Crowdfunding, crowdlending or peer-to-peer lending is a way for you to raise finance by tapping into the ‘crowd’ and asking for their financial support.
Crowdfunding came about in response to the onset of the credit crunch when banks become reluctant to lend to businesses. The crowdfunding platforms realised there were individuals (the “crowd”) looking for better returns on their money and businesses looking for finance, so why not bring the two parties together? And so crowdfunding was born.
You can sell shares in your business via euqity crowdfunding platforms or obtain a more tradtional loan via crowdlending/peer-to-peer lending platforms where you borrow and pay back over an agreed period of time.
Their attraction lies in the speed within which money can be accessed. You could have money in your bank account anywhere from one week to three weeks from application.
Crowdfunding has a number of benefits over traditional sources of finance:
– Typically no lengthy business plans are required
– Speed in accessing finance; it can take anywhere from 1 weeks to three weeks
– In the majority of cases security to back-up the loan is simply a Personal Guarantee if you are operating via a Limited Company
You can raise finance to utilise in your business for a large variety of reasons from boosting working capital to the purchase of machinery and equipment.
The majority of crowdfunding platforms will only deal with Limited Companies which have been trading for two years or more. Some crowdfunding platforms have broken ranks by including sole traders and partnerships.
To find out more simply send us an email via the Contact Us box at the foot of this page or call us on 08456 809 728