Debt-based crowdfunding, also known as crowd-lending or peer-to-peer (P2P) lending, allows a large number of individuals to pool their money together through a platform to invest in a company.

Advantages for both companies and individual investors alike are better interest rates. Businesses typically pay the money back at lower interest rates than they would ordinarily when obtaining capital from a bank and  individual investors get a better interest rate than they would with an ordinary bank or building society savings account.

Approaching a P2P platform is not too dissimilar from applying to any other capital lender. You'll need to provide information regarding your turnover, profits and other relevant data.

Once accepted, your funding request will be published on the platform for individual investors to view. They can then offer smaller amounts that collectively add up to the sum you want to borrow. Different P2P platforms will handle this differently so it's worth exploring different platform providers.

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