Crowdfunding Explained

Sep 15, 2016 Blog  Crowdfunding , Lending Marketplace , Peer-to-Peer

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Fintech is the buzzword of this technology driven world we find ourselves in. It is the fastest growing emerging industry, like a tidal wave disrupting the global finance sector. There are many forms of Fintech, however the most popular sector of Fintech is marketplace lending.

One of the aspects of marketplace lending is crowdfunding. Crowdfunding is the process whereby small amounts of money is raised for a project or venture by a large group of people via an online platform. There are two different forms of crowdfunding, firstly reward based crowdfunding. Reward crowdfunding platforms provide the funder something in return for the funds they have provided. This would be something in the form of an exclusive limited offer or the first version of the product. The second form of crowdfunding is equity crowdfunding. This is the form of which the backers of the cause (funders) are offered a portion of shares of the company in exchange for their funds.

Although marketplace lending is the most popular sector in Fintech, peer to peer (P2P) lending is the most popular sector in marketplace lending. It is the concept of borrowers applying for a loan and lenders funding that loan. It is popular due to borrowers being able to obtain funds at lower interest rates than what a bank would typically offer, and the lender receives a higher return than what the bank would typically offer. It’s a win-win solution. Lenders include both individual and institutional and they also benefit by being able to lend at a range of different interest rates on the platform. Lenders are also able to place small amounts of funds in multiple loans, giving them a steady and lower risk return.

RainFin is an online lending marketplace that connects borrows seeking transparent, cost effective loans with lenders wanting great returns.

 

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