Veteran crowdfunding is precisely what you may think, as it involves investors entering crowdfunding marketplaces and loaning money to active service members and veterans. Crowdfunding for veterans is mission-driven, so it may come with a discounted rate or favorable terms, given that the peer lenders are doing this to help their peers and not just to make as much money as possible. In this post, we go over the advantages and disadvantages of veteran crowdfunding.
Veteran Crowdfunding Advantages
Of course, the obvious example of an advantage of veteran crowdfunding is that the interest rate may be lower than other forms of personal loans and perhaps even lower than regular peer-to-peer lending. As mentioned above, people lending money through crowdfunding for veterans are doing it to help that group and not just get the highest possible return. Of course, that is not to say they don’t want any return.
Advantages of crowdfunding for veterans for the receiver
Other advantages of veteran crowdfunding may depend on the marketplace you choose but could include:
- Longer payback time than conventional loans may be available, though you may pay a slightly higher rate for this advantage
- Fixed-rate may be available for some crowdfunding for veterans, saving you the anxiety that comes with getting an adjustable rate loan
- The fees involved with veteran crowdfunding may be lower, and the application is more straightforward than you’d find with traditional personal loans.
- Most crowdfunding for veterans does not have penalties for early payoff and otherwise has favorable terms.
Advantages of crowdfunding for veterans for the investor
For investors, the advantages of veteran crowdfunding are apparent: You get the chance to get a return on your investment while also helping a group you want to help. You are rounding out your investment portfolio while also being mission-driven.
Crowdfunding for Veterans Disadvantages
For many, the choice of veteran crowdfunding for veterans may be obvious, but there are certain disadvantages as well that you should keep in mind. Crowdfunding for veterans is not for everyone, and you should consult with a financial adviser if you are unsure whether they are the right fit for you.
Disadvantages of veteran crowdfunding for the receiver
You need to consider the terms of the loan you are being offered and be sure it is a fit – are you going to be able to afford the payments, and are you being given sufficient time to repay things?
While veteran crowdfunding is excellent and is available, they are still not for everyone, and some may benefit from more traditional funding sources that may allow for better terms. Of course, you also have to make sure that you should borrow money for your project or purpose in the first place – are you going to be able to pay the loan back? Other disadvantages of crowdfunding for veterans are the fact that you may not be able to borrow as much as you need, you may have to wait a while before your loan is funded, and if your credit scores are low or other factors work against you, you may be asked to pay a higher rate.
Disadvantages of veteran crowdfunding for the investor
The disadvantages of crowdfunding for veterans for investors are that they may have a lower rate of return than other peer-to-peer lending instruments, given that they are partially mission-driven, and may allow for slightly less qualified borrowers for the same reason. Additionally, veteran crowdfunding has the same disadvantages as other peer-to-peer lending, such as a nonguaranteed return, longer wait time getting your return, and an inability to pull out cash whenever you want.
Veteran Crowdfunding Types
Two types of crowdfunding for veterans are available, and it is essential to know the difference.
Favorable terms
There is veteran crowdfunding that is discounted or otherwise made particularly favorable to the military family, service person, or veteran. These loans may have a lower rate, more favorable terms, or specific provisions that may slightly reduce the payback to the lender and improve things for the person receiving the loan. These mission-driven loans are popular but also a little less common. They are certainly more favorable to those receiving the l. In some cases, this may mean that payback is more likely to stress a family during the deployment cycle.
Increased visibility
Veteran crowdfunding allows borrowers to state that they are military connected , and lenders can choose a military family or individual. These loans, however, are not necessarily discounted in any way, nor do they come with favorable returns. Instead, they merely offer increased opportunities for military individuals and families to get funding from those who will single them out. As mentioned above, while these loans provide just as high of a potential payback as regular peer-to-peer loans, they may put a lot of pressure on the family whose member may be deployed or just returning when financial stress may be at its highest.
Conclusions and Our Work with Crowdfunding for Veterans
Perhaps as time passes, other veteran crowdfunding types will emerge, such as those that allow military deferments while someone is deployed or give extra time when they get back. Or maybe there could be loans that will enable graduated payback when the person returns from active duty so she can get acclimated.
Veteran crowdfunding may be a great choice if you have done your homework and understand the advantages and disadvantages related to your unique situation. We’d be happy to help connect veterans to potential investors and investors to the platforms through which they can pursue crowdfunding for veterans. Contact us any time to discuss veteran crowdfunding.
