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Crowdfunding: alternative to commercial loan

Blog | Various

The crowdfunding is an alternative system to commercial loan. That allows companies which are at the start-up stage or in phase of development to obtain funds outside the banking system.

Effective alternative to commercial loan

The crowdfunding enables to raise funds from individuals. It’s an interesting solution for companies who have difficulties to obtain a commercial loan from a bank.

This option is a marketing operation for the company. As it should promote the product or service that will create to have the required capital before they will be effectively in the market, it will already have a notoriety when the sales will begin.

Companies may also test the success of their future product before the start of the sales! If they easily recolt the expected funds, it means that future customers will buy the product. If unfortunately they don’t get the desired cash, it means that the market is not interested in the product. At least, the second case prevents the companies from unsold stock.

The crowdfunding includes many advantageous and earns to be presented to companies as an alternative to a commercial loan!

Freedom of choices

It’s an opportunity for the individual to participate directly in the financing of a society of their choosing. They can dedicate a part of their personal funds to a product that’s close to them.

All the deposit account holders at a bank participate in development of credit. The loans are according to companies or individuals from the banks trough the funds they have.

The assets deposited by privates or societies constitute a port of the funds loaned. It means that the capital from privates or societies is used in projects that they don’t know the existence. With the crowdfunding, the investors are fully aware where the money is going.

The sharing of benefits

This new alternative to commercial loan gives benefits to the investors too. The benefits are not necessarily in liquid form!

For example, it’s frequent in case of financing for a restaurant to recover benefits be provided in kind. It can be a drink or a desert at each visit in the restaurant. The value of benefit will be fixed to the level of investment.

Profitability

The crowdfunding gives the opportunity to produce goods and services that not exclusively depend from a profit potential estimated by the banks! And what is financed from the crowdfunding is waited into the market because is financed by the future consumers.

Article written from the team of Multicrédit.