Estate Living Digital Publication Issue 8 August 2015 | Page 53

B A N K I NG W IT H OUT a

BAN K

SMEs have an unique ability to delve into new
and unsaturated sectors and develop exciting and
innovative opportunities but the risks attached to this
means banks are less likely to lend money to these
entities that need it most and more likely instead to
give the cold shoulder. The few that are successful
in obtaining capital stumble because financial
institutions are failing to offer important SMEs specific
products like immediate cash for invoicing, financial
leasing and lower borrowing costs for example. As a
result, most start-ups and promising businesses either
begin to eat their way through their overdraft facility
completely fall to the wayside or shut up shop entirely,
usually in the first two years of existence. As we know
and have experianced with our bankers they just not
supportive. Queue CROWDFUNDING – pioneering
companies that are stepping in and filling the massive
financial void and uplifting despondent youth.
Taking inspiration from old school practices of
money lending from friends, family and peers,
these forward-thinking firms focus on helping small
companies acquire funding for a business venture by
raising monetary contributions from a large number
of investors via the internet. Last year alone, a report
released by UK-based The Crowdfunding Centre
showed that more than US$60, 000 was raised on an
hourly basis via global crowdfunding initiatives and
442 global crowdfunding campaigns were launched
each day. Unlike banking professionals, who have
usually only ever worked in the industry and have no
real understanding of how different SMEs function,
crowdfunding investors possess sector-specific insight

into the environment and have deep and enriching
experience that helps to widen the reach of a niche
business and increases their capacity to find bigger
and stronger audiences.
Companies entrenched in renewable energy and new
technologies for example, continue to successfully
attract investment through alternative finance
as they receive the knowledge and expertise not
necessarily available from a high street bank manager.
Crowdfunding allows funds to be allocated on the
viability of an idea as opposed to credit records and
an individual’s financial stability. In all or nothing
crowdfunding platforms investors have the a safety
net ok knowing funds are only allocated once the
entire anticipated funding goal has been reached.
If an entrepreneur sets a goal and doesn’t reach it,
funds are returned to each contributor whereas in
a successful fundraising project, the entrepreneur
receiving their funding and the investor gets a small
percentage commission.
Furthermore, entrepreneurs have the opportunity to
test consumer reactions to a product or concept that
they haven’t yet taken to market. One idea can help
inspire others and drive even