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Article 3 - Credit risk of individual crowdfunding projects

Article 3
Credit risk of individual crowdfunding projects

The description provided to investors of the method to assess the credit risk of individual crowdfunding projects within a portfolio as referred to in Article 6(2), point (a) of Regulation (EU) 2020/1503, shall contain all of the following elements:

((a))

the criteria and the key financial indicators used to establish the feasibility and sustainability of the business plans of the individual crowdfunding projects;

((b))

an analysis of the expected cash flows of the crowdfunding projects and an assessment of how certain those expected cash flows are over different time horizons;

((c))

an analysis of the characteristics, including the degree of competition, of the business sector in which the project owners operate;

((d))

an assessment of the project owners’ knowledge, experience, reputation and capacity to manage business activities in the project’s specific sector;

((e))

the procedures regarding the acceptance and recognition of collateral or guarantee and credit risk mitigation measures, where relevant;

((f))

the type of the repayment schedule for the loan and the frequency of instalments;

((g))

the procedures to assign each loan associated with a project to an appropriate risk category as defined by the risk management framework;

((h))

the source and type of data used for the purposes of points (a) to (g).

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