FREQUENTLY ASKED QUESTIONS

Below you will find answers to some of the most frequent questions. For explanation on terminology please refer to our Glossary. 


Questions asked by new investors

 
What is MYC4?

How does MYC4 work?

How do I sign up?

How do I get started with lending?

What is the minimum I can lend?

Where can I follow the businesses I have lent to?

How does MYC4 operate in Africa?

Who can lend through MYC4?

Who is behind MYC4?

Can I withdraw my money again?


Top 10 questions from existing investors


I do not have a lot of time, but want to participate. Can lending be done automatically?

What is the minimum interest rate functionality and how do I enable it?

What is withholding tax?

How do I upload money to my account?

How does MYC4 secure my money?

Why do the interest rates seem high?

If a repayment is due on a particular day, when can I actually expect to see it in my account?

What happens when a repayment is late?

What happens if the business does not repay the loan?


Other questions


Why do my repayments differ each month?

How does MYC4 earn money?

Which fees are associated with lending on MYC4?

What are inactive account fees?

Where can I view MYC4's portfolio performance?

What is "Seniority Points"?

What is PAR?

What does ‘Legal name’ mean?

What are the terms and conditions for being an investor on MYC4?

What are the browser requirements when using MYC4.com?

My credit card is not accepted. What should I do?

I cannot log in to My Account. What is wrong?

How can I give a MYC4 Gift Card to friends and family?

Is it possible to lend as a group?

Is it possible to lend as a company?

How do the providers and administrators earn money?

What is the actual cost for the African businesses?

Does MYC4 have a Code of Conduct?

Can I get in contact with the businesses I lend to? 

What are the general condidtions for the African loan market?

Does MYC4 provide advice regarding tax declarations?

How can I close down my MYC4 account? 





What is MYC4?

Africa is growing like never before and it has one of the fastest growing economies in the world. Yet more than 380 million people there do not have access to a bank. This is a huge problem for Africa’s growth and prosperity because it is typically the small businesses that cannot borrow money to expand and become more effective - What would you do if you didn't have access to a bank? Watch our video: A day without banks

MYC4 has a solution for this and you are part of the solution.

MYC4 is an internet marketplace where you and investors from around the world can lend money directly to entrepreneurs who are doing business in Africa and create growth together with them. That means when the African business makes money as a result of your loan, you can also make money. MYC4 is a business – a business that creates growth – growth created by you.

By promoting business potential in Africa, it is possible to trigger long-term positive social impact. Funding speeds up economic growth and prosperity permeates through the lives of entrepreneurs, their families, employees and local community.


How does MYC4 work?

An African entrepreneur wants to apply for a loan in order to grow his small business. He goes to a local MYC4 partner to present his project, how much money he needs, and how much he can pay in interest.

The MYC4 partner makes a thorough evaluation of his business to make sure it provides healthy economic prospects for growth and can repay the loan and its costs.

If the loan is approved by the MYC4 partner, it is uploaded to the MYC4 marketplace. You and other investors can now read about the entrepreneur and see his application for funding.

There is an auction on MYC4 where you can bid with the amount you wish to lend to the small business and at what interest rate. You do not have to lend the entrepreneur the full amount. Several people can participate in the loan. It is the people who offer the lowest interest rates that end up lending money to the business when the auction is over.

When the auction closes, MYC4 transfers the funds to the local partner and the entrepreneur receives his loan. As the business grows, he starts paying back his loan with interest to you.

You can now decide whether to withdraw your money or lend it to another small business in Africa. 


How do I sign up?

Go to Sign Up and follow the instructions. It only takes a couple of minutes and you are set to go.


How do I get started with lending?

Lending through MYC4 is easy and personalized. First you need to create a MYC4 Account and upload money to this account. Secondly, when you have an account with funds to lend, you pick a business to lend to. To see the different Loans that you can choose to lend to, click on LEND in the menu bar and you can view a list of all the Loans that are open for bids.

In the bar above the open loans, you can sort the loans by various measures. By clicking on a specific loan, you can read about the business applying for the loans, its targets and goals, plus economy and data of the Business.

When you have found a loan that matches your criteria, just click the Lend button and type in your bid amount and your requested interest rate. The bidding is set around the principle of a so-called Dutch Auction, where investors compete to win the bid.


What is the minimum I can lend?

Getting started - MYC4 encourages bids of all sizes. You can begin bidding with as little as 5 euros. When you feel comfortable with the lending process, then you can choose to increase the size of funds in your Account.


Where can I follow the businesses I have lent to?

When you have created a MYC4 Account and made your first loan, you can always keep track by going to “My Account”. Here you will get an overview of your Account balance, your loans, profits and loss etc.


How does MYC4 operate in Africa?

The MYC4 platform is built around a network of local providers screening the businesses who would like to obtain a loan and local administrators handling the financial transactions. All businesses interested in obtaining a Loan undergo a thorough investigation process to make sure they provide healthy economic prospects for growth before they are classified as businesses for lending on the MYC4 platform. The due diligence process include a background check of the business to check reputation, track record and whether the business is involved in any other business in conflict with the vision and mission of MYC4.


Who can lend through MYC4?

MYC4 is for everybody. You can lend to African businesses through MYC4 as a private person, as a group or family, as a company, as a foundation, as a financial institution, etc. Go to Sign Up to get started. If you wish to lend as a foundation or a larger institution please contact info@myc4.com.   


Who is behind MYC4?

Founding shareholders:
Kjaer Group A/S (DK)
The Way Forward ApS (DK)
casa-share ApS (DK)

Other shareholders:
Middelfart Sparekasse A/S (DK)
Dutch Oak Tree Foundation (NL)
SeiAr Invest Aps (DK)
Mikkel Vestergaard Frandsen (CH)
DOEN Foundation (NL)

For a list of our staff and board, please click here.
For a discription of MYC4 Foundation and how it secures investor funds, please click here.


Can I withdraw my money again?

You can withdraw the available amount on your MYC4 account at any time by going to the Withdraw page once you are logged in. You find the Withdraw page in the left hand menu when clicking My Account. Though for the first 90 days from activation of your account, withdrawals to a bank account will not be possible if the original amount has been uploaded with a credit card. This limitation is to avoid fraud and money laundering. Money can however be refunded to your credit card (the same credit card, which was used for the initial upload) earlier than the 90 day period, if the full amount of the individual transaction is still available on your MYC4 account. E.g. if you have uploaded €100 from a credit card and you still have €100 on your account balance, the amount can be refunded to your credit card on request. If there should be any questions, please don´t hesitate to contact us at info@myc4.com


I do not have a lot of time, but would like to participate. Can lending be done automatically?

The Auto Bid function is a service that gives you the opportunity to make automatic Bids on Loans which match your criteria.

In the Auto Bid section you can view, edit and create new Auto Bids. It is possible to have several Auto Bids with different settings – e.g. one for large loans, one for low interest rates etc. Please note that only enabled Auto Bids can make bids.

To create a new Auto Bid, simply log in, click on My Account and click the 'Auto Bid' link in the left hand menu. Then click Create Auto Bid box to set the parameters.

First you define your bid (in Define bids). Here you can choose the bid size, interest rate and minimum interest rate.

Then you define the loans to Auto Bid on. You can choose to select one or several parameters. Below you can see the parameters that decide how your Auto Bid lends.

  • Loan amount
  • Payback amount
  • Initial grace period
  • Provider
  • Provider product
  • Risk rating
  • Business Country
  • Business Industry
  • Business function
  • Gender

What is the minimum interest rate functionality and how do I enable it?

When creating a bid, you can choose to enable a service for automatically setting the minimum interest rate. This service is to enable flexibility for investors who wish to reduce their bid (until the minimum interest rate is reached) and maintain a bid when competitive bids are offered, even if they are unable to check up competitive bids regularly.

If your bid is pushed out by a competitive bid, your bid can be replaced by a lower interest rate (-0.25%) until it reaches minimum interest rate. The system can also use your minimum interest rate when the loan closes if the final interest rate is still higher than the maximum accepted by the borrower. In this case your bid can be replaced by a lower interest rate (-0.25%) until it reaches minimum interest rate or the loan is funded at the maximum interest rate, whichever happens first. To enable this automated feature, please specify the lowest interest rate you are willing to accept in the minimum interest rate field. If you wish to bid at a fixed rate, simply leave the minimum interest rate field blank.

 

A description of the automatic bidding system is also provided on the lending page itself. When creating a bid, please look for the information bubble next to the field marked ‘minimum interest rate’.


What is withholding tax?

Most African countries apply tax on interests earned (withholding tax), which is applied to investor and MYC4 earnings. The withholding tax paid in an African country should be deductable from the tax you pay in the country where you are a normal taxpayer, and you need to look into this before you declare your taxes. You can see the specific percentages for the countries that we are working in here.

In most cases, depending on your home country, the taxes withheld in Africa can be offset against the taxes paid to the resident authorities, as most countries have double taxation agreements with the African countries MYC4 operates in. Please contact your local tax authorities for further clarification.


How do I upload money to my MYC4 account?

When you are logged in, click on the button “Upload money” in the right hand side of the page. You can transfer money either by using your credit card or using bank transfer. Uploading money using your credit card enables you to start lending immediately. If you upload money using bank transfer, the funds will be available in your MYC4 account as soon as we register your payment.


How does MYC4 secure my money?

When investors transfer money, these funds are separated from MYC4 A/S’s funds both in terms of separation of cash flow and bank accounts, which means in the unlikely event of MYC4 A/S going out of business, your money will be safe.

In that regards, MYC4 A/S has established MYC4 Foundation (CVR 32068723) to hold the investors funds until the investors have made their investments via the platform and subsequently when the investors receive return of their money.

The bank account holding Investor funds is denominated “Investor Funds” to reflect that it is for the benefit of Investors and not MYC4 A/S. Investors have full ownership of the funds at the bank account according to their individual accounts at www.myc4.com. MYC4 A/S has the right to administer all funds on the account. MYC4 A/S’s creditors cannot levy execution on the funds in the bank account containing investor funds.


Why do the interest rates seem high?

MYC4 interest rates are normal for the informal market and competitive compared to rural banks in Africa. It's costly to lend to micro and small scale businesses, but we focus on the ability to repay, and highlight that the terms in connection with a loan must be both fair and transparent.

MYC4 strives to strike a balance between running a profitable business, allowing all partners involved in the process of financing the loans to African entrepreneurs to earn a fair, risk-adjusted return, while at the same time ensuring fair and flexible terms to the entrepreneurs. This can be a difficult balance to strike, but is one that will be attained through a combination of transparency and ongoing diligence.

MYC4 has identified that the main drivers of extremely high effective interest rates in microfinance are the relatively fixed cost of conducting due diligence on small loans, poor infrastructure and legal recourse (operating expenses). The fact is that there are some costs that all financial institutions face when disbursing a loan, regardless of loan size, and that these are percentage-wise higher for small loans than larger loans. These operating costs include: screening processes, management of loans (loan officers), repayment strategies, organizational and computer systems to assist in this process, time and energy to disburse loans in remote, rural areas. In the end, if MYC4 wants to be financially sustainable, we have to charge a price that covers all of our costs, including operating expenses.

To address the issues of high interest rates, MYC4 has implemented a targeted strategy of partnering with existing organizations capable of implementing MYC4 processes as an add-on to existing operations, thus benefiting from economies of scale. Second, MYC4 aims to focus on medium-sized, longer-term loans to established SMEs, which typically have a fixed address, and whenever possible, bank accounts, thus reducing the costs of due diligence and client interaction. Finally, because the credit risk is being borne by the MYC4 investors, who are able to diversify their risk broadly across partners, industries and countries, African entrepreneurs, are not subject to the typical cash security. Thus, while interest rates on MYC4 are still comparatively high when compared to European rates, they are typically much cheaper than all other commonly accessible sources of capital in local markets.

MYC4 greatly acknowledges the need for transparency when it comes to the actual costs for borrowers, and we therefore follow Microfinance Transparency's recommendation to show the APR for each loan. The APR (annual percentage rate) is a tool for making loans comparable, which incorporates all costs (fees) and timing (due dates of interest rates, repayments etc.). Although APR is a useful tool for comparing loans, it tends to cause confusion regarding the actual costs involved for the borrower, which seem higher than they actually are. All loans pay interest after a declining balance priciple - meaning that interest is paid on the remaining sum, not on the original amount.


If a repayment is due on a particular day, when can I actually expect to see it in my account?

Due to the time it takes to transfer money and to the way the system works, you should expect to wait an average of 14 days for your repayment, counting from the repayment’s due date. You can read about the entire process here.


What happens when a repayment is late?

A payment is considered late if it has been received by the Administrator later than the 4th day after the scheduled repayment day. If the repayment is late, or if the repaid amount does not match the repayment plan, the repayment schedule turns red. The Provider, who is responsible for the Loan in question, will then visit the Business and find out why the repayment is late. The Provider will often post a blog on the Business’ blog to explain the late repayment.

According to best practice in microfinance a Loan defaults after it has missed repaying an accumulated amount corresponding to six months or ordinary, planned installments. If you only looked at when the last repayment was done, a borrower could potentially just make a small repayment every three months and avoid default (while the debt increases due to the interest burden of additional credit).


What happens if the business does not repay the loan?

In case a business does not fulfill the repayment plan, the administrator takes contact to the business to clarify the situation and try to resolve any issues. If the loan continues to be mismanaged by the business, MYC4 will inform the provider and the Business will not be able to obtain any additional loans until everything has been solved. All providers are asked to vouch for their Business, which means that Loans not being paid will reflect poorly on the reputation of the provider. In certain circumstances the administrator can seek up the business and take valuables (collateral) instead of money in repayment. The collateral has been agreed upon when the contract was signed. 

A defaulted loan is when a business fails to pay back the entire or part of the loan amount. A loan is declared defaulted when the cumulated late repayments exceed the amount of six months scheduled repayments, which may run up to six months to the original expected final repayment date.

The Loan is then moved to “Defaulted”, and the Investors will receive an email with information about the default. The provider will normally post a blog on the business’ blog explaining the circumstances for the default.

Even after a loan has defaulted and the investors have formally lost their money, the administrators may still recover the collateral at a later stage in which case these funds will be distributed to the Investors via their MYC4 account.


Why do my repayments differ each month?

The monthly payments are not equal since equal payments are made for the overall credit, which includes fees and markups. Thus the payments to the investor increase over time, while the interest part gets smaller. The business pays back an amount, which consists of paid back principal plus all the interest. Since there are equal payments each month, the outstanding principal gets lower every month (the business is paying back part of it every month). The interest, however, is calculated on the outstanding principal, so the interest is also getting smaller every month, the payments are equal, and so the principal will increase each month.

And what's that got to do with my repayments?

Simple: you get 100 percent of the paid back principal (it's your loan), which increases each month.

You get only part (approx. 50% or even less) of the interest, because the administrator, the provider and MYC4 also get a share. This part is shrinking, so your payback will increase every month.

In the last month, there is almost no interest, so you will receive almost 100 percent of what the business pays back.


How does MYC4 earn money?

Lending via the platform is free of charge, and it is free of charge for the African entrepreneur trying to obtain a loan, as the model works on a “no cure – no pay” principle. This means that if a loan is not funded or the wanted interest rate is not reached, the African entrepreneur will have no costs.

The way MYC4 earns money is that we charge a closing fee of 2 percent and an interest commission of 6 percent on a declining balance on all loans.

MYC4 adheres to transparency principles and thereby lists MYC4 earnings in percentages and absolute amounts for each loan.

Working from the conviction that business and economic development is the means to end poverty, MYC4 focuses on the meso segment since the need for capital here is immense. Developing small and medium sized businesses will influence higher economic growth, which again will reduce poverty and improve health conditions. 

Please click on the direct link to view our Annual reports.


Which fees are associated with lending on MYC4?

The business model is based on transaction fees alone. Lending via the platform is free of charge, and it is free of charge for the African business to try to obtain a loan as the model works on a “no cure – no pay” principle (meaning that if the Loan is not funded or the wanted interest rate not reached, there are no costs for the business). MYC4 charges fees for providing the infrastructure that handles the transactions.The fees will vary, but they are stated on all loans.

With this model everyone wins: the business gets the loan at a rate they can repay; the investors earn income from the interest; and MYC4 and the MYC4 partners get a fee. Due to the nature of the platform with its open bidding process, the model ends up providing a self-regulated marketplace that encourages the businesses and providers to perform well and the investors to offer lucrative interest rates.


What are inactive account fees?

MYC4 charges an account fee of €1 on inactive accounts. By inactive accounts, we mean any account that has not placed a bid within the last year. As long as you place at least one bid each year you will not be affected by this change.

The reason for this fee is that we have a large number of accounts where investors have uploaded money but have not made bids in over a year. We think it is in everyone’s interest to have these funds working in Africa and have made ongoing efforts to contact these people and activate them again. As a service, we offer everyone the possibility of becoming an automated investor. Read more about auto-bids.


Where can I view MYC4's portfolio performance?

MYC4 evaluates its portfolio performance each quarter and posts it for all investors to view on our blog. Write 'portfolio performance' in the Search field to find the most recent report.


What is "Seniority Points"?

The basic principles behind the seniority system is derived from old school roleplaying games and gaming in general. These principles have been applied to MYC4 for different purposes.

The initial thought was that the Seniority Points system could promote some of the following features:

  • Seniority and level is an indicator as to how proficient a user is to the MYC4 platform
  • Seniority and level are competitive elements
  • Seniority and title are personal brandings within the MYC4 universe.
  • Levels will in future updates unlock and make available functionality on the platform that will not be available unless a certain level has been achieved
Most of the above is not implemented today and the bullets above serve as a guideline to what the Seniority Points system could be used for. The main purpose of the system has not yet been determined. Read this document to discover which actions reward you with Seniority Points.

Please note that the Seniority Points in no way affect your loan on MYC4. It is purely a number of points, which is awarded based on your activity on MYC4.


What is PAR?

PAR (portfolio at risk) is a risk management tool used to assess the quality of a loan portfolio. It is a measurement of the total outstanding balance of loans past due-date—not late payments or payments not yet due—divided by the active portfolio. In line with best practices in the industry, MYC4 operates with 30 days (PAR 30), evaluating the value of all outstanding loans more than 30 days past due. This includes the entire unpaid principal balance, including both the past due and future installments, but not accrued interest. It does not include loans that have been restructured or rescheduled.

See MYC4's overall PAR here.


What does ‘Legal name’ mean? 

When you create your account, you have to type in a Legal name. This is to ensure that you are who you say you are, if you at one point want to withdraw money from your MYC4 Account. The Legal name must be the same name you have in your passport.


What are the terms and conditions for being an investor on MYC4?

You can read MYC4's Terms & Conditions here.


What are the browser requirements when using MYC4

We support Internet Explorer, Firefox, Chrome, and Safari. To get the best experience with MYC4, ensure to update your browser regularly.


My credit card is not accepted. What should I do?

We only accept the credit cards listed in the drop down menu on the upload page. Note that you should not leave a space between any of the numbers. If you continue to experience problems please contact info@myc4.com.


I cannot log in to My Account. What is wrong?

There are different possibilities. Maybe you have not verified your account yet. When you sign up on MYC4, you will shortly after receive an email, where you have to verify that you wish to sign up. Please check your mailbox and your junk mail folder for the verification mail. If you did not receive a verification mail, please contact us at info@myc4.com.

Another option is that you have typed in the wrong password. Pick “Password reminder” and have your password emailed to you.

Also, there is a possibility that your Cookie setup prevents you from logging in. In this case you have to delete your cookies by choosing Tools > Internet Options > Delete > Delete Cookies in your browser.


How can I give a MYC4 Gift Card to friends and family?

With a MYC4 Gift Card for Christmas, birthdays, anniversaries etc. you can give a gift that truly matters. Not only to those who receive it, but also to Africans entrepreneurs. By giving a MYC4 Account to those you care for, you give them an opportunity to make a difference. To give a Gift Card you must be logged in to your MYC4 Account. When you are logged in, go to My Account and click the ‘Gift Card’ link in the left hand menu. The explanation here will guide you through the steps.


Is it possible to lend as a group?

Yes! It is completely up to you whether you wish to lend individually or as a group – for instance as a family. Just identify the group when you create the profile as e.g. ‘The Smith Family’ or ‘The Oldboys Team’ in the username and make sure that you have one person who administrates and is responsible for the Account.


Is it possible to lend as a company? (Learn more)

Yes! There are several ways to lend as a company. For instance, you can create an Account in the company’s name; you can lend in teams of employees; or you can create a company foundation.

Please contact info@myc4.com to require further information and ideas on how to incorporate MYC4 in your company’s Corporate Social Responsibility activities.


How do the providers and administrators earn money?

Both the providers and administrators charge a fee for their services. These fees vary from each administrator and provider, but they are stated on each loan in order to create transparency in regards to the cost structure of the loans. So, the fees are also included in the APR of each loan. Part of the provider’s and administrators' fees is fully dependent on the business being able to pay back the loan successfully.

Under each loan you can not only see the fees that the business has to pay to the provider, the administrator and to MYC4 respectively. You can also see the APR and the total cost for the business in EUR. 

It is important to keep in mind that MYC4’s business model cannot be compared to for instance the banking orbit in developed countries.


What is the actual cost for the African business?

MYC4 greatly acknowledges the need for transparency when it comes to the actual costs for the borrowers, and we therefore follow Microfinance Trasparency's recommendation to show the APR for each loan.

We also have a detailed break down of the interest rates and fees attached to each loan. To view the cost of business, click on the loan of interest and scroll down and you will find a tab called Cost of Business.


Does MYC4 have a Code of Conduct?

Yes. Click here to read MYC4's Code of Conduct. 


Can I get in contact with the businesses I lend to?

In MYC4, the provider is the link between investors and the businesses and the provider is ready to assist with your questions. Most businesses haven't got access to Internet on a regular basis.


What are the general conditions for the African loan market?

The African banking system is the smallest in the world and consequently has very little competition. The governments in many African countries are restricting the entry of foreign banks, thereby creating a monopolistic situation with a lack of distributional capacity and uncompetitive rates. A World Bank study concluded that the difficulty of accessing affordable finance is one of the main factors holding back the continent’s private sector. The study finds that it is crucial to extend the reach of financial services; payment systems; insurance and credit to a larger share of the population; and that particular challenges are posed by the widely scattered nature of rural populations and the informal nature of much economic activity.

The losers are not the large companies. The amount of finance available for these companies more than meets the need. The losers are the medium-sized (100- 250 employees) and small (1-100 employees) businesses, which find it hard to obtain finance. They are often forced to turn to local money administrators and end up being exploited because of non-transparent conditions – a setback not only for the individual entrepreneur but for the development of the region as a whole.


Does MYC4 provide advice regarding tax declarations?

MYC4 cannot provide advice on tax declarations. However, if you log on to your investor account, click My Account and then tax report, you can view the withholding tax that you have paid.


How can I close my MYC4 account?

You can withdraw the money in your account by going to the Withdraw page once you are logged in. You find the Withdraw page in the left hand menu when clicking My Account. If you wish to completely delete your account, please send an email with the following text to info@myc4.com:


“Cancellation of account

I, _________, hereby wish to cancel my account. All outstanding bids, as well as the current balance of the account, I wish to donate to the MYC4 foundation, for the foundation to lend to businesses in Africa.”


Upon receipt of your email we will close your account and ensure that the funds, if any, get lent as quickly as possible. Please note that you must use the same email address that is registered to your MYC4 account when writing to close your account. We will issue you with an email confirmation once the process has been completed.