Crowdlending involves investors (lenders) lending small sums of money directly to a large number of borrowers. Crowdlending platforms are in effect online account systems performing some functions similar to those performed by banks. These include marketing to lenders and borrowers, risk assessment and underwriting, payments, and recovery procedures in case of default. Today we will talk about how and where to get crowdfunding for your business.
Think Like an Investor
A research conducted by FundingKnight in the UK reveals that investors have some common traits. Most importantly, they are keen on securing good returns from their investments. In particular, the research found that 82 percent of those interviewed and confessed to having invested or would consider investing through crowdlending were either business leaders or had aspirations of running their own businesses. They were applying their own business knowledge or experience in deciding to invest. Additionally, the research showed that some investors were investing because of their love for the community and the desire to give back by investing in a UK Plc. 41 percent said that they would only invest in a business run by a person they can trust.
When applying for funding, you need to have in mind that many of your prospective investors may have previously been in your position or are currently running their own businesses. They will definitely want to feel that they are making a valuable contribution into a worthwhile, exciting and profitable venture. You will therefore need to showcase everything that makes your company worth investing in.
Prepare a Great Business Plan
When considering your initial application for funding, crowdlending platforms will review your business plan, financial information and other details about your company. In other words, the platforms will review your company’s financial information as well as your personal information in much the same way as banks will do before offering you a loan. Therefore, it is imperative to ensure that your business plan is engaging, comprehensive and well thought out.
Build a Great Profile
Investors will usually seek to get more information about you and your business from social networks like Facebook, Twitter and LinkedIn. It will serve you well to ensure that you have an online presence before you seek for funds through crowdlending. Similarly, you should ensure that you have a well-structured website with information that is consistent with what you submit together with your application. You can increase your online visibility by installing google analytics and using other search engine optimization techniques.
Consider Networks and Community
Going by the FundingKnight research, most UK investors have a love for the community and would want to give back to some UK SME to ensure its prosperity. Crowdlending platforms are in effect online communities where investors can look for business opportunities. Indeed, the essence of a successful crowdlending platform is to bring together like-minded investors and businesses with investment needs. For this reason, it helps to view your business as a member of a network and not just an individual enterprise seeking funds.
Some of the popular crowdlending companies/websites you may be interested in are Prosper, Lending Club, Endurance Lending Network, Funding Circle, Lendico, AuxMoney, Modalku, and Crowdlending.com.