As an investor on a local currency loan, just as with a euro loan or dollar loan, you basically run the entrepreneur's entire credit risk. If the entrepreneur cannot pay the interest and/or repayment owed by him, the investor will not receive the expected interest and/or repayment either. However, this credit risk is in principle lower than with a euro loan or dollar loan. Since the entrepreneur is not exposed to exchange rate risk on loan, there is less risk of not being able to repay the loan because of a drop in the local currency's value.
Investing in a local currency loan does not expose you to direct currency risk; you get the euros you invest paid back in euros, with the corresponding interest in euros, as long as the entrepreneur pays back his loan.
Suppose, however, that TCX terminates the currency hedge contract between the Lendahand FX Foundation and TCX for valid reasons. In that case, the outstanding amount of the loan will be converted into a euro loan at the exchange rate at that time. The entrepreneur will then be exposed to currency risk on the euro loan from that moment on, and in principle, that means more credit risk for the investor.
The currency hedge contract with TCX covers the currency risk for the entrepreneur and investor; therefore, if TCX cannot meet its obligations under that contract, it could result in a loss for you as an investor.