Crowd2Fund business loan review: Rates & eligibility

Founded in 2014, Crowd2Fund is a peer-to-peer investment platform that connects investors who have money to lend with small and medium-sized enterprises (SMEs) looking for funding.

Its aim is to help businesses raise the money they need to grow, while investors can potentially earn higher tax-free returns through an Innovative Finance ISA.

An overview of Crowd2Fund business loans

Crowd2Fund offers the following finance options for businesses looking to borrow money:

Business loans

Designed for established businesses that can demonstrate a track record of profitability, these loans allow you to borrow a lump sum of cash over a term of up to five years. You then repay the amount borrowed in regular instalments, including interest.

You can use the funds to buy new premises, renovate an existing one or invest in equipment, inventory or staff.

Your business must usually provide security for this type of loan – often in the form of company assets, debentures or a personal guarantee from the directors.

Revenue loans

Revenue loans are aimed at new businesses that need to manage cashflow carefully. Monthly repayments are flexible, meaning you pay off more when business is going well and less during quieter months. Terms of up to five years are available.

Interest-only loans

Interest-only loans are designed for project funding and allow you to initially only pay off the interest on your loan, making repayments much cheaper and improving cash flow.

Interest payments can be made monthly, bi-monthly or quarterly. Once the loan matures, you’ll need to repay the capital, so it’s important to have a plan in place to allow you to do this.

Equity finance

If you’re an early-stage business looking for growth funding, equity finance could be suitable. It enables you to raise finance by selling shares in your company to investors. Although you’ll need to be happy giving away a percentage of your business and potentially some control over future decisions, you won’t need to repay the funds, so you won’t be tied down by monthly repayments.

What is Crowd2Fund’s typical interest rate?

Interest rates for Crowd2Fund’s business loans range from 12% to 18% APR. The exact rate you pay depends on factors such as the length of the loan term, as well as your business’s credit rating and financial standing.

Businesses that have been trading for several years and have a solid credit history are more likely to qualify for cheaper interest rates than new businesses.

Note that once you have raised a successful campaign, Crowd2Fund charges a fee of 8% for the first £500,000 and 2.5% for any funds raised after that. This fee is taken automatically from the funds raised.

How much can I borrow with a Crowd2Fund business loan?

The amount you can borrow depends on the type of loan you’ve applied for, as well as your business’s credit rating. However, in general you can borrow between $25,000 and $2 million.

To find out exactly how much you can borrow, it’s best to contact Crowd2Fund and discuss your requirements.

What is the acceptance rate for a Crowd2Fund business loan?

Crowd2Fund doesn’t publish its acceptance rates. However, you will need to pass the necessary fraud and credit checks, and you will likely find it easier to get accepted if you meet the eligibility criteria, have low levels of existing debt, and have a positive net worth.

Providing relevant information and documentation to show you can afford the repayments will also increase your chances of success.

Eligibility criteria and whether you qualify

To qualify for finance with Crowd2Fund, you must meet the following criteria:

The business must be a limited company or limited liability partnership
The director must have a UK address
The director should have been a director for at least one year

Depending on the type of loan, you may need to have been trading for at least 18 months, have at least one year of statutory accounts and have a minimum annual turnover of £100,000.

Additional information

When applying for a business loan with Crowd2Fund, it’s important to read through the terms and conditions carefully, paying attention to the following:

Early repayment fees

There are no early repayment fees if you choose to pay back your loan before the end of the agreed term.

How long does it take to get approved?

Crowd2Fund offers an instant eligibility checker that won’t impact your credit score and enables you to see how likely you are to be approved for a business loan. If the answer is positive, you can then go ahead and apply in full.

Keep in mind that Crowd2Fund has a thorough pre-screening check that will look at the business’s financial health and trading history, as well as the background of each company director. It will also carry out an assessment of any security provided for the loan.

Because these checks are comprehensive, it could take a few days to get approved.

Estimated time to receive funds

This depends on factors such as the demand for your project or business opportunity, but it typically takes between two and three weeks.

Can a loan be repaid early?

Yes, you may be able to repay your loan early, but it’s best to check your agreement terms or contact Crowd2Fund to be sure.

Is security required?

This depends on the type of finance you’ve applied for. But you will often need to provide some form of security, whether that’s company assets or a personal guarantee that makes you personally liable for repaying the loan if the business can’t.

What documentation is required

When applying for funding through Crowd2Fund, you’ll need to provide certain information and documentation.

Business information

You will need to supply the name and address of your business, as well as its company registration number. You will also need to provide details about its annual turnover, net worth and profit, along with three months’ worth of bank statements and details of any other lending.

Business owner information

You will be asked to provide the names, addresses and contact details of all business owners.

Funding requirement

In addition, you must state how much you wish to borrow and what you plan to use the funds for.

How to apply for a Crowd2Fund business loan

You can start the application process online by using the quick eligibility checker and then creating an account. Once you’ve done this, fill in the application form and someone from the team will get back to you within three days. Your personal account manager will give you a ring to discuss your campaign and the financial offer.

Is the application process different to other lenders?

Crowd2Fund isn’t like a traditional high street lender. Rather than lending directly to you, it matches you with investors who either lend money to your business or invest in it in return for equity.

This means that as part of the application process, you’ll need to discuss your requirements with a member of the team before you can proceed. You should also create your campaign page to help promote your business on the platform and attract investors.

How to improve your chances of getting funded

The best way to improve your chances of getting funding is to ensure you meet the eligibility criteria and provide the necessary information and documentation as quickly as possible. Creating a solid crowdfunding campaign – which Crowd2Fund can support with – will also help.

Pros & cons of a Crowd2Fund business loan

Before deciding whether to apply for a business loan through Crowd2Fund, it’s important to weigh up the pros and cons.

Pros

Interest rates can be lower compared to traditional loans
Quick and simple application process
Many loans have flexible terms
No early repayment fees to pay

Cons

You will likely need to provide security for your loan
You’ll need to pass extensive checks to qualify
Crowd2Fund charges a fee once a business has raised a successful campaign
You may not be able to borrow as much as you could with a traditional business loan

Alternative funding options for different lenders

If applying for a business loan through Crowd2Fund isn’t right for your company, there are plenty of alternatives available through other lenders. These include:

Why use a finance broker?

A finance broker can cut down the time and effort involved in comparing and applying for business loans. They work with multiple lenders, giving them a broad view of available products and can help you narrow down the lenders that are more likely to accept your application. This can be useful if you’re a new business or have had credit problems in the past.

A trustworthy broker will make any fees clear and handle the application process on your behalf.

However, some brokers will charge for their services, either as a flat fee or a percentage of the loan, so check the costs before you proceed.

Get started with Swoop's business funding platform

Our team at Swoop would be happy to discuss your business funding requirements with you to help you find the right deal to support your application and help your business grow.

Crowd2Fund business loan review: Interest rates, eligibility, and the application process