When No One will Lend You Money
Today we live in a world of easy credit. In fact the entire whole monetary system runs on credit. Easy money. Zero percent borrowing, (almost). You can get money for almost anything and you don't even need good credit either it seems. Borrow money for a million dollar shack, maybe a big fancy boat or how about new fifth wheel? Want to take a vacation? No problem, stick the cost on a credit card or line of credit. But if you want to start a business, expand a business or any other kind of worthy business venture, you might find out that there is no easy money for that.
You see it's all about so called risk. Banks and other financial institutions don't like risk. For some strange reason most lenders will not really consider loaning money for any kind of new business start up. I know this very well here in Canada especially if you want to go into mining. Even with close to 50% down in cash the banks would not loan out any kind of money. I could however borrow almost unlimited funds to buy a 5th wheel trailer and a new truck to tow it but I could not get the money needed for equipment to put a small mine into production. To the banks it was deemed to risky.
This is one of the reasons why small venture companies such as small junior mining companies go in search of a broker who will underwrite a loan for them and take their shares out into the public market. By selling stock in their company they can raise cash for expenses such a drilling and other exploration costs. This kind of financing has worked well for many years and there has been a lot of companies today that would not exist if it were not for the brokers and the public markets.
Today though times have changed and even brokers don't want to talk to you unless you're maybe trying to raise tens of millions of dollars. So what does a person do whether they want to start a small mining operation, expand an existing business or develop the next new gadget? Well depending on how much money you really need and if you can sell your story, the newest avenue to raising money is a new method called "Crowd Funding". It's new, it's hip, it's cool and it works.
So what is crowd funding? Crowdfunding is the practice of funding a project or venture by raising money from a large number of people. Crowdfunding is a form of crowdsourcing and of alternative way to finance your project. In 2015, it was estimated worldwide that over US$34 billion was raised this way. The first noteworthy instance of crowdfunding was in the music industry was in 1997, when fans underwrote an entire U.S. tour for the British rock band Marillion, raising US$60,000 in donations by means of a fan-based Internet campaign.
Modern crowdfunding generally operates with three separate participants:
- (1) The project inventor/ initiator/owner who proposes the idea and/or project to be funded
- (2) Individuals or groups who finance the idea/project
- (3) A moderating organization ( called a crowd funding company / platform) that brings all the parties together.
There are two primary types of crowdfunding:
- (1) Rewards crowdfunding: entrepreneurs presell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.
- (2) Equity crowdfunding: the backer receives shares of a company, usually in its early stages, in exchange for the money pledged
So you could say that crowdfunding is kind of like going to the public markets except there is really is no middle man taking his slice of the action. There is you, with your project/business and you need money. You sign up with a Crowdfunder on a online platform and post your business concept / plan telling everyone what you are going to do, how much money you need and if they like what they hear they give you money. You tell the public that you need "X" amount of dollars in "X" amount of time. If the so called "crowd" like what they hear and buys into your project, you get the cash and set off to do your business. All the money that the "crowd" funds you goes into an escrow account and is held there until the funding is complete. Of course you will need to pay them back, after all they the "crowd" are your financial backers. So you can either give them shares in your venture, or maybe give them a dividend or just repay them with a set percentage on an agreed time frame.
A quick google search will show that there are a lot of different crowd funding platforms on the internet. Some sites are set up for charity type works like raising money for sick kids or building play grounds, others are geared more for techy type stuff like software development and such. There is almost some kind of crowdfunding platform for almost everyone and every idea now. We know of a crowdfunding site that goes beyond the ordinary. This site is registered with the SEC and FINRA in the USA. This platform at this time only accepts USA registered applicant with USA registered companies doing business in the USA.
The platform also does due diligence on the applicant and also requires that all entrepreneurs who wish to raise funds register with them. There are fees that need to be made by the applicant also but all these requirements give investors an extra bit of piece of mind and confidence knowing that the applicant already has a business or at least the skills to run a business.
Another reason we like this platform is because let's say for for example, you have some mining property that is free and clear and you have spent considerable time and energy working on the said property/mine. Now let's say you have some data that shows good grades but you need cash to develope the property. With this platform you have that the chance at raising the amount of money you need to get that drill turning. You sign up and then explain that you need X amount of funds, what you need the funds for and how you are going to pay the lenders/crowd back and see what happens. All the funds that are contributed are locked in an escrow account. Once you reach your funding goal, you're off to the races. As an investor in the mine I have some degree of comfort knowing that there is already some mineable minerals there because data and other facts were presented by the applicant.
If you are a USA registered for profit business and are seeking an alternative method of raising dollars from a "crowdfunding platform" to create / market your new idea, expand, or operate your business without the use of a brokerage firm or banker, I can introduce you to a quality Crowdfunding platform.
Please send Junior Miners an email and we will have a Crowdfunding representative contact you to start the process with the Crowdfunder.
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