Is Crowdlending better for small businesses than Crowdfunding?

2min read Is Crowdlending better for small businesses than Crowdfunding?

Depends. What is the stage of your business?

Crowdfunding may be good for starting a business concept, but Crowdlending is better for growing it. Crowdlending will help you raise more money faster once the market demand is established and the business model is proven.


Why?


Simply put, Crowdlending helps you get a loan, not a gift. You pay back the money with interest rather than provide rewards to supporters.

Let’s take Jenny as an example.

A few years ago, Jenny was the first to offer Italian-style espresso in her community. She put down three months of rent on a tiny space and funded the

purchase a second-hand espresso machine by offering free coffee, cookies, and T-shirts in exchange for donations from the first espresso enthusiasts.

Jenney’s Coffee Shag was a success. The line in the morning grew ever longer.

Jenney decided to expand into Jenny’s Coffee Shop.  But how much more cookies and coffee can anyone eat and drink?

Jenney launches a Crowdlending campaign instead.  She offers to borrow the money, promising to repay it on a schedule and with interest. Now, her friends and customers can help her earn interest on their capital and enjoy a shorter line for their morning espresso. It is a win-win for everyone.

Where can you crowdfund a loan in Texas?

You have to set up your crowdfunding campaign on a Texas-registered crowdfunding portal. Currently, only two registered portals specialize in debt, and they are quite different: Lendoor and NextSeed. The first facilitates term loans, and the latter does revenue-sharing loans.

Read More TEN Capital Eguide: How to Use Crowdfunding in Your Fundraise Here


Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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