Question

With the rise of technology, many companies have gone to the Internet to find financing for their business. For this question, research two "non-traditional" forms of financing and provide their pros and cons.

Answer 1

The rapid booming business markets many of the small start-ups and local businesses are trying to raise capital in order to raise capital for their business expansion .

· While the traditional source of equity financing through issue of equity shares is expensive and business had to go through a lot of fees and procedures to get approval from exchanges to raise equity capital, Newer Alternative sources of financing are gaining popularity these days

· Equity Based Crowdfunding

· Peer to Peer lending .

No	Equity based Crowdfunding
1	It involves finding equity investors in the early phase of the start-ups .
2	There is almost no fund raising fees as the investment transaction is done one to one
3	Funding’s in revived in irregular tranches as per the capability of small investors .
4	There may be possibility of no funding’s if investors doesn’t like the business proposition
5	There is no legal body to intermediate the process in case of any disputes
6	Investors may exit early leaving the company in cash deficit position

For Peer to Peer based lending following are the key points

No	PEER to PEER lending
1	It is similar to alternative source of debt capital for small companies and start-ups
2	There is no intermediary to process the loan , and hence the transaction charges are lower
3	The loans are completely Unsecured for the lenders
4	Lenders may demand variety of interest depending on the amount of capital lend
5	Origination fees are not charged in this process
6	High chances of default and credit risk involve is high

Thanks