With every new venture or project, you need capital. From crowdsourcing to peer-to-peer lending to Shark Tank, we’re always coming up with new ways to get funding for our next venture. The latest trend to hit the market is Marketplace Lending. Sit tight, we’ll break it down so you can stay on top of the latest money lending trends available.
Marketplace Lending
Entrepreneurs, real estate developers, and just most people are skeptical of the investment banking industry and Wall Street when it comes to borrowing money to start a business or to help a business grow. Rightfully so. When it comes to your money, you should be careful and you should always understand the terms of any agreement with anyone offering to lend you money. One thing we learned from The Big Short is that confusing lingo used by banks and lending institutions is part of their strategy. They don’t necessarily want you to understand—because if you do, you will find that your skepticism is justified and start looking elsewhere for simpler, more comprehensive, and more transparent lending and borrowing solutions. This is where marketplace lending, specifically peer-to-peer lending, and crowdfunding come into play.
Understanding Crowdfunding
Crowdfunding is something most of us understand at this point. It’s the simplest, most risk-free way of acquiring capital for a startup or project. Crowdsourcing is great for the startup phase of a company. If you’re thinking of setting up the best darn lemonade stand on your block this summer, then a crowdsourcing campaign is a great way to get small amounts of cash from a lot of people who think your idea is worth a small investment… And off to the market you go to buy all your supplies with your funds.
Once your lemonade becomes the talk of the town, you’ll need more money to help you expand to every block in your neighborhood. Maybe even take your stand and turn it into a global franchise — wouldn’t that be nice. But you’ve already exhausted your family and friends, and your crowdsourcing community. It’s time to step up and find a lender with deeper pockets. But why stop at just one lender when you can have many? This is when you look towards peer-to-peer (or “P2P”) lending. This puts more established startups and small businesses in touch with bigger investors — still with the ease and transparency of crowdfunding.
Misconceptions About Peer-to-Peer Lending
The biggest misconception about P2P lending is that a “peer” can be anyone from your grandmother to a larger institution or corporation. Now your gut may have jerked at reading “larger institutions and corporations”, but don’t run away just yet. P2P lending is a way to get funding from many large investors more quickly, and often at a much cheaper rate than borrowing from the bank. These investors or lenders—whether private citizens or professional lending institutions—will cover a share of the amount you want to borrow, letting you take on several investors, who take on the risk of loaning you the money.
New York Real Estate Crowdfunding
Real estate developing has a history of being an exclusive club that you pretty much had to be born into. The biggest and best developments were passed around, like a secret handshake, that only the wealthy knew. Marketplace lending sites have swung the doors wide open for anyone to invest in huge real estate development deals — or small deals, it’s up to you.
Real estate crowdfunding is the wave of the future and the easiest, most transparent way to diversify your investment portfolio and get in on some prime New York real estate. All you need is $5,000 and a dream, and you can grab yourself a slice of the Big Apple.
