Both loans will get you the funds to grow your business, but the
process of securing those funds is very different. The resulting obligation
would likely be very different too.
Different
process
For a bank loan expect to spend most of your time on paperwork
and collecting documentation, then waiting for response. Your personal credit
score would almost certainly be checked.
For a crowdfunded loan, most of your effort will go into finding
the people that will invest in your loan. You would have to spend time
preparing your campaign as well. Your credit score will not be checked, since
your friends and family would be the judge of your credit worthiness, not a
credit algorithm.
Different
obligation
A bank loan is typically secured by assets of the company, or by
personal assets. It is almost always personally guaranteed by the business
owner. A crowdfunded loan is unsecured and without quarantine by the owner. If
you are able to crowdfund a loan, your company will have better financial
flexibility.
Loans for
Start-Ups?
Banks don’t usually lend to start ups, especially if you don’t
have personal or business asset to offer as a collateral. If you have a solid
business idea and people that believe in you, you could raise the money for
your start up even if your only assets are your business plan and your
reputation.
Crowdfunded loans
with benefits
There could be
a number of additional benefits that come with a crowdfunded loan:
·
Customer loyalty. Your customers could be literally “invested”
in your business’ success.
·
“Word of mouth” advertising. Investors are naturally great
advocates for a business.
·
Buzz factor. A crowdfunding campaign may increase visibility and
create buzz about your company in your community.
Where can you crowdfund a loan in
Texas?
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. Lendoor is the only platform that works with start ups and does not require credit check.
