Crowd Funding – The New Lending System Crowdfunding is a phenomenon that is currently sweeping the business world. In simple terms it is the ability to ask for small sums from many independent lenders rather than vast sums from very few. Thousands of people and businesses across the UK alone are saying goodbye to traditional forms of bank lending to embrace this new source of funding, drawn, we think, by its low risk access to money and ‘community’ element. At wood and disney we are strong advocates of Crowdfunding, to the point where we are Intermediaries for the group Funding Circle. This simply means that if we deal with finance for a client we are able to act as the middle men and women for them, to find the most cost effective and low risk strategies available. With £447 million already having been lent through the group, we are confident of Funding Circle’s ability to deliver. What makes Crowdfunding really unique is the way it taps into our modern perception of community. No longer is networking or ‘local’ confined to what is nearby. Through Social Media we now have access to a global online market and crowdfunding taps into this magnificently. It is in certain circles described as ‘Democratic Finance’, which we think is a fairly accurate description. It sources ‘community’ from generosity, allowing you as the lender to show your support for a venture continents away, and as the borrower access funds that would otherwise prove impossible, or incredibly difficult, to find. The benefits for both sides are numerous. For the borrower it is fast, simple finance, with the lowest interest rate from each lender. In effect it is all the benefits of an infamous ‘Pay-Day Loan’ without the nauseating television adverts and crippling subsequent debt. For lenders there is a similarly small risk factor as you spread your investments and even the chance to make a great return too, in the region of 7.4% per year. What Crowdfunding does is that it takes banks out of the equation, with groups like Funding Circle connecting people with organisations in need of cash to those with the ability and the drive to provide it. It is a simple premise that works in practice. In many ways it is similar to how a football club used to be run. You asked a crowd of people to give a small amount of money to a cause they felt strongly about, in this case the team. The accumulated funds could then be used to pay player wages and fund transfers, meaning the lender/fan’s reward should, in theory, be entertainment and a better brand of football in return. As a metaphor that may well be stretching it, especially in the modern era of Russian Oligarchs and Saudi Princes, but hopefully you get the idea. We believe in Crowdfunding and its ability to give businesses a chance to shine. If you are looking to access lending then get in touch with us today for the rundown on how we think Crowdfunding can serve you.
Posted on: Thu, 11 Dec 2014 12:11:38 +0000
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