Germany: The Loan without the Bank
00'01
Just outside Berlin a log cabin is being built for an Austrian restaurant. But the business is at risk. The owner, Maik Mätzing, needs 11 thousand euros to purchase new natural wood strains. Yet the banks have refused him a loan, ever more cautious since the financial crisis.
00'22
OT Maik Mätzing, Carpenter.
I‘m self-employed and it’s very difficult to get a loan in carpentry, especially for a small business like mine. For example, one criteria is that in order to receive a certain amount I must pay a deposit. Also the procedure for applying for a loan is a very long and complex one.
00'44
Gertrud Wagener had the same experience with her electrical business. Gertrud thought a loan for the much-needed renovation of her business premises would be no problem given her banking record. But her bank still refused the loan, explaining that this year, it would no longer assign credit- perhaps next year.
01'08
OT Gertrud Wagener, retail assistant
Nowadays in the retail business, if you go to a normal bank, many references, a lot of security and a sound credit record are required. This is not only the case for my business, but for any other business too.
Smava actually made things very easy.
01'27
‘Smava’ is the name of the online citizens’ bank in Germany. Anyone can borrow money- from ordinary people, such as René Müller. The chemical laboratory worker invests his savings in people who he would like to support.
01'45
OT René Müller,Smava investor.
A great aspect is the social character of ‘Smava’ – to support people in financing a project or realising a dream, without having to rely on a bank. And for the investors it is especially beneficial, as we receive the returns on investments, which would normally go to the banks.
02'06
The idea of the citizens’ bank sprung up in the U.S. In Germany, it was made famous by Alexander Artopé. More than 5 million euros have been made available through his service already. And since the financial crisis, demand is on the rise.
02'29
OT Alexander Artopé, Smava founder.
With the financial crisis, the banks proved that the trust customers brought towards them was not always justified. The great thing about a citizens’ bank like Smava is that the people themselves decide. So one knows what happens to the invested money and it doesn’t just disappear in the non-transparent business of banks. This is the great structural advantage we have in comparison.
02'54
The wishes of the borrowers are without limits - from marriage proposal to money for the great-grandson. A bank would hardly be interested in these things - but at Smava investors decide what they want to lend their money for.
03'11
The consumer protection provided by product watchdog ‘Stiftung Warentest’ examined the reliability of the citizens’ bank. Product tester Lutz Wilde recommends Smava, although he warns that people can sometimes be cheated.
03'22
OT Lutz Wilde, product tester.
For example, people asked for credit to help finance their marriage. They signed up for Smava, put their photos on the website and yet in the end failed to raise the amount they asked for, Two weeks later the same couple asked for money to take on a foster child. That lacks credibility and everyone should keep in mind that the stated reason behind the request for a loan might not be the truth. The important thing, however, is that those trying to obtain a loan have a good credit record, which has generally been checked by a bank beforehand.
03'54
René Müller is satisfied with his investment. He spread the risk of Smava over many small loans of less than 500 euros. So far, he has always received the payments including interest on time. But the forecast for his shares is less rosy.
04'14
OT René Müller, Investor.
I have made a loss of about 40 per cent with my shares lately. But, I still receive the Smava payments on time, which gives me a certain security and means less financial worry.
04'28
Should a debtor fail to make a repayment, Smava has a safety net.
04'35
OT Lutz Wilde, product tester.
Investors receive very good interests on their provided loans. The system works and is secure. Should a debtor nevertheless fail to make a payment the other investors are there to support each other. In addition, there are a number of other safety measures for investors, so if things should go wrong, no one is left out in the rain. That means Smava is a good and beneficial alternative.
04'58
A total of 52 people from all over Germany invested in the refurbishment of Gertrud Wagener’s business. She had her credit checked by a credit protection agency and made it available for investors to look at. They now receive 9.7% in interest and next season’s business is saved for the retailer.
05'21
OT Gertrud Wagener, retail assistant.
I would like to expand the business a bit before next season. Increase the stock, for example, in order to stand out in comparison with the larger retailers.
05'32
Gertrud Wagener has never disappointed her investors. And she has been in business for 25 years.
05'40
OT Gertrud Wagener.
I organise my finances well, so even if sales go down, I will still be able to repay ‘Smava.’
05'51
Maik Mätzing’s investors can even expect a 12 per cent return, significantly more than a bank would ever offer.
06'00
OT Maik Mätzing.
I think for many investors the profitability makes all the difference. One important aspect might be the reluctance of creditors to invest overseas in unfamiliar business environments. The other thing is that investors, who provide loans through Smava have greater returns than they could get anywhere else, whilst investments are still relatively safe.
06'27
So far the citizens’ bank only operates in Germany. In the coming year, Smava will expand to Austria too.
06'39
End.