How Does LoanWell Compare to Other Crowdfunding Sites?


What is LoanWell?

In short, LoanWell is a website that makes it easier to loan money to -- or borrow it from -- people that you know. You can do this through more traditional methods, by creating individual loans between you and one other person (or even a few others). But so far, the most popular option for the users of our site has been to lend or borrow through our Crowdfunding Campaign platform.

An easy way to describe this platform to someone who had never heard of it would be to highlight the similarities it has with other crowdfunding websites. When asked individually how the site works, we often find ourselves saying that it’s “like Kickstarter or Indiegogo, but for loans.”

But when it comes to measuring the usefulness of LoanWell compared to these other crowdfunding platforms, the most important details to highlight are not the similarities, but the differences.

So what are some of those differences? Let’s take a look.

Kickstarter

What is it?

Perhaps the most popular crowdfunding platform, Kickstarter is exclusively a crowdfunding platform that allows businesses or individuals to raise funding from their audiences and communities provided that they are able to demonstrate a working prototype or a strong proof of concept. Their website emphasizes creative or innovative projects, and they do an excellent job supporting their creators.

There are a lot of qualifications required in order for someone to create a campaign on Kickstarter, as mentioned above. The upshot of this is that Kickstarter has a much higher success rate than many other crowdfunding websites, but the intense vetting that they do means that a lot of individuals who would otherwise like to try raising money through the website end up being barred or discouraged from doing so.

Who’s it for?

Again, largely creatives, entertainers, and innovators. The main campaign genres on the official Kickstarter website include things like Arts, Film, Music, Design & Tech, Games, etc., and much of the impetus for funds raised through the site is through the various rewards offered for different backer tiers.

What’s the cost?

Kickstarter charges a 5% fee for successful campaigns along with a 3-5% payment processing fee, bringing the total cost for successful campaigns up to somewhere between 8-10% of total funds raised. There is no cost for unsuccessful campaigns; however, as Kickstarter is all-or-nothing. All funds raised for campaigns that don’t reach their goal are refunded to that campaign’s backers.

Indiegogo

What is it?

Another crowdfunding site, Indiegogo’s platform is a little more open to different types of campaigns compared to Kickstarter’s. Rather than limiting campaigns to one of just a few genres, Indiegogo campaigns can be for pretty much anything, as the site has over two dozen potential categories for campaigns to fall under.

The process to use Indiegogo is essentially the same as Kickstarter, but with far less stringent guidelines for starting campaigns. However, fundraising for personal causes is not allowed, and the Indiegogo website specifically directs borrowers to GoFundMe if they intend on raising money for personal causes.

Who’s it for?

Creatives and innovators, as with Kickstarter, but also non-profits, for-profit businesses, and “non-personal community projects.” Indiegogo also allows for successfully funded campaigns to continue raising money through their page after the campaign is over, making it easier for certain kinds of businesses to continue raising funds and growing their communities after the fact.

What’s the cost?

Indiegogo’s costs are comparable to Kickstarter -- somewhere in the 8-10% range -- although they tend to be slightly higher. Indiegogo also allows unsuccessful campaigns to keep the funds they’re able to raise, provided they can still provide the rewards for backers that met those requirements.

GoFundMe

What is it?

GoFundMe is a crowdfunding platform that focuses on individuals. Whereas Kickstarter and Indiegogo allow for unique products, brands, and public causes to be funded through their platforms, GoFundMe allows for the funding of personal or individual causes, including for medical issues, memorials, family or community needs, and much more.

Once again, users create a campaign page using text and media describing what cause they’re raising money for. There are no deadlines or limits to raising money through GoFundMe, and campaigners don’t need to wait until the end of a campaign to receive funds that were raised through it. As a result, campaign creators also don’t have to worry about running a “campaign” in the sense that Indiegogo or Kickstarter users do, as there are no enforced launch or end dates for GoFundMe pages.

Who’s it for?

People raising money for themselves, for others, or for their community in almost any way -- the GoFundMe website suggests that there are few (if any) restrictions on the types of causes that can be fundraised through the platform. However, while it is often used for creative causes like the ones typically done through Kickstarter or Indiegogo, the website is designed more for these personal causes described above.

What’s the cost?

Use of the GoFundMe platform is free, but there is a transaction fee of 2.9% plus $0.30 for every individual donation made through the website.

LoanWell

What is it?

LoanWell is a family and friends lending platform that allows users to borrow or lend in one of two ways: either by creating a simple (but official) loan agreement for individual loans, or by creating a crowdfunding campaign. Like Indiegogo or GoFundMe, campaigns don’t need to raise their goal in order for users to keep the funds that they raise. However, campaigns do have beginning and end dates, as the urgency these create help drive backers to contribute: after all, the majority of funds raised through crowdfunding platforms tend to come at the beginning and end of campaigns.

For individual loans, the process is as easy as filling out a questionnaire, inputting your banking information, and sending a special invitation to your lender. For the Campaign, it works more like the websites described above. The user creates a Campaign page, complete with text and pictures describing the reason they’re raising money, and then they decide whether their campaign is public or private. Either way, they’ll receive a special link which they can use to direct their friends, family, and network to their Campaign page.

Who’s it for?

LoanWell is for people who would like to crowdfund, but who would rather borrow the money they’re raising rather than raise it through donations. It’s an excellent source of capital for businesses or individuals in need of low- or no-interest loans, and like Indiegogo, Campaigns don’t need to reach their full goal for lenders to keep the amount that they are able to raise. There are no category restrictions or restrictions against raising for personal causes. Generally speaking, any campaign that would be allowed on Kickstarter, Indiegogo, or GoFundMe would be able to find a home on the LoanWell platform -- but unlike on these other platforms, LoanWell campaigners would be raising loans from their backers, not donations.

What’s the cost?

There’s a flat rate of $74.99 to create individual family-and-friends loans. For Crowdfunding Campaigns, it works a little differently -- there’s no charge to create or run the Campaign while it’s ongoing, but upon the Campaign’s conclusion, LoanWell charges just 5% of the total funds raised by the campaign. That 5% charge is also flat -- there are no additional processing fees.

Better Efficiency for Your Team

LoanWell is a End-to-End platform for Lenders with Intake, Origination, Underwriting, Closing, Servicing, & Reporting all in one platform. Our system can be completely branded and customized (like Squarespace) and is specifically designed with flexibility in mind for the multi-faceted origination and servicing needs of Lenders.


LoanWell's services are not an offer to sell securities nor a solicitation of an offer to buy securities. LoanWell does not give investment advice, endorsement, analysis or recommendations with respect to any securities and is not a lender, financial institution, broker, venture fund or an investment advisor.