Frequently asked questions
What is Crowdadance and how does it work?
Crowdadvance is an online marketplace for buying and selling future receivables. We are often referred to as a crowdfunding platform, marketplace lender, or peer-to-peer lender. Whatever term you choose to use, we are here to connect investors who want to invest in small businesses with small business owners that need capital to grow their business. It’s that simple.
Through the Crowdadvance platform, accredited, industry non-accredited, and institutional investors have the opportunity to invest in small businesses online through a private, secure website. Investors can browse investments, review due diligence materials and sign legal documents securely online. Once invested, investors have access to an investor dashboard, giving them 24/7 access to watch how their money is working for them.
Borrowers and sponsors looking for apital can do so by filling out an online application, creating an account and going through our due diligence process.
We are here to simplify the capital raising process through the use of technology.
Is Crowdadvance secure?
Crowdadvance is committed to protecting the privacy and confidentiality of information. This includes but is not limited to physical and electronic procedures to protect information from loss, misuse, damage or modification by unauthorized access. Some of the central features of our security program are:
- Internal and external review of our public and non-public Internet sites and services;
- The use of specialized technologies such as firewalls and encryption;
- Rigorous multi-stage testing of the operability of products and features before they are exposed to the Internet as well as updates for known vulnerabilities;
- Monitoring of our systems infrastructure to detect weaknesses and potential intrusions.
How is Crowdadvance capitalized?
Crowdadvance is backed by two venture capital firms and additional several smaller strategic investors. In January 2016, we completed our first major capital raise for $2 million, which was led by Sather Capital Partners, a prominent venture capital firm and one of the first investors in OnDeck.
What's the difference between a loan and Crowdadvance's short-term financing?
Short-term financing is an alternative to a traditional bank term loan that is extended based on the monthly sales volume at your business, and not your personal or business credit history. The application and approval process is faster, and no collateral is required. Short-term financing is available with terms from three to 24 months and it is generally repaid through automatic deductions from your business bank account.
Crowdadvance for Franchisors
What are the benefits of becoming a franchise partner?
We understand the unique needs of franchises, because our founders own a chain of franchised gyms themselves. That’s why we take a holistic approach to understanding a franchisee’s creditworthiness and recognize the value of being part of a successful franchise concept in our underwriting process. One of the biggest benefits is getting a dedicated, co–branded web portal to streamline your franchisees’ applications.
As a franchisor, how do I become a franchise partner?
It’s easy! Please just get in touch with us at email@example.com and specify that you are interested in a franchise partnership.
Crowdadvance for Independent Sales Offices
How do I become a referral partner?
Email us at firstname.lastname@example.org to request more information about our Referral Partner Program. Or, call us at (888) 502-3849 and ask to speak to a member of our Referral Partner Team. If you are a suitable partner, we will send you our Welcome Pack and our Referral Partner Agreement. As soon as you sign and return the agreement, a member of the team will create a login for you to access your Partner Portal and we can get started working together on deals.
Is there a referral partner commission?
Yes, we pay our registered Referral Partners a fixed fee for any businesses they refer that get funded on our platform. This fee comes directly out of our own pocket from our origination fee proceeds.
When do referral partners get paid?
We do our best to pay commissions on the same date that the borrower receives their loan proceeds however not longer than 5 business days.
As a referral partner, how do I check the status of my client?
Use your login and password to access your Partner Portal via the blue ‘Sign In’ link in the upper right–hand corner of our homepage—www.crowdadvance.com. From your Partner Portal, you can complete and submit a loan application on behalf of your client, or you can share your unique Partner Affiliate Link (found in your Portal) so an applicant can submit their own application and it will tie back to your account.
Can my client enter their own application?
Yes. Every Partner Portal has a unique Partner Affiliate Link associated with it that can be found at the bottom of your dashboard. Just copy and send your Partner Affiliate Link to your client so they can access our online application.
As a referral partner, will you include me in all communication to the borrower?
It’s completely up to you. Every relationship we maintain is unique. We’re happy to reach out directly to loan applicants with requests for additional information, or you can manage the communication with your clients.
As a referral partner, can I receive a copy of my client’s Experian credit report?
No. For privacy reasons, we can only send a copy of your client’s credit report directly to your client and only after your client has provided us with the necessary verification information to do so.
As a referral partner, can I be copied on AAN decline emails to my client?
Unfortunately, no. For privacy reasons, we have to send all Adverse Action Notices directly to the borrower and cannot share that credit information directly with any other parties.
Who invests through Crowdadvance?
Crowdadvance investors include high net worth individual investors and institutional investors including family offices, registered investment advisors, private equity firms, hedge funds, banks, asset managers, and non-accredited individual investors who work in commercial finance.
Who can invest through Crowdadvance?
Both accredited and non-accredited investors who work in commercial finance are eligible to invest small business financing opportunities on Crowdadance.
To qualify as an accredited investor, you must meet certain thresholds as defined by the Securities and Exchange Commission under rule 501 of Regulation D. Specifically, you must meet one of the following criteria:
- Earn an annual income per individual of over $200,000 per year ($300,000 per couple) with the expectation of maintaining such level of income in the future.
- Have a net worth of more than $1 million (individually or jointly), excluding the value of a primary residence.
- Be a bank, insurance company, registered investment advisor, business development company, or small business investment company
- Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered.
- Be a business in which all the equity owners are accredited investors.
- Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million.
When I invest in a business though Crowdadvance, what do I own?
When you invest in a small business on Crowdadvance you are purchasing a portion of that busineess future sales at a discount, the performance of which is tied to the underlying performance of the business. The Purchas and Sales Agreemnt allows you to receive weekly payments on the purchase if and when the borrower makes daily payments which are aggregated and paid weekly.
What fees are involved for investors?
Joining Crowdadvance and browsing the marketplace requires no obligation. For those who choose to invest, there are fees associated with each investment. The fees depend on the type of investment (loan purchase or equity purchase) and the nature of the transaction. In addition to administrative and legal expenses, the fees will cover the ongoing reporting and communications for the investments. As we are big believers in transparency, you can find the specific fee structure for each deal when you browse through our investment opportunities.
What is crowdfunding and why haven't I heard about this before?
General Investor Questions
What are the benefits of investing though Crowdadvance?
Crowdadvance makes it easy for accredited, industry professionals, and institutional investors to invest in small businesses.
We provide access that was historically limited and pre-vet every investment in the marketplace. We spend countless hours sourcing real estate investments so you don’t have to. We also allow you to invest in real estate with dramatically smaller check sizes. Instead of $50,000 or $100,000 minimums, you can buy shares of investments with as little as $1,000. And we make the process frictionless – allowing you to screen investments online, sign legal documents online, and have access to all your documents in one place on your investor dashboard.
For institutional investors, we are a source of efficient and technology-based production, helping them diversify their portfolio while getting access to a wide suite of commercial debt products.
What will I actually own?
When you invest in a Purchase and Sale Agreement or "PSA", you are purchasing an unsecured note in Crowdadvance, LLC., the performance of which is tied to the underlying small business cash advance. This PSA allows you to receive periodic payments on the on the note if and when the borrower on the underlying business cash advance makes payments.
When will I get my investment back?
Can I use a retirement account to invest?
At this time, we can (and regularly do) process debt investments made through a self-directed IRA account, but it will depend on your custodian's processes/procedures. Our two requirements are that the custodian be able to process documents via electronic signatures, and that it be able to process contributions and distributions via ACH transfer payments. Unfortunately, some custodians have problems meeting these conditions; inquire of your current custodian whether they can work with these requirements, and if not, we can refer you over to other providers who can meet these guidelines.
If a borrower stops paying, what happens?
If a borrower stops paying, we will determine what note modification or loss mitigation options to pursue before beginning foreclosure proceedings. Crowdadvance will inform all investors if any significant actions are taken on their specific investments.
Is there an investment minimum and maximum?
Yes. The minimum and maximum investment amount is different for each project and is set by Crowdadance. An individual investor my not invest more then 10% of their total account value any single offering.
Is the investment secured?
No, the investments on Crowdadvance are not secured.
How often should distributions be expected?
Distributions depend on the specific investment, but are typically provided to investors weekly. Please review the expected distribution schedule for each investment before making an investment. No distributions are guaranteed.
Are these investments risky?
Yes they are. However, before placing any investment opportunity on our platform, the Crowdadvance team reviews all aspects of the proposed deal to ensure quality and to prevent fraud. While we recognize that every investment involves risk, and there is always the risk of losing your capital, we strive to reduce that risk by providing you the transparency and tools you need to make an informed decision.
What are the tax implications for investing in Crowdadvance?
Tax information regarding first lien debt investments is reported annually to investors on Form 1099. For other types of debt (like mezzanine debt), distributions may be characterized as interest, dividends, or other distributions, and investors may receive either a Form 1099 or a Federal and state Form K-1, depending on the structure of the transaction.
Crowdadvance do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. See offering documents for additional details, disclosures, and disclaimers.
Who is eligible to buy larger percentages?
Institutional investors looking to invest >$5 million are eligible to buy whole notes from Crowdadvance. These whole notes differ from the PSAs in that they are secured by the borrower
What is the process to get financing?
To apply for capital, start the application process here. You’ll be asked a quick series of questions about the property and you. Our propriety technology then will screen your application and if found to be suited, one of our account executives will reach out to discuss further details and provide you with a quote.
What are the advantages for business owners?
Most industries can qualify for short-term financing and even businesses that have been open for as few as three months can apply. You can request from $5,000 to $1,000,000; lenders will base their decision on your monthly sales volume. You’ll need to provide some documentation, but far less than for longer term loans: Expect to be asked for bank statements and a landlord reference. Some lenders will require that your business is majority owned by a U.S. citizen or legal permanent resident.
- No collateral required
- Limited documentation needed
- Perfect credit not required
- Nearly every industry accepted
What sorts of rates do you charge?
We offer competitive interest rates but they are subject to a variety of factors including industry, loan size, time in business and credit rating of the borrower. We typically charge 8-12% not inclusive of fees for origination and underwritng.
Access Your Future
accredited and allow you to access to all our projects.