The Intersection of Crowdfunding and Traditional Debt Financing

“Anyone who lives within their means suffers from a lack of imagination.” – Oscar Wilde via Wisebread.com

Last week I wrote about crowdfunding and the many different platforms available for funding. I decided to explore the site Lending Club. I’ve since learned, this type of funding is called person-to-person or P2P lending. Think of it as crowdfunding meets an angel investing pool. I spent some time researching their model and writing some brief instructions on the steps to become approved with Lending Club. Here’s my screencast evaluation of their financing option:

And some more in-depth info on the steps for applying with Lending Club:

Now, let’s follow the (hypothetic) steps to apply from the borrower’s perspective:

Determine your eligibilitylending club eligibility

Click on this link for a dashboard of steps to follow (with access to the electronic platform):lending club small business dashboard

https://help.lendingclub.com/hc/en-us/categories/202523217-Small-Business

  1. Start by exploring the “How to Apply” button
  2. Check your rate
  3. Choose your offer, if given
  4. Watch as people invest in your loan
  5. Funding is sent directly to your bank account
  6. Set-up monthly auto-draft payments
  7. Pay off your loan early, if wanted, with no early pay-off penalty

 

Success and Key Questions (6/30/18 Stats):

https://www.lendingclub.com/info/statistics.action

  • How much does the Crowdfunding source take as a fee? Varies depending on the terms of the loan
  • How long will the process take until the money arrives and can be used? About 7 days for approval and a few more days for funds to be deposited (depending on bank rules). Need to use their check-list to avoid delays.
  • Restrictions? Varies depending on the terms of the loan
  • Reporting requirements? Lending Club wants to see your IRS tax return and requires a 4506-T form to do so. Borrowers would report funds as part of their tax return.

 

Author: blueridgemtntwinmama

Blue Ridge Mtn native. Trying to live my best life and achieve "good person" status. Wife to a freelance/self-publishing author, A.D. White. I'm an HR & OD leader and my most fun title is "mama" to my cute, funny, and mischievous b/g twin babies. I also have a day job as an HR, OD, Engagement, and Leadership professional in the hospital & health care industry. I have an associate's degree in Art, a bachelor's degree in Ethics and Social Institutions, and a masters' degree in Entrepreneurship. I write about my gorgeous life in the Blue Ridge Mountains of western NC, raising twins, strengths-based leadership, and I even write about business and the entrepreneurial spirit sometimes. Dang, I love a good side hustle!

One thought on “The Intersection of Crowdfunding and Traditional Debt Financing”

  1. Hey Nancy,

    Excellent insight towards P2P lending through providing the insight needed to understand what it means and how to go about it. The helpfulness your blog provides through giving myself and others the information we need is great, especially for topics some of us might not know about (me for instance with this type of crowdfunding and traditional debt financing). “Crowdfunding meets Angel Investor pools” was an excellent way of describing the platform.

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