Archive | July, 2014

Is Crowdfunding for you?

23 Jul

Again, today, some banks have tightened their qualifying criteria for loans and mortgages. Santander have changed the way they offer a loan from 3 choices – depending on credit history – to one offer for all. This has particularly affected those with good credit histories by reducing the overall amount they can borrow.

Crowdfunding works by bringing together investors and borrowers in a controlled environment. Investors can earn better returns than through a bank with risk spread among many like minded investors. For example, a borrower wants a personal loan of £1000. 100 investors would put up £10 each. So if the investor has £1000 to invest they would have 100 loans at £10 each.

Borrowers can obtain funding for a variety of reasons with a less stringent crterian than a bank. It doesn’t mean a loan is given to just anyone. The borrower still needs to demonstrate the ability and integrity to repay the loan.

There are many crowdfunding platforms available ranging from a small personal loan to high value business deals. Investments can be made from as little as £10 to a million pound plus. Terms range from one month to 25 years. Interest rates vary from around 3% net to 15%.

So, regardless of how much money you want to borrow or invest there is a crowdfunding platform suitable for you.