DEBT VS. EQUITY CROWDFUNDING / P2P LENDING
- May 10, 2016
- 1 min read
With all the opportunities in crowdfunding these days, it can be rewarding to understand how peer-to-peer (P2P) loans work. There are many different models, but they all revolve around the same concept - using the internet to link people who have money to people who need money.
Peer-to-Peer (P2P) Lending - Equity investments
It involves businesses seeking investment in order to build their business. By investing you become a shareholder in the company and eligible for any capital gains. The idea is that the company intends to exit in the future, either through an IPO or a trade sale, which will give investors the opportunity to sell your ownership at a higher price.
Peer-to-Peer (P2P) Lending - Debt investments
The investor lend money directly to a businesses (like a bank), specifying their own interest rate.
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