Knab Crowdfunding is crowdfinancing as the innovative Dutch bank Knab sees it. Rather than reinventing the wheel, Knab has set up its own crowdfunding platform in partnership with Collin Crowdfund. The advantage of this is that at Knab, just like with Collin, you get the help of a Crowdfund Coach to help you through the credit assessment process. After that, investors can subscribe to your project through Knab to arrange financing of $ 50,000 to $ 2.5 million.
Funding Circle is a British crowdfunding platform that operates worldwide. In the Netherlands they are one of the largest crowdfunders. Funding Circle offers credits as low as $ 5,000 (up to $ 250,000 US dollar), making them very accessible for small projects and start-ups. Your application will be assessed within 48 hours and then drawn up. Once the required amount has been reached, your credit will be paid out with a term of 6 months to 5 years (60 months).
Lender & Spender is a crowdfinanced retail credit provider from $ 5,000 to $ 25,000. We also call this peer-to-peer lending. At Lender & Spender, in order to borrow money, you have to choose a loan goal: a renovation, large expenditure, or switching with an existing loan. Because no bank is involved in peer-to-peer lending, the costs and interest are lower. Lender & Spender is interesting for investors because of the return, which is much higher than an average savings account in the Netherlands.
Collin Crowdfund is the largest crowdfunding platform in the Netherlands. Entrepreneurs have already raised more than US $ 100 million in credit through the platform, which was established in 2014. Collin Crowdfund focuses mainly on SMEs. At Collin, you can crowd-finance a loan of $ 50,000 to $ 2.5 million for up to 10 years, with an interest rate of between 5 and 9 percent. Before your project is accessible to investors, you will receive an expert credit assessment from a Crowdfund Coach.
Kapitaal op Maat helps entrepreneurs to find (additional) capital for a specific project. This is done in the form of crowdfinancing, in which private and corporate lenders bring the credit together. Both starting entrepreneurs and companies that have been working for some time can turn to Kapitaal op Maat for a credit between 25,000 and 500,000 US dollars. The term of the loan with Maat Capital is 6 months to 10 years. A grace period is also possible.
The main feature of crowdfunding as a means of obtaining financing is that it is done with several investors at the same time, without the intervention of a bank or other financial intermediary. Instead of a single (large) financier, multiple investors, both private and corporate lenders, can invest different amounts in a project. This can often start from very small amounts, but usually also has a maximum investment amount. There may be various rewards against the investment, but in the Netherlands crowdfunding as credit (crowdlending) is still the most successful.
credit through crowdfunding: interest and additional costs
Using a crowdfunding platform is not free. The providers compared here only offer loans as crowdfunding. This means that you have to make monthly repayments and pay interest on top of that. The interest is mainly determined on the basis of your creditworthiness, in other words, the risk for investors. In addition, a number of providers charge a monthly administration fee. Of course you only pay this if you have received the amount, in addition to the repayment and interest.
There are also additional costs that you must pay anyway. Some of the providers compared here charge fees for credit assessment. You must always pay this, even if your application is rejected. These costs are designed to let a professional help you with your project so that you have a higher chance of success. A coach can help you determine a realistic interest rate, which affects your monthly amount.
costs for using a crowdfunding platform
There are also two charges that are deducted from the amount raised. If your application is published, the platform may charge a publication or contract fee for this. This is usually a fixed amount that you always have to pay, even if you don't collect all the money, so you may even have to pay extra for this. The success fee that platforms charge when reaching your target amount is also deducted from this when paid out. So keep this in mind when determining the amount of your credit.
Calculation example crowdfunding
To make it clearer to you what you can count on with a credit that you obtain through crowdfunding, we have listed the top 5 crowdfunding platforms below with a loan for $ 50,000. This is the minimum you can borrow from Knab and Collin Crowdfund. However, at Lender & Spender, it is not possible to borrow more than $ 25,000, so we chose $ 25,000 there. Note that the financing of Lender & Spender is a consumer loan and therefore not suitable for business investment.
|Knab||Funding Circle||Lender & Spender||Collin Crowdfund||Tailor-made capital|
|Credit||$ 50,000||$ 50,000||$ 25,000||$ 50,000||$ 50,000|
|Interest||To be determined by yourself *||From 3.79%||6.38%||To be determined by yourself *||To be determined by yourself *|
|Monthly administration costs||0.05%||n / a||n / a||0.07%||n / a|
|Duration||60 months||60 months||60 months||60 months||60 months|
|Monthly amount (approximation)||$ 866 + interest||From $ 915||$ 488||$ 874 + interest||$ 833 + interest|
|Credit assessment costs (excl. VAT)||$ 350||Free||Free||$ 350||$ 395|
|Publication & contract costs (excl. VAT)||$ 450||Free||$ 250||$ 850||$ 350|
|Success fee / brokerage fee||1.9% = $ 950||From 4% = $ 1,000||n / a||1.5% (minimum $ 1,500) = $ 1,500||4% = $ 1,000|
* The specialist / coach assigned to you will assess whether the interest rate proposed by you is in line with the expected risk and return of the investment.
Frequently Asked Questions
Who is crowdfunding suitable for?
Crowdfunding is best suited to finance short-term financing with a specific purpose. Your application will be published as a pitch on the crowdfunding platform, to attract investors. This mainly focuses on risk and return. Crowdfunding can be suitable for making investments such as machines or working capital, but also for refinancing existing debt. Due to the long term of mortgage loans, crowdfunding is less suitable for purchasing real estate.
Why should I choose crowdfunding instead of regular financing?
The big advantage of crowdfunding over regular financing is that it is usually cheaper. This is because crowdfunding usually involves no intervention from a bank or financial institution. As a result, the costs are lower: a traditional bank usually has to cover a lot of costs by providing loans, such as bank branches. Another advantage of crowdfunding is that you create so much goodwill and attract positive, engaged investors.
How does my application for crowdfunding go?
If you submit a credit application to a crowdfunding platform, it will not be posted immediately. First, you, or another person entitled to trade for the company, must register and identify yourself with the platform of your choice. This is done completely digitally, based on the uploading of documents. Your company will then be assessed on its creditworthiness, possibly by uploading additional documents. In some cases, one or more specialists will then work out the pitch further with you. Only then will your application be published for investors to subscribe to.
What conditions do I have to meet to apply for crowdfunding?
This differs per platform. Usually your company must be a sole proprietorship, vof or Ltd. In addition, there may be requirements for correct accounting, a minimum number of years (from 1) that your company has been operating. In addition, you must take into account a requested minimum annual turnover and / or a demonstrable profit motive. All these factors not only count when assessing whether your credit application is accepted or not, with Funding Circle, for example, it also determines the interest rate on your credit.
What do I need to apply for crowdfunding?
You must be able to demonstrate that you are entitled to trade for the company when you register on the platform to apply. You usually also provide personal surety if you are the director. You will then need supporting documents for the credit assessment. This usually consists of at least the most recent annual accounts. To back up your application, a financial plan with forecasts and figures is also highly desirable or even required. For the specific details, you can check the information of the different platforms.
Is crowdfunding always a loan?
Several forms of Crowdfunding are possible. The popular Kickstarter in the United States, for example, leaves it up to the borrowers themselves how they reward their 'backers' (investors). This could be, for example, a special copy of the financed product or some other non-monetary reward. In the Netherlands, however, these initiatives are not getting off the ground. A loan with clear, transparent conditions is much more attractive here for both borrower and investor. You must of course always repay a loan in full.
What are the costs of borrowing money through crowdfunding?
Crowdfunding may usually be cheaper than a bank loan, but it is not free. The interest that you have to pay on a crowdfinanced loan goes mostly to the investors, so the crowdfunding platform itself may also charge additional costs, such as monthly administration costs, costs for facilitating the listing of your application, and a success fee if you have collected the full amount. See the calculation example above for more details about these costs.
Can I also repay early?
This is possible with most crowdfunding platforms. You will not be fined for this, but some providers do charge a fee. At Collin Crowdfund and Knab you can only repay the full outstanding amount early, for a payment of 12 months interest. There are also costs associated with Capital Op Maat. But at Funding Circle early repayment is completely free of charge. And consumers who pay extra at Lender & Spender do not pay any extra costs.
What happens if I cannot pay off an installment on time?
Formally, crowdfunding platforms often work the same as regular lenders. That is, if you fail to pay an installment on time, they will send a reminder, which may incur costs. Just like with a regular lender, structural failure to meet your payment obligation can lead to a review of the conditions, or even the cancellation of the credit, which is then immediately due and payable. In addition, you will receive a negative BKR registration. It is therefore very important that you can pay off your credit, also with crowdfunding.
What happens if I don't raise enough money?
All approved projects are offered for a certain period of time on the crowdfunding platform (how long this is varies per platform). If you have not collected enough after the expiry of this period, this may be extended. The chance of success is (again) assessed for this. If it is still not possible to collect the full amount, the application can be canceled. You will not receive credit, but you will have to pay the publication costs. Naturally, however, you do not pay a success fee.
Should crowdfunding platforms have an AFM license?
As a bank, Knab has an AFM license to provide credit. Lender & Spender, too, because they offer consumer loans. But crowdfunding platforms can usually also operate without an AFM license. For example, the AFM has granted an exemption to Funding Circle, Collin Crowdfund and Kapitaal op Maat. This exemption means that they may mediate, but may never grant loans to private individuals. The platforms with an exemption are not under continuous supervision, but do report periodically to the AFM.