In 2021, European regulators rolled out a new licensing framework that fundamentally changed who could participate in private credit markets. The European Crowdfunding Service Provider (ECSP) regulation created unified rules across all EU member states, allowing licensed platforms to connect retail investors with company loans – an asset class that had been largely institutional territory.
The timing wasn’t coincidental. Traditional banks had retreated from SME lending after 2008, while retail investors were stuck between negligible deposit rates and volatile public markets. Meanwhile, institutional credit funds were consistently earning 8-12% annual returns on private debt. The gap was structural: fragmented national regulations made it nearly impossible for credit platforms to scale across borders.
ECSP licensing solved the infrastructure problem. Platforms holding the credential can now operate in all 27 EU countries under standardized investor protection rules, creating the foundation for pan-European credit marketplaces.
Sofia-based Afranga operates within this framework. Founded in 2020 and relaunched under ECSP licensing in 2025, the platform has deployed over €50 million in company loans from more than 4,000 retail investors across 27 countries. The model addresses both sides of the market gap: companies access alternative financing outside traditional banking, while retail investors access private credit with minimum investments starting at €10 and returns ranging from 6.5% to 14% annually.
The Three-Party Structure
Credit crowdfunding platforms function as marketplaces, they’re not lenders. Afranga’s structure involves three distinct parties: the platform itself, loan originators, and retail investors.
The platform provides infrastructure and oversight and vets loan originators through a methodology derived from rating agency standards, maintains ongoing monitoring, and ensures regulatory compliance. Critically, Afranga does not hold investor funds — these are segregated via Lemonway, a licensed payment institution. This separation protects investor capital if the platform encounters operational difficulties.
Loan originators issue debt to companies seeking capital. After platform approval, they list loans with fixed terms and interest rates. Investors review available loans, select investments (minimum €10), and the Afranga software automatically generates electronic contracts between investor and originator. The platform charges investors zero fees for deposits, withdrawals, or account maintenance.
Returns range from 6.5% to 14% annually depending on loan terms and risk profile. Since inception, Afranga has distributed €1.5 million in interest payments to investors. These figures represent actual deployment, not projections.
Product Architecture for Different Investor Profiles
The platform offers three investment approaches, each addressing different risk tolerances and time commitments.
- SaveSmart mimics fixed-term deposit mechanics. Investors select predefined terms (3, 6, or 12 months) with corresponding fixed rates (6%, 7%, and 8% respectively). Interest payments occur monthly. Principal returns at maturity. This structure targets investors seeking deposit-like simplicity without complex portfolio decisions.
- GrowBot is an upcoming feature that will automate deployment through rule-based investing. Investors define criteria (loan originators, interest repayment methods, principal repayment structures, early repayment preferences), and the system allocates available funds automatically. When demand exceeds loan size, the algorithm distributes investments fairly across multiple investors rather than favoring speed. The tool continuously reinvests idle capital, maintaining portfolio activity without manual intervention and will be available for users in spring 2026..
- Manual selection provides loan-by-loan control. Investors access full loan documentation through Key Investment Information Sheets, construct customised portfolios, and make individual deployment decisions. This approach suits active investors prioritising control over convenience.
The product range does not reflect innovation claims but rather addresses practical investor segmentation: some prefer simplicity, others want automation, and some demand granular control.
Regulatory Framework in Practice
Afranga holds an ECSP license from Bulgaria’s Financial Supervision Commission, granted under Regulation (EU) 2020/1503. This credential enables EU-wide “passporting” — the platform can serve investors across member states under unified regulatory standards without requiring separate authorisations in each jurisdiction.
The ECSP framework, operational since November 2021, replaced fragmented national regimes with unified rules for all EU countries. The regulation imposes specific operational requirements that distinguish regulated crowdfunding from earlier peer-to-peer models. Platforms must segregate investor funds through licensed payment institutions (Afranga uses Lemonway for this purpose). They must provide standardised Key Investment Information Sheets for every offering, detailing loan terms, risks, and issuer information in comparable format. Mandatory reflection periods prevent impulsive investment decisions and investors receive cooling-off rights before commitments become binding.
ECSP regulation provides structural safeguards, but doesn’t guarantee performance. The framework establishes transparency standards, fund segregation requirements, and operational oversight.
Current Traction and Market Context
The platform’s metrics indicate interest in such services: €70 million in total investment volume, 4,000 active investors across 27 EU countries, and €1.5 million in distributed interest payments.
The 2025 regulatory relaunch signals commitment to compliance-first infrastructure. Afranga also received the Innovative Service Award at the Forbes Innovation Awards 2025, providing third-party recognition within Bulgaria’s developing fintech sector.
The mechanism works through clear role separation: platforms provide infrastructure and oversight, loan originators supply investment opportunities, and investors deploy capital with regulatory protections. Whether this model scales or consolidates depends on factors beyond any single platform – mainly continuous regulations and investor adoption patterns across the asset class.
