Types of Loans Available through Debt Crowdfunding
Posted on April 18, 2014 by Michael Ibberson Updated April 18, 2014
For those familiar only with rewards- and donation-based crowdfunding, the debt crowdfunding process may feel alien. Before listing on a portal, applicants must submit tons of financial and personal information for review. In order to even receive a quote or verify your project’s eligibility, portals must retrieve your credit score and run an identity check, among various other things.
As can be seen, the process is much more complex and requires a great amount of forethought. Repayment periods, interest rates, portal fees, and myriad other details must enter into the equation early on. Those choosing to engage with debt crowdfunding must also be mindful of the economic environment around them. This is particularly true for startups in competitive markets. But putting the specifics aside, crowdfunders should know the types of debt crowdfunding loans available to them.
Types of Debt Crowdfunding Loans
Different portals offer different loan opportunities. Prosper excels at connecting individuals with personal loans for nearly any occasion, including debt consolidation, home improvement, auto, medical/dental, vacation, baby, engagement, taxes, and more. These loans range from $2,000 to $35,000 with an amortization period of three to five years. The interest rates, processing fees, and loan options will change website-to-website, and even country-to-country, so research the market well before listing.
Similar to the personal loans, business loans come in many different forms. For instance, Assetz Capital, one of the UK’s fastest growing peer-to-peer lenders, allows startups to apply to one of three loans: property development, mortgage, or business. Like most other portal offerings, these loans require security and span the course of one to five years. The amount a business may borrow varies as well. Funding Circle, a leading debt crowdfunding portal in the UK, allows businesses to borrow £5,000 to £1,000,000. The fees are often transparent on such portals and right from the home page businesses can see the common lending rates.
As you ponder which type of loan best suits your project, read our past posts on debt crowdfunding investment opportunities and campaign management.
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