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How to qualify for Crowdfunding Alternatives

Published on 15th May 2018 - Last update on 8th January 2019

If you’re an aspiring entrepreneur wanting to turn an idea into a successful business venture, the number one question on your mind no doubt involves the matter of funding. As such you’ve probably considered applying for either Investment Crowdfunding or Loan-based Crowdfunding (Peer-to-Peer Lending). Although these are both useful ways of raising external funds, there may be more favourable alternatives to be found elsewhere. So if you’re not keen giving away shares in your business or are looking for a finance solution that better fits your business, then why not apply for a Crowdfunding Alternative instead? Describing a number of different business finance products, such as Business Loans, Merchant Cash Advance, Invoice Factoring and Invoice Discounting, here’s what you need in order to qualify for a Crowdfunding Alternative.

Will I need to present collateral?

This depends on the type of product you’re considering. If you’re using a product that’s Secured, you will need to present collateral in the form of unencumbered assets, for example, equipment, machinery, vehicles or property. However, Invoice Financing products are an exception to this as they typically use the money tied up inside the concerned Business-to-Business (B2B) invoice as security. Meanwhile, Unsecured finance solutions don’t require you to present collateral. However, on account of the increased risk to the lender, they usually possess stricter entry requirements and larger interest rates. Therefore, before making your mind up about using either a Secured or Unsecured agreement, you need to think about whether you have sufficient business assets available, and what would happen if your business were to become unable to keep up with the repayment scheme?

What documents will I need to provide?

When applying for a Crowdfunding Alternative, you may be asked to provide a number of documents depending on your chosen finance solution. Along with proof of identity, you could be asked to provide any of the following:

  • recent and past bank statements,
  • sales reports,
  • turnover reports,
  • profit and loss statements
  • inventory reports
  • collateral documentation
  • Business-to-Business (B2B) invoices (worth in excess of £5,000)
  • Standard Industrial Classification (SIC) for your sector

This should all be outlined in the documents provided to you by the lender. So in order to ensure that the application process runs as smoothly as possible, get all the necessary documents ready beforehand, minimising the need for the lender to chase you up and waste precious time.

Have you got an idea you want to turn into a thriving business venture? Got the team but lack the funds? Apply a Crowdfunding Alternative or learn more about how your business could benefit.

How much attention will be given to my credit profile?

Being an early stage startup, this is where exploring your Crowdfunding Alternatives can prove invaluable. Because of the variety of products that are available, the amount of attention that’s given to your Credit Profile tends to vary considerably from product to product. So, although lenders will usually ask to see both your personal and business credit profile, possessing a less than perfect credit rating won’t always be used against you. So whilst unsecured products generally pay close attention to your credit score (Merchant Cash Advance being the exception), other products tend to focus on other areas of your business such as your credit and debit card sales, B2B invoices or the amount of equity stored inside your unencumbered assets. But, although an adverse credit rating may not always lead to rejection, it will, however, affect how interest you’ll be charged throughout the course of the agreement.

Could your business benefit for a Crowdfunding Alternative?

During the early stages of your business, gaining access to the funds you need to succeed can be a frustrating ordeal. Although Crowdfunding can be a useful way of raising funds, forming a convincing pitch can be difficult, with no guarantee of success. So rather than wasting precious time, and maybe giving away equity in the process, choosing to explore the alternatives to crowdfunding could be a wise move. Covering a wide range of business finance solutions that all work in different ways, the only challenge you then need to overcome is sourcing a suitable agreement. Fortunately, we’ve already done the hard work for you. So if you’re looking to take your business to next level but lack the necessary funds to do so, apply for a Crowdfunding Alternative today or find out more with Rangewell.

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David Harrison

David Harrison

Content writer