Crowdlending Fintech – Founders and young self-employed people know the problem: You have a promising business idea for which there is a high demand on the market. But starting up a business costs money, and until the new company is established and generates profits, it usually takes several years. Even Fintechs make no difference here. Although the digitization of financial services should still offer enormous potential in the coming years, a new company needs money to establish itself successfully. In connection with young fintechs, there are also more and more frequent reports of alternative forms of financing, such as crowdlending. But what is crowdlending, and what does it mean for Fintechs?
Crowdlending is a financing with many lenders
Crowdlending is a form of crowdfundingng. The German Federal Financial Supervisory Authority (BaFin) declares crowdfunding to be a form of financing by many lenders with mostly manageable contributions for the individual. Loans are usually granted via Internet platforms. Thus, through these platforms, many lenders join together to finance a larger project with small sums.
In crowdlending, the borrower receives a loan from his lender, so it is often seen as an alternative to a traditional bank loan. There are several online platforms in Germany that were created to mediate between lenders and borrowers. The first known Crowdlending Fintech Portal in Germany was smava. Here an investor-financed credit offer was conceived. In the meantime, Berlin-based Fintech has discontinued crowdlending and is now focusing on credit comparison. However, a number of Fintechs have since taken up crowdlending. First and foremost Auxmoney.
Crowdlending Fintech List Germany
- auxmoney
- Bergfürst
- Crowdcub
- Exporo
- iFunded
- Innovestment
- kapilendo
- Mezzany
- Mintos
- WIWIN
There is usually a fee for arranging the financing. In 2018, the average financing amount was around 27,000 euros. Crowdlending is interesting for young companies, but also for private individuals who want to fulfill a larger wish and need money to do so.
These costs are incurred in crowdlending
As with any financing, the borrower has to pay a fee for crowd lending. This fee is charged in the form of interest. In crowdlending, the borrower pays back the loan with interest. The loan rate is fixed and usually consists of a fixed monthly installment. The interest rate is mainly determined by the creditworthiness of the borrower, so that the creditworthiness of the borrower is taken into account. The correlation is that the interest rate rises slightly with decreasing creditworthiness. So if you want to finance a rather risky project, you have to expect higher interest rates. With crowdlending, the lender does not acquire a stake in the company, i.e. he does not participate in profits and does not receive a share even in the event of a company sale. Crowdlending differs significantly from crowdinvesting in the acquisition of a company share.
Crowdlending Fintech – Attractive financing for start-ups from the financial sector
A swarm financing is an option for Fintechs, which can be quite interesting. Before a young company takes out a classic bank loan, the possibility of crowdlending via one of the established online platforms should definitely be examined. However, one must know that the interest rates can be somewhat higher than with classical bank financing. This is because a start-up company is always associated with the risk of losing capital if the project fails at a later date. Fintechs are no exception, because although there are always new and very promising business ideas on the market, there is a risk that a Fintech will not be accepted by the market as expected.
When Fintech Crowdlending comes into question
Crowdlending is an attractive alternative to the classic bank loan for Fintechs whenever financing through the crowd is desired and when no participation in the young company is required. This participation may not be wanted by the lender and is therefore excluded. In addition, it can be rejected by the management of the startup, if these do not want to grant a say to their lender. This right to a say can be given for example in strategic, operational or financial questions. If you want to exclude this right to a say from the outset or if you do not want a financial backer to share in the profits, you should not opt for crowdinvesting. Crowdlending is the better alternative in this case. With it, young start-ups with business ideas from the exciting world of finance create a financial basis for themselves, which can be used as start-up financing and also for later expansion.
