Developer loans in France via crowdfunding platforms

The retail route to French developers runs through authorised platforms. What you hold, what the platform does and does not do, and what to check.

A private person who wants to lend money to a property developer in France does not, in practice, sign a loan agreement with the developer and register a mortgage in their own name. The route open to retail investors, including people who live abroad, runs through a licensed crowdfunding platform. This guide explains how that route works, what you actually hold, where the risk sits and what to check before you put in a euro. It is general information, not legal, tax or financial advice, and money invested this way can be lost in full.

This is not the German product

Elsewhere in this series we describe a different structure: a direct loan to a German developer, secured by a land charge (Grundschuld) in the lender's favour. See how a private loan to a German developer works and the due diligence checklist. A French platform loan is not that. You do not deal with the developer yourself, a platform stands between you and the project, and what security you have, if any, depends on the project. Please do not read this article as 'the same thing, but in France'.

The legal frame in short

Since 10 November 2021 Regulation (EU) 2020/1503 on European crowdfunding service providers applies in France as in every EU country. Its transitional period ended on 10 November 2023, so a platform that offers loans to French projects must now hold the authorisation of a crowdfunding service provider (in French, PSFP) granted by the AMF, the French financial markets regulator.
French law reserves lending as a regular business to banks and other licensed institutions (article L511-5 of the Monetary and Financial Code), and authorised crowdfunding platforms operate inside a specific exemption. Whether a one-off private loan to a developer outside a platform would be lawful is a question for a French lawyer. We have not verified it and we do not present it as an option.
The regulation limits how much one project owner can raise through the regime: secondary sources summarise the ceiling as EUR 5 million over twelve months per project owner, above which the ordinary prospectus regime applies. The sources word this differently, so check the current text before relying on the number.
Investors who are not sophisticated get information protections: a key investment information sheet, risk warnings, a test of their knowledge and a pre-contractual reflection period of four days. These protections exist so that you understand the risk. They do not stop you from investing and they do not protect you from loss.

What you actually hold

In a loan-based offer you lend to the project company, usually a company created for a single development. Your claim is against that company. You are a creditor of the developer's project, not an owner of the building and not a depositor in a bank.

Whether your claim is secured is the most important question, and the answer differs from project to project. A platform may describe a mortgage, a pledge over the shares of the project company, a guarantee from the sponsor's group or a personal guarantee from the developer, or no security at all. The sources we could check did not document the security structure of French platform loans in general, so we make no general statement about it. What matters is the project's key information sheet, which must say what the security is and where it ranks. A mortgage that ranks behind a bank's mortgage is worth much less than one that ranks first, and a guarantee from a group is only as good as the group.

Repayment normally comes from the sale of the units or from refinancing once the project is finished. If sales are slow or the permit or the build is delayed, the term is usually extended. An extension is part of how these products work, not an exception.

What the platform does, and what it does not

The platform selects projects, publishes the information, collects your money, passes it to the developer and passes repayments back to you. It earns fees for doing so. Its authorisation means it must meet the regulation's rules on information, conflicts of interest and governance. It does not mean that the project is safe: one summary of the AMF's position states that an authorisation does not guarantee returns, does not protect against loss of capital and does not cover the failure of a developer.

The AMF has also published a call for vigilance that names two risks specifically: the default of the project owner and the platform ceasing its activity. The second one is easy to forget. If the platform stops, somebody still has to collect repayments and enforce your claim. Look in the platform's documents for what happens in that case and who takes over.

The risks, plainly

Default of the developer. You can lose part or all of the capital. The security, if there is one, may not cover what you lent.
Delay and extension. Projects run late and terms are extended; the date you expect your money back is an estimate.
Illiquidity. Your money is locked for the term and there is normally no way to sell your claim before maturity. Where a platform offers a secondary market, nothing guarantees that you will find a buyer.
Platform failure. See above.
No deposit guarantee. A loan to a developer is not a bank deposit, so no deposit guarantee scheme applies.
Concentration. Putting a large share of your savings in one project or one platform multiplies every risk above.
Currency. If you do not live in the euro area, the amount you get back in your own currency moves with the exchange rate.
Marketing. Advertised rates are the platform's marketing, not a promise and not a forecast we can stand behind. We do not quote any.

Tax, and what we could not verify

We could not verify how interest paid to a lender who lives outside France is taxed in France: whether the platform withholds tax, at what rate, and what a tax treaty changes. The sources we read describe the position of French residents, with rates that differ by year. In many countries the lender's own country of residence also taxes this income, sometimes with a credit for foreign tax. Ask a tax adviser before you invest, and ask the platform what it reports and withholds for clients who live abroad.

Checklist before you invest

Check that the platform is on the AMF's list of authorised crowdfunding service providers, and on the register kept at EU level.
Read the whole key investment information sheet, not the project page. Find the sections on risks, fees, security and what happens on delay.
Find the security and its ranking. Who holds it, who can enforce it, in what order are you paid?
Find out who the project owner is: its accounts, its earlier projects, the share of the project paid by its own money.
Check the permits and the share of units already sold.
Check the term, the extension rules and who decides when to enforce.
Find out what happens if the platform stops operating.
Add up all the fees you pay and all the fees the developer pays.
Keep each project to a small share of money you can afford to lose.

Questions people ask

Is it safe? No investment of this kind is safe. The honest description is a risk of partial or total loss, a locked period and a dependence on one developer and one platform.

Can someone who lives abroad invest? Platforms set their own eligibility rules by country of residence and may refuse some countries. Ask before you register.

Is the capital guaranteed? No. Neither the platform nor the regulator guarantees it.

How we help

We do not offer or arrange loans to French developers. What we can do is talk through the German project financings we work with, show the documents and terms of those offers, and, for the French market, help with the purchase side: finding a property, checking it and structuring the purchase. We do not quote returns. This text is general information and not legal, tax or financial advice; the terms of any offer are set by the issuer.

Lending to developers in France through crowdfunding platforms: how it works and where the risk sits