Crowdlending

Crowdlending: what is it?

Crowdfunding is a lending operation aimed at SMEs. As with crowdfunding, the lenders are private individuals who have been approached by the general public via an internet platform. Crowdfunding can and quite often is accompanied by institutional loans, such as from banks, which will then offer financing subordinated to the amount obtained via the platform. Crowdlending is therefore a form of participatory financing, which is often concluded in the form of a loan agreement, bond or debenture issue.

Advantages

As with crowdfunding, it can be obtained very quickly, often in just a few minutes. The entrepreneur does not need to offer any guarantees. If investors rush in in large numbers, it will mean that the project is appealing and reassuring. This will also be an advantage when negotiating a subordinated loan with a bank.

For what companies?

This financing is aimed at companies that are at least at the scale up stage in their life cycle, with a clear track record of results. This formula is particularly suitable for companies that are at a more mature stage in their life cycle, seeking funds for their national or international development.

Under what conditions

Companies applying for this type of finance must be able to demonstrate their debt capacity and, above all, their ability to repay. It's important to remember that while loans are less risky than for start ups, they are no less risky, which makes this type of financing expensive.

It is also very important for applicant companies to ensure that the products for which financing is requested are sold with a high enough profit margin to be able to finance the costs of the loan. It is very often necessary to be able to combine financing between crowdlending and banking, which reduces the cost of financing.