What is Crowdlending?
Crowdlening is funding a small
business loan by getting many people to lend small amount. These could be
customers of the business, neighbors, friends, family or community members.
Earning interest on your investment is even more compelling when you are
helping people and businesses that are important to you.
Crowdlending became possible in
Texas only recently through the implementation of the Texas intrastate
crowdfunding exemption.
Who is it suitable for?
There are two things that you need
to successfully crowdfund a loan: 1) a cash flow generating business (so you
can pay back the loan), and 2) a large network of supporters that you can reach
out to. That could be personal or business connections. Thanks to the new
regulations you can now leverage your network to raise growth capital for your
business, instead of knocking on closed bank doors.
To crowdfund your loan your company
must be registered in Texas. You also can raise money only from Texas
residents.
What does it involve?
If you want to crowdfund in Texas,
you need to follow a few rules.
1.
Pick a portal
You have to set up your crowdfunding
campaign on a Texas registered crowdfunding portal. There are currently only
two registered portals that specialize in debt, and they are quite different:
Lendoor and NextSeed.
2.
Povide information
Your crowdfunding campaign must
contain certain information about your business and about your loan. While all
the regulatory requirements may seem overwhelming, most portals will assist you
with preparing your campaign.
3.
Crowdfund
This is by far the most important
part of the process. The success of your loan is in your own hands, so be
prepared to reach out to everyone you know. If you reach your target amount you
will receive your loan. If not, all the pledges will be returned to investors.
Remember, it is a loan, not a gift! This makes it more likely to fund.
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