Our latest loan offering is nearly 100 per cent bid-for. When the quota is filled, the cheaper offers of credit will drive out the more expensive ones as the auction continues.
Sound like algebra? We hope not. To help you understand what crowdfunding is all about, here's an extract from our Knowledge Hub.
Crowdfunding is a general term for the process of raising money. Back in the early days of email, people who raised money for charity by emailing all their friends in a big group email were doing a primitive form of charity crowdfunding. Other common purposes for crowdfunding are to raise share capital investment (the person in the crowd takes a direct stake, or shareholding, in the company seeking funds). Many commentators say this process is rather risky, and that a high percentage of the typically young companies seeking funds fail. It is known as equity crowdfunding.
The purpose of the fund raising on Money&Co.is to lend money to much more mature, developed businesses with a strong profit record. The process does not involve investing, but lending money. Its technical name is crowdfund lending, or peer-to-peer (P2P) business lending (a person, human or corporate, lends to a business).
Money&Co. is in the P2P business-lending sub-sector of crowdfunding and is part of the fast-growing trend in crowdfunding loans, quick, fast, and at rates that work for borrower and lender alike.
Our latest loan offering is an A-rated loan of over £455,000. The borrower is an independent adviser looking to use the funds to expand. The loan auction closes in 8 days' time. The offering is currently 84 per cent funded, with a current indicative gross yield of 8.4 per cent. As we say above, cheaper offers of credit will drive out the expensive offers,. and the borrower's cost of credit will come down at the end of the auction. Well, that's what usually happens, at least!
Our loans are only offered if our borrowers are free of all other debt, and have a track record of sustained profit. Moreover, Money&Co. takes a charge on the assets of the company, which is exercisable if a borrower defaults. The relevant assets could then be sold and used to reimburse lenders. As yet, after two years' trading, no borrowers are in default. See our recent article on Money&Co.'s conservative attitude to vetting deals.
That said, remember that when lending, capital is at risk. See warnings on Home, Lend and FAQ pages.