Business Finance Blog

"...excellent finanicial advice and, most of all, an exceptionally friendly service..."

Crowd Funding for Property Development

Some people are now aware of the existence of Crowd Funding as a means of financing commercial operations. Not everyone, however, grasps the potential of Crowd Funding as an alternative source of finance for businesses. Well, it really is, and this has been proved again very recently with a client of ours who was seeking funds to complete a particular project.

We received an enquiry in the middle of February from a young man who had embarked on his first ‘new build’ housing project. He had previous experience of refurbishing properties but this is his first foray into building from scratch. Up to the point where he contacted us he had funded the project from his own resources. He could see however that if he continued to do this it would delay completion of the project and thereby restrict his ability to move on to his next project.

Our Client was looking for a commercial Loan of £125,000. He approached us to investigate Crowd Funding or other options. After our initial conversation at his construction site we agreed that, in this case, an application to the ThinCats Platform would be appropriate. Based on that we carried out the necessary Due Diligence and prepared an application in our role as Sponsors for ThinCats.

The way that ThinCats work is that a project is put into an auction either at a fixed or variable rate. In the latter case potential Lenders bid to make a loan at an interest rate they choose. As Sponsors we verify the project and, in conjunction with our client, set a maximum acceptable rate and a target rate of interest.

In this Client's case we anticipated that the target would be reached and that, if we set a variable rate, this would bring down the average rate of the bidders. What we did not anticipate was how quickly this would happen and the beneficial effect that this would have on the average rate of the bids. To our very pleasant surprise the target for the funding was reached in less than 24 hours (we had allowed for a lot longer) and the final interest rate was well below the target set.

The result is that our Client has the funding that he needs to complete his project and it will cost him less than anticipated. One happy builder with a great future. If you have a project like this that needs funding then give us a call at Business Finance Services on 01327 349 779 or e-mail us at . You’ll be amazed how we can help!'