In this crowdfunding model, contributors lend money to businesses or private individuals and receive interest in return.
Crowdlending, also called peer-to-peer (P2P) or social lending, allows contributors to lend money to companies or individuals in return for interest. The share depends on the risks associated with the loan. The advantage for businesses is that they can bypass traditional intermediaries such as banks. This system makes it possible to get loans at advantageous interest rates and formalities may prove easier than with banks. It is a particularly advantageous formula for start-ups.
Making ends meet
The leading Swiss crowdlending platform, Cashare, has already facilitated financing for 1,400 projects. One of its users, for example, got a loan of CHF 50,000 to “cover unexpected end-of-year requirements”. The low-risk loan granted was repayable over 36 months at an interest rate of 6.9%.
Among the various forms of crowdfunding in existence today, crowdlending is the form which saw the strongest growth in Switzerland in 2015. Amounts lent increased by 126% compared to the previous year, reaching CHF 7.9 million according to the 2016 Crowdfunding Monitoring Schweiz Report by the Lucerne University of Applied Sciences and Arts. This massive increase can be explained by the advent of new platforms providing support to SMEs.