Business Funding: Crowdfunding Vs. Peer-to-Peer Lending

[Mika]

There are different ways to raise funds for your business and Crowdfunding and Peer-to-Peer Lending are two common methods. Crowdfunding and Peer-to-Peer are some of the easiest ways to raise funds for your new or existing business. Actually, these are great options to start small and medium enterprises if you do not have money.

In crowdfunding, the crowd will donate to your campaign, in other words, you start a campaign on a crowdfunding platform, and raise funds by asking for donations from the public.

Peer-to-Peer Lending means you get a loan from the public. You create a campaign on the lending platform, ask the users to give you a loan and you promise to pay the loan along with certain monthly interest in a certain time frame.

The basic difference between Crowdfunding and Peer-to-Peer Lending is while crowdfunding does not require you to necessarily pay back the money you raise, Peer-to-Peer Lending means you will have to pay back the money along with interest rate.

 

[Jasmine]

Crowdfunding is a donation, where as Peer-to-Peer Lending means loan. Donation means you do not have to pay back, you can keep it all, all you need to do is you show your donors that the funds have been used in the best possible way. Loan means you will have to payback the principal amount along with the interest. Most of the Peer-to-Peer Lending sites are based on the United States and Europe, these sites are available world wide if you want to lend money, however, in order to borrow money you need to be either based in the US and Canada or few European countries like the UK Australian, etc. Even if you happen to be in these countries, it is not easy to borrow, you will have to fulfill so many borrowing conditions. However, it you want to make money, you can become a lender and earn passive money.

 

[niche]

People who are good at marketing their business find it easier to get the funds they require using crowdfunding. Has any member of this forum lent money to the peer to peer lending websites? If yes, what is the interest rate they offer to the lenders, and when is the money repaid? In some countries lenders have to upload personal documents, so some do not use these websites to avoid the risk.