What Is the Seniority of Crowdfunding?

The seniority of crowdfunding therefore determines the priority of repayment for a crowdfunding loan in the event of a company’s liquidation, generally ranking after traditional creditors but before shareholders.

In other words, in the event of default by the company that issued the securities (at Enerfip, this is the project sponsor), there is a hierarchy that determines the order in which creditors will be repaid. When a creditor is in the so-called “junior” rank, this means they will be repaid after the creditors in the so-called ‘senior’ rank have been paid. Typically, for the majority of projects presented on Enerfip, crowdfunding holds a junior rank, whereas the bank loans established to finance the project are positioned in the “senior” rank.

And now you’re probably thinking: “But isn’t that great?” Well, yes and no. Yes, because it’s a risk to consider when making your investment, and no because:

• the wealth of experience that renewable energy provides (in both financial and technical terms),
• the care we take in analyzing projects to ensure they meet all criteria for quality and sustainability,
• the comfortable operating margins we observe regarding the project’s ability to repay its debts,
• and the insurance policies that are in place—whose validity we verify—mean that while risks associated with the junior seniority are certainly present, they are limited.