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Profitus news Real estate developers are increasingly choosing crowdfunding

2021-03-07 09:00:00


Real estate developers are increasingly choosing crowdfunding

When real estate developers are looking for financing, one of the main arguments is the speed and flexibility of obtaining a loan. Financing real estate projects in banks are not fast - it can take at least several months, and commercial banks are becoming more conservative every year, especially when we talk about small and medium-sized businesses. Therefore, the business is looking for alternatives to receive financing and in most cases chooses a crowdfunding platform.

Crowdfunding is still a relatively new field in Lithuania, but it has already managed to gather a considerable circle of investors. Therefore, it is possible to collect the necessary financing for a project or business loan on the platform in just 2-3 days. Real estate developers start looking for financing at the property acquisition stage when they have very limited time to pay for the property. Then crowdfunding becomes a great tool, offering a significantly faster process. One such example is the acquisition of property by auction or bidding when financing is required in less than 1 month. period.

And these are not necessarily just business loans worth several hundred thousand euros - some of these financed projects reach a value of over a million euros. One such example is the Vanagupė Valley project, in the first phase of which investors financed 1 million euros in just 3 hours. The invested funds were used for the acquisition of property from tenders and for the development of the real estate.

Real estate development can be sensitive to various circumstances. It is not uncommon for unplanned disruptions that require operational solutions to be overcome. Finding them is helped by a financial partner - a crowdfunding platform that fully explores the needs of each business and adapts the most suitable financing structure. One of the highly effective solutions offered by Profitus for a business that borrows a large amount of money for a project and does not have time to immediately employ all the funds, so paying interest on the loan is useless for them - business loan financing in stages. Crowdfunding that takes place in this way allows the developer to conveniently use the funds in parts. And the value of the mortgaged property is constantly increased for the investor, he can monitor the construction progress of the project he invested in, the solvency of the business loan, judging by the previous stages, and invest in a well-known real estate project.

It is clear that crowdfunding platforms, which until recently were a novelty in the market, and was viewed with caution, have today come a long way and become a sustainable financial partner for businesses. In many cases, they surpass the usual business loans and financing tools, and cheaper loans are no longer the only argument determining the decision.