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Why you should consider using Crowdfunding Alternatives?

Published on 6th June 2019 - Last update on 7th June 2019

One of the most exciting and challenging aspects of running your own business is growing it! But in order for any of your short- and long-term goals to come to fruition, you need access to the necessary funds. That’s why, during the early stages of your business’ development, you may consider applying for Loan-Based Crowdfunding (Peer-to-Peer Lending) or Investment Crowdfunding. Although these options are useful for anyone seeking to raise capital from external investors, there are drawbacks that can make them unsuitable for your business’ needs. However, there are other business finance solutions available. All you need to do is decide which product to apply for. If you’re a start-up or an SME owner looking for more ways to raise capital for your business, some of the reasons why you may want to consider exploring your Crowdfunding Alternatives include:

  • Access to a range of finance solutions
  • Access to larger sums
  • Maintain control over your business
  • No need to disclose sensitive information
  • Suitable for a range of financial situations
  • Access to a range of terms

Crowdfunding Alternatives - what's available?

If you’re looking for funding opportunities beyond crowdfunding, there are plenty of other fiances solutions available to your business. As well as Secured Business Loans, you could apply for anything from Merchant Cash Advance, Revenue Advance to Invoice Financing. Each of these products operates and provides funds in different ways to benefit your business, so you must ensure that you’re fully aware of how they work before submitting any applications. Nevertheless, having access to these products could allow you to receive the funds you need in a manner that takes into account how your business operates.

Do you have a business project that needs funding? Don’t wish to release equity in your business to 3rd party investors? Apply for a Crowdfunding Alternative or learn more about how your business could benefit

How much funding could my business receive?

Although there’s no limit to how much money you could raise through crowdfunding, the money that you do receive is based entirely upon how much interest and confidence you can inspire in 3rd party investors. As such, if you’re unable to convince lenders or you need access to a large amount, crowdfunding may not be able to provide the support that your business needs. But thanks to the array of Crowdfunding Alternatives that are available, you could receive funds based on factors such as your past Income, monthly credit and debit card sales and even unpaid invoices. So if you need access to large amounts of cash or your previous attempt at crowdfunding was unsuccessful, choosing to explore what Crowdfunding Alternatives are on offer could provide you with a suitable finance solution for your business.

Will I need to give up shares in my business?

For some business owners, Investment Crowdfunding can be a useful way of raising external funds on the back of 3rd party investors. However, in exchange for these funds, you’ll need to give away shares (equity) in your business, which will be based upon the number of investors and how much they each chose to invest. The risk that this presents is that you could lose control over your business, jeopardising your ability to pursue your vision and seize upon vital opportunities. But thanks to Crowdfunding Alternatives, you don’t need to give away shares. Lenders only seek to earn a return on their investment through interest, or any additional costs and fees specific to the particular product. So as soon as any Crowdfunding Alternative product that you’ve applied for has been fully repaid, that’s it.

Will I need to disclose sensitive information about my business?

With crowdfunding, you need to appeal directly to 3rd party investors through an online platform, often by releasing video demonstrations and holding question and answer sessions. This gives investors the ability to review the viability of your business or products and ask questions. However, this can lead to them requesting sensitive information about your business that you may not wish to divulge online. But when applying for a Crowdfunding Alternative, you only need to provide information that’s to the application process. Plus, any information that you do provide to the lender is kept strictly confidential. So if you’ve got an idea that you want to keep away from your competitors, applying for a Crowdfunding Alternative could offer you greater security and peace of mind.

Could my business qualify even with adverse credit?

What makes Crowdfunding Alternatives so useful for start-ups and small businesses is that you could find an appropriate finance solution, even if you have Adverse Credit. This is because lenders may choose to make decisions based on other factors such as your past income and whether or not you’re providing collateral. Nevertheless, even though lenders won’t always use it against you, they will usually request permission to review your personal and business credit profile. This allows them to form a comprehensive understanding of how well you and your business are performing financially and to decide how much interest to apply.

As such, they may incorporate into their checks whether you have CCJs, Accelerated Payment Notices, arrears, unpaid debt (eg. credit card debt) and your history of paying debt on time.

If there are any issues, they may affect the strength of your credit score and, if you have a weak credit score, you are likely to pay more interest in the agreement - and vice versa if you possess a good credit score. If you’re interested in learning more about how your credit score may affect your application you can read more on the topic here.

How long can Crowdfunding Alternatives last for?

With Investment Crowdfunding you can only borrow funds from 3rd party investors and on a short-term basis, which typically lasts up to a year. This may not be suitable if you need to borrow a large lump sum and wish to spread out the repayments over a longer term. However, by choosing to explore your Crowdfunding Alternatives you can gain access to a wide range of business finance solutions that can be either short-term or long-term solutions. So, no matter how much funding your business requires or how long you need it for, you could find a suitable Crowdfunding Alternative to suit your needs.

Could you benefit from a Crowdfunding Alternative?

Although ensuring reliable growth, innovation and sustainability are all vital aspects of running a business, achieving this isn’t always easy or straightforward. This is especially true if you're a start-up or a developing SME working to a tight budget. Although crowdfunding can be useful, raising a large amount of funding can prove challenging and you may need to surrender shares in your business to 3rd party investors. That’s why more and more UK entrepreneurs are choosing to explore Crowdfunding Alternatives. But with so many business finance solutions to choose from, how can you be certain you’re applying for a suitable product for your business? If you’ve got a project you want to get off the ground but need help gaining access to the necessary funds, why not apply for a Crowdfunding Alternative today or find out more with Rangewell?

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David Harrison

David Harrison

Content writer
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