Crowdfunding is a way to raise money, awareness, and support for a project or a business from the people around you. It’s all about how you persuade each individual to give you a small donation or capital for your project or idea.
Crowdfunding allows people with great ideas but lack of financing to raise the money they need to turn their initiatives into reality. In return, the donors and lenders will get rewarded.
There are 4 different types of crowdfunding: (1) rewards-based, (2) donation-based, (3) equity-based and (4) peer-to-peer lending.
So what type of crowdfunding does Funding Societies do?
We are a P2P (peer-to-peer) crowdfunding platform, which some refer to as debt-based crowdfunding. Investors are also called lenders, and they will individually loan some money to a borrower via a peer-to-peer lending platform. Peer-to-peer lending is open to more than one investor as long as the target loan is filled. The peer-to-peer lending platform, as a go-between, will facilitate a borrower with their requested financing. The peer-to-peer lending business model tends to be favorable to SMEs and other small businesses, as the process is fast, simple, accessible, and online based – SMEs often need quick capital. With a P2P loan, an SME can use the funds to grow its business. Meanwhile, an investor gets repayment plus interest over time.