Crowdlending: Individuals lend to businesses.
Henceforth, traditional banks no longer have the monopoly of business loans in France. In recent years, the new crowdfunding methods of crowdfunding have been on the rise, thanks in particular to online fundraising platforms. Thus, according to the Association Financement participatif en France, project funding funds doubled in France in one year. An increase due in part to the success of the campaigns on the sites of crowdlending. Back on a financing mode 2.0…
How does crowdfunding work through the loan?
You previously knew crowdfunding, this technique of financing projects online, you will now know the crowdlending.
This new version of crowdfunding allows an individual, through an application decree in force since October 1, 2014, to lend directly to businesses with interest. The repayment of invested funds is not guaranteed, but the interest will vary according to the degree of risk: they can go from 4% up to 10% per year.
The principle is simple: a project leader is registered on a platform dedicated to crowdlending, and submits his project to the greatest number of people in order to raise funds. In general, the amounts invested are of minor importance.
The advantages and disadvantages
If crowdfunding figures soar throughout the French territory, with a fundraising estimated at 66.4 million USD in September 2013-2014, crowdlending platforms are not left out. Of the sums collected in the crowdfunding sector, nearly 37.4 million can be attributed to this type of platform. A success far superior to crowdinvesting campaigns, whose principle is more risky.
For the borrowing company
The main advantage is to be less dependent on banks by borrowing elsewhere. Then fundraising is often faster than the traditional banking system. Finally the loans are made without personal guarantee, which represents a sacred advantage for a contractor.
On the other hand, the rates are between 4% and 10% for durations of less than 5 years. These rates are therefore much higher than the rates offered by the bankers.
For individual lenders
The rates offered to individuals are generally between 4% and 10%, which represents a much higher remuneration than a classic booklet, even after taxes and social security contributions.
However, the investment is risky because no guarantee is required from the borrower.
Nevertheless, this success can be attributed to the deeply “safe” nature of business lending, which makes it possible, through the rigorous selection of companies (most of which have been in existence for more than two years), to guarantee the reimbursement of costs placed in a company. majority of cases. Some sites also make it possible to directly support a project, or to automatically allocate a sum of money to a group of borrowers.