1) Prepare a robust business plan
Crowdlending or more specifically, Peer to Business lending platforms will review your business plan along with other details about your company and your financial information when considering your initial loan application. In fact the most reputable platforms will review all of this information extensively in much the same way as a bank would, and will consider the profile and history of the individual business owners as well as the company as a whole. With this in mind, it’s important that your business plan is comprehensive, engaging and well thought out. It also goes without saying that any potential investor will want to feel confident about the future of your business, and inspired by what you want to achieve. Your business plan should act almost like a marketing document showing what you are realistically planning to do, and selling the excitement of the opportunity to an investor. It should also show that you’ve thought further ahead than just an idea, and have planned out from conception to execution.
2) Think like an investor
What all investors will have in common is a mutual desire to secure a significant return on their investment. However, recent research from FundingKnight also shows there are other traits which unite those who invest, or would consider investing through crowdlending. The research showed that 82% of those questioned were either seasoned business leaders, or had aspired to run their own enterprise, and were using their own business experience to inform their investment decisions. The research also showed that a love of community and wanting to give something back to UK plc was a key driver for investors, as was investing in an individual they feel they can trust, a motivating factor for 41% of those questioned. You should consider all of these factors when making your application for funding, and be mindful of the fact that many of those looking to invest in your business will have stood in your shoes or may currently be running their own enterprise. They will also want to feel like they are making a positive contribution to an exciting, worthwhile, profitable and valuable business, so ensure you showcase everything that makes your company great.
3) Build a great profile
Whilst you won’t be expected to recreate your Facebook page on a Crowdlending platform, your online presence should still be considered as investors will search for further information about your business. If you don’t already use Facebook, Twitter, Google + and LinkedIn, it might be worth considering investing time in building a presence on the right channels for you. Your website should also be well structured, and all of the information about your business should be consistent with that which you’ve provided as part of your loan application. There are some simple things you can do to improve your search engine optimisation so investors can find your site easily, such as installing google analytics, considering what keywords people will use to search for your business. If you do have a social media presence, you can use this to drive traffic back to your website via tweets, LinkedIn posts or blogs.
4) Recognise the importance of networks and community
As the recent FundingKnight research showed, investors share a love of community and want to give something back to UK SMEs to help them grow and prosper. Crowdlending platforms act as an online community where these investors can search for investment opportunites and browse businesses that engage them. This bringing together of like minded individuals (aka ‘the Crowd’) and businesses with an investment need is the basis of any successful Crowdlending platform. With this in mind, it helps to consider your business as a member of a network rather than an individual company seeking finance. Many SME owners will be familiar with the concept of physical networking events such as industry seminars, local business events etc which provide them with an opportunity to make valuable connections and potentially sell their business to either customers or investors; Crowdlending platforms are no different.
5) Be agile
One of the biggest benefits of Crowdlending platforms is the flexibility and often, the speed at which your application is reviewed. FundingKnight review loan applications within five working days before coming back to successful applicants with conditional offers. This offer will set out the repayment terms, provide details of any security requirements and other conditions of the loan. After this point the business will have five working days to consider the offer, and if they go ahead their business loan funding request will go live onto FundingKnights’ Loan Exchange, usually for a period of 7 days, although businesses may choose to access the funds earlier when the loan is fully funded at their required rate. Taking all of this into consideration, it’s important that your business is ready to make a prompt decision and that you have done all of your thinking and planning before you make the application. That way, you can get the required funds into your business much quicker once a decision is made, moving a valuable step closer towards perhaps opening up a new premises, purchasing new equipment, or improving your working capital – and fulfilling your ambitions for your business.
Richard Watts is Marketing Director at FundingKnight, the Crowdlending platform for SMEs.