Your bank will lend most of the money for your next project, but rarely all of it. When your own money is still tied up in the last project, many developers turn to private investors: buyers of earlier flats, local business owners, friends of the company.

That usually means choosing between three tools: a subordinated loan, a bond or a participation right. They sound alike, but they cost you very different amounts when a project runs late, and they come with different rules on who you may sell them to.

Why does a property project need money beyond the bank?

The money between the bank loan and your own equity is often called mezzanine capital: it is paid back after the bank, but before you.

That gap has grown. In its July 2026 survey, the Bundesbank found German banks had tightened lending to companies again, with real estate among the sectors hit hardest.

Take one example through this guide. You are building 24 flats for €10 million. The bank lends €7 million, you put in €1 million, and €2 million is missing. The numbers are made up.

What are a subordinated loan, a bond and a participation right?

All three let people invest in your real estate project without becoming co-owners.

A subordinated loan (Nachrangdarlehen) is paid back last: if the project fails, the bank, the tax office and suppliers come first. Most German subordinated loans add a pause clause, which lawyers call qualified subordination: if paying investors would make your company insolvent, you may wait.

A bond is a loan cut into small, equal pieces that investors can buy and sell. Each pays fixed interest, called a coupon, on fixed dates. Bondholders are paid before subordinated lenders, and a secured bond gives them a claim on the building itself.

A participation right (Genussrecht) gives investors a share of your profit, and usually of your losses, but no vote. German company law barely mentions it, so your contract sets almost all the details.

Which one costs you least if the project runs late?

In property, something usually goes wrong: a permit takes longer, a buyer pulls out, sales start three months late.

Say you pay investors 7% a year on the €2 million, a rate picked for the arithmetic. With a bond, you owe €140,000 a year on fixed dates whether the flats have sold or not, and a missed date lets investors demand their money back. A subordinated loan costs the same, but the pause clause lets you wait if paying would make you insolvent. A participation right pays out of profit, so a slow year means a smaller payout rather than a missed one.

That flexibility has a price: investors carrying more risk usually want a higher return, and in Germany some participation right payouts cannot be deducted for tax.

Can you raise the money directly from your own investors?

In Germany, yes, with a bond. Since February 2026, a company may sell its own bonds directly to private investors, without a bank or broker. Since 5 June 2026, the EU Listing Act lets you offer bonds up to €12 million a year without a prospectus, the long official document a regulator checks before you sell to the public. Instead, you need a three-page securities information sheet (Wertpapier-Informationsblatt), approved by BaFin, Germany's financial regulator, with no limit per investor.

Subordinated loans and participation rights are national investment products (Vermögensanlagen), not securities. Without a prospectus, they can only be offered through a licensed crowdfunding platform, up to €6 million a year shared between them, with €1,000 to €25,000 per private investor.

For our €2 million, that decides it. A bond can go on your own website to the people who bought your last flats, with any ticket size. A subordinated loan needs a platform, its fee and its caps, which is why a bond is often the better choice today.

Selling only to professional investors, to fewer than 150 private investors per country, or in tickets of at least €100,000 needs no prospectus anywhere in the EU.

What if your investors live in other EU countries?

A German information sheet only works in Germany. For several EU countries at once, the main route is a crowdfunding platform licensed under the EU crowdfunding rules. It can offer a bond or simple loan everywhere in the EU up to €5 million a year, with one six-page key investment information sheet that no regulator approves.

The pause clause matters here: the prevailing legal view is that EU crowdfunding rules don't cover such loans, though no EU authority has confirmed it.

Between €5 million and €12 million, a bond can still skip the prospectus, one country at a time; as of October 2026, none of the larger markets had lowered the €12 million line. Each country has its own short document: in Germany and Austria the regulator approves it, in the Netherlands and Luxembourg it is only informed, in France the document is filed, and Italy and Spain ask for none (checked 16 October 2026).

Two counting rules apply. The €12 million counts across the whole EU, not per country. And a bond sold without a prospectus also counts towards the €5 million crowdfunding limit.

How long does it take, and what does it cost?

In Germany, BaFin charges €5,923 for a bond's information sheet, €805 for the sheet for subordinated loans and participation rights, and €16,915 for a full prospectus; the crowdfunding fact sheet is free. Each review takes 10 working days (fees, timings). For our €2 million bond, that is about 0.3% of the raise. Most of the cost is the lawyer who drafts the terms and, on a platform, the platform's fee.

What can go wrong?

Creating a fund by accident. Collecting investor money for property under a fixed written investment plan can make you an investment fund, which needs a licensed manager. EU guidance treats building property as normal business, so developers are fine; buy-and-let companies should check.

Skipping the document. In March 2026, BaFin stopped Afrika Emissions 7 UG from selling subordinated loans without an approved fact sheet. The loan was legal; the missing document was not.

Creating a security without noticing. Issued as a freely tradable digital token, a subordinated loan or participation right can fall under the bond rules. Choose that with your lawyer.

So which one should you choose?

Size alone rarely decides. In ONINO's own real estate pipeline, which includes many mid-sized developers that banks overlook, participation rights show up in small and large raises alike.

Three questions usually settle it. We call them the 3-Question Instrument Check:

1. Can you pay fixed interest on time, every time? If yes, a bond works. If income depends on sales dates, a participation right or subordinated loan is gentler.

2. How much debt does the project already carry? A large bank loan favours money that shares losses; a building you can pledge favours a bond.

3. Where do your investors live? One country opens the national routes; several point to a crowdfunding platform below €5 million or a prospectus above €12 million.

For our developer, with €2 million to raise from local buyers and a sales plan that can carry fixed interest, that means a bond. Whatever you choose, publish the required document before you start selling.

Raising directly from your own customers and network is called self-issuance, or direct placement. ONINO is a software provider: with its white-label platform for direct placements you run the investor page, identity checks, subscriptions and interest payments under your own brand. ONINO holds no financial-services licence of its own. Licensed tasks, such as keeping the investor register and handling payments, sit with pre-integrated licensed partners, and any permission your offer needs sits with you as the issuer. To check which tool fits your next project, book a call with our team.

Keep reading: our comparison of white-label tokenization platforms in the EU and our guide to EU crowdfunding, national and prospectus routes.