The Way That We Borrow Money Is Changing

| June 30, 2017 | 0 Comments

Traditional lending streams for businesses are changing. It used to be that a new business would put together a pitch and then take it to the bank or show it to investors. That made it fairly difficult for some people to get a loan because people weren’t willing to take a chance on them. It can also be difficult if your financial past isn’t brilliant, especially if you’re trying to start a new business in later life. Fortunately, the world is changing and the internet has given rise to lots of new lending streams that are helping more and more businesses get started. If you’re struggling to get money from a traditional lending source, try some of these ideas.

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Crowdfunding

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Crowdfunding is one of the biggest online lending trends of the past few years. The first major site to start doing it was Kickstarter. The general idea is that a company puts their business idea online with a financial goal that they want to reach and anybody that likes the idea can donate an amount. Because the amounts that are donated are so small, anybody can be involved. Instead of trying to convince one investor to part with a significant amount of money, you can ask thousands of people to give up a few dollars each. Some of the biggest companies have been started by crowdfunding like Elevation Lab, the Iphone accessory company. Thousands of business have found huge success through crowdfunding but there is a lot of competition out there now as everybody is trying to get themselves noticed so you won’t get very far if you don’t have a unique idea.

 

Online Loans

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In the last few years, online loans have started to take over bank loans because they are often easier to get and more flexible with repayments. Places like signature loans online can give you loans without having to go through extensive credit checks like you would at the bank. The problem with bank loans is that if you have financial trouble, that bad credit is quite hard to get rid of, even when you are stable again. These online loan services are more willing to lend people money as long as they are in a stable position now.

Funding Circles

Funding circles are like a halfway point between crowdfunding and a standard bank loan. These sites help put together people that either need to borrow money, or have money to lend. The joy of these sites is that anybody can be involved so there is plenty of options for lending. The only issue with it is that a lot of the regulations and guarantees that apply to a traditional loan don’t apply to funding circles. That means that if you’re lending through a funding circle and somebody doesn’t make the repayments, there aren’t many legal avenues that you can take to get your money back.

Community Shares

If your proposed business is something that the whole community will benefit from, you could look into community shares. Certain businesses are funded by the local community as a whole and are jointly owned by everybody that has contributed. Lots of communities are using this as a way to save local businesses that would otherwise go under.

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Category: Loans

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