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Crowdfunding for Property

Rosalind Renshaw reports

Since the credit crunch, there has been increasing noise about crowdfunding, or peer-to-peer lending. Crowdfunding primarily started as a way of getting singers and rock groups into a financially viable position whereby they could record albums. Investors received little in return beyond free CDs.

However, the idea cottoned on: if a neighbour's son wanted funds to open a restaurant, then friends and family pitched in.

It then became increasingly commercial and the rewards became financial, as crowdfunding platforms sprung up online introducing investors to business opportunities and allowing people to pool their money to support businesses, organisations and individuals. And all this without a bank in sight.

Funding Circle, for example, launched in 2010 because of two key problems: businesses were struggling to access finance and people were getting a poor return on their money. It has attracted over 72,000 people who have joined to lend money to businesses - so far, a total of nearly £235m.

For a number of small businesses, particularly start-ups, crowdfunding has been almost the only way to raise money in recent years.

It is not just that crowdfunding is a source of money - it is a quick source, with funds typically made available within two to four weeks.

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