The Basics


What is Vault Circle Inc.? How does Vault Circle Inc. work?

Vault Circle Inc. (“Vault Circle”) provides Canadian investors in Ontario and British Columbia with access to Lendified Investor Notes (“Investor Notes”) issued by Lendified Inc. (“Lendified”), which is an affiliate of Vault Circle. Vault Circle operates under an Exempt Market Dealer (“EMD”) license and has created an investor marketplace that allows accredited investors to invest directly in Lendified small business loans. Currently, Vault Circle is registered in Ontario and British Columbia and the Investor Notes are available to accredited investors in these provinces.

What is Lendified Inc.? How does Lendified Inc. work?

Lendified is a premier provider of working capital loans to small businesses in Canada. Here’s how it works:

⦁ Customers interested in a business loan complete an application on Lendified’s website via

⦁ Based on the information provided, Lendified evaluates it and through its leading-edge technology and proprietary algorithms, determines an interest rate and presents a loan offer to the qualified borrower.

⦁ Applications are approved based on Lendified’s proprietary LendScore method, which aggregates and analyzes thousands of data elements and attributes related to a business, the business owners, its industry and key markets – all of the factors that impact credit performance and the majority of applicants do not receive a loan.

⦁ As an EMD, Vault Circle converts those loans into Investor Notes on a reoccurring basis for accredited Canadian investors.

⦁ Investors, ranging from individuals to institutions, can invest in the current series of Investor Notes and earn monthly returns.

How does Vault Circle make money?

Vault Circle will act as the “Collateral Agent” on behalf of the holders of Investor Notes (“Noteholders”). A collateral agent is the secured party for any registrations that are made from time to time in order to manage the general security interest granted pursuant to the Loan Agreements and to represent the interests of the Noteholders. Lendified shall provide the Collateral Agent with the compensation as agreed upon between Lendified and the Collateral Agent.

Fund Transfers


What is the minimum amount of money I can invest in Notes?

$100,000 is the minimum initial investment required to fund your Lendified Investor Note Program account.

How long does it take for my funds to transfer into my Lendified Investor Note Program account?

Transferring funds from a confirmed linked bank account will up to 5 business days to be deposited into your Lendified Investor Note Program account.

Where are my funds held?

Your funds that have not been invested yet are held in trust at a Canadian Chartered Bank, so you can rest assured that your money is safely stored.

Investing Mechanics


How do I pick which Investor Notes to invest in?

After the Vault Circle team has ensured you are suitable to invest in Lendified Investor Notes according to your investment needs and objectives, financial circumstances and risk tolerance, you are able to view the available Investor Notes on our website. Vault Circle will offer monthly and/or quarterly series of the Investor Notes on a continuous basis, and each series may vary by term and rate. Each series of Investor Notes is back-stopped by a portfolio of small business loans.

Vault Circle does not offer investment advice. Please consult a financial advisor if you have any questions or need additional information.

Am I investing in the loan of a single borrower?

No, Vault Circle packages a group of loans in the form of Lendified Investor Notes according to a variety of factors, including risk tolerance, loan amount, and industry.

How often do I get payments and when do I get all of my money back?

Payments of principal and interest on each loan are due from borrowers on a bi-weekly basis. The cash received by Lendified from these bi-weekly payments is collected in the Lendified Investor Note Program account and interest is disbursed to investors accounts on a monthly basis. Investor Notes are fixed on a term and at an annualized interest rate. Principal is available to each investor at the maturity of the Investor Note.

How do I exit my investment?

The solid returns, monthly cash flow, and low volatility of Investor Notes come with less liquidity relative to other asset classes. Currently, Investor Notes mature one year from the date the Investor Note was issued, and investors should be prepared to hold any Investor Notes through to its maturity. Investors may withdraw available cash at maturity through a money transfer to their bank account or through other means.

Borrowers & Underwriting


How does Lendified set interest rates?

Lendified, a premier provider of working capital loans to small businesses in Canada, assigns a LendScore (credit grade), and an interest rate to every approved loan. Lendified’s interest rates increase for each risk band ranging from A+ to C-. For example, an A+ LendScore loan has a lower interest rate than a C LendScore loan, reflecting the lower expected losses and lower expected volatility of returns associated with A+ loans. Similarly, a C- LendScore loan has a higher interest rate than a B LendScore loan, reflecting the higher expected losses and higher expected volatility of returns.

Returns, Performance, & Taxes


How do we measure returns?

Vault Circle calculates Net Annualized Return (NAR) for investors and displays it on their Investor Portal. We calculate and display NAR to provide investors an annualized measure of returns on their Investor Notes that may be useful in evaluating the performance of their portfolio.

How is this taxed?

Interest and other payments received in your Lendified Investor Note Program account are generally taxable as regular income. Vault Circle does not provide tax advice and recommends that you consult your financial or tax advisor if you have any questions or need additional information.

Is my money insured?

Vault Circle is not a bank and does not take and hold deposits. All cash balances reflected in your Lendified Investor Note Program account (e.g., funds not invested in the Lendified Investor Note Program) are held at Canadian Chartered Bank, a CDIC member banking institution, in a pooled bank account titled in our name "in trust for" investors. The account is CDIC-insured on a "pass through" basis to the individual investors, subject to applicable limits. This means that your Lendified Investor Note Program account cash balance is covered by CDIC insurance, up to the limits established by the CDIC.

Lendified Investor Notes are not guaranteed or insured.

Delinquencies & Defaults


What happens when a borrower misses a payment?

As a Vault Circle investor, when a loan in the Lendified Investor Note Program goes into default, it will be replaced by Lendified from the bucket of loans that are back-stopping the investment within 90 days.

Delinquencies are a natural component of small business lending and we are prepared for some borrowers to miss loan payments. When borrowers miss a loan payment, Lendified makes reasonable efforts to collect outstanding payments and bring the loan back to "current" status. The collections process in general is highly regulated and our third-party collection agency will take action to collect payments from delinquent borrowers in accordance with federal, provincial, and municipal laws related to collections activities.

What is the general risk involved when investing in products offered by Vault Circle?

Investing in Lendified Investor Notes involves investing risks, including Lendified business risk and the credit risk that borrowers will not repay their loans. Lendified’s business risk refers to the risk associated with Lendified being the specific issuer of the Investor Notes. Generally speaking, the business risk refers to the possibility that the Lendified as issuer of the Investor Notes may go bankrupt. If this was to happen, then the mechanism to replace any delinquent loans in the Investor Note program would discontinue. In this scenario, investors could sustain losses if the underlying loans that make up the investor note go delinquent as the obligation to make payments on Investor Notes is dependent upon borrowers paying Lendified on the corresponding loans.

Vault Circle has taken steps to protect investors in the event that Lendified were to go out of business or if their services were disrupted with a wind-down strategy.

The risks of investing mean that investors may lose all or most of their investment. Before purchasing any of our Notes, you should carefully read our Investment Profile which provides information about the risks of investing in our Notes. The Notes are not guaranteed or insured by any governmental agency or instrumentality or any third party.

Exempt Market Dealers


What does it mean to be an Exempt Market Dealer (EMD) in Canada?

Exempt Market Dealers (“EMD”) are exempt market securities dealers registered under provincial securities legislation in one or more jurisdictions in Canada. The regulatory framework for EMDs is set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations which applies in every jurisdiction across Canada.

EMDs may act in two primary capacities in the capital markets:
⦁ As a dealer or underwriter for any securities which are prospectus exempt, or
⦁ As a dealer for any securities, including investment funds which are prospectus qualified (mutual funds) or prospectus exempt (pooled funds), provided they are sold to clients who qualify for the purchase of exempt securities. The qualification criteria for exempt purchasers and exempt securities are found in National Instrument 45-106 Prospectus and Registration Exemptions.

Can anyone invest in the Exempt Market?

Currently, you can only invest in Lendified’s Investor Notes, issued by Vault Circle, if you are "eligible" according to the accredited investor qualifications outlined by the Ontario Securities Commission (“OSC”) in National Instrument 45-106 – Prospectus and Registration Exemptions (“NI 45-106”). Below Vault Circle has provided the definition of Accredited Investor. Accredited Investors can be corporations, institutions, and individuals. Individuals please focus your attention on numbers 10, 11, 12, and 13. ⦁ A Canadian financial institution, or a Schedule III bank, ⦁ The Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada), ⦁ A subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting Securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary; ⦁ A person registered under the securities legislation of a jurisdiction as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador), ⦁ An individual registered or formerly registered under the securities legislation of a jurisdiction as a representative of a person referred to in paragraph (d), ⦁ The Government of Canada or a jurisdiction, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction, ⦁ A municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec, ⦁ Any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government, ⦁ A pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada, ⦁ An individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000, ⦁ An individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year, ⦁ An individual who, either alone or with a spouse, has net assets of at least $5,000,000, ⦁ A person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements ⦁ An investment fund that distributes or has distributed its securities only to ⦁ A person that is or was an accredited investor at the time of the distribution, ⦁ A person that acquires or acquired securities with an aggregate value of not less than $150,000 under certain minimum purchase or additional investment exemptions specified in sections 2.10 and 2.19 of NI 45-106 or their equivalents under securities legislation of an applicable jurisdiction as specified in sections 8.1 and 8.2 of the NI 45-106, or ⦁ A person described in paragraph (i) or (ii) that acquires or acquired securities under the investment fund reinvestment exemption specified in section 2.18 of the NI 45-106, ⦁ An investment fund that distributes or has distributed securities under a prospectus in a jurisdiction for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt, ⦁ A trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be, ⦁ A person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction [Note: this is not available in Ontario], ⦁ A registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded, ⦁ An entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function ⦁ A person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors ⦁ An investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; or ⦁ A person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as ⦁ An accredited investor, or ⦁ An exempt purchaser in Alberta or British Columbia after September 14, 2005.