Crowdfunding Your Property Deposit or Property Project, Anything? - Yes.
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Is it Legal? Yes.
Crowdfunding. Also known as peer-to-peer finance (P2P). Crowdfunding is a way of raising money from several individuals to fund a business, project, venture or cause. This is often done through online platforms to reach hundreds if not thousands of potential funders.
The Financial Conduct Authority's (FCA) website identifies four types of crowdfunding:
Loan-based. People lend to individuals or businesses in the hope of a return in the form of interest payments and a repayment of capital over time (this excludes some business-to-business loans). Also known as marketplace lending or crowd lending. It is regulated by the FCA.
Investment-based. People invest directly in businesses by buying shares or debt securities or, indirectly, by buying units in an investment scheme. It is regulated by the FCA.
Donation-based. People give money to individuals, enterprises or organisations whose causes, activities or purchases they want to support, with no expectation of any return (for example, litigation, medical treatment and other philanthropic and civic projects). It is not regulated by the FCA.
Pre-payment or rewards-based. People give money to receive a reward, service or product. It is not regulated by the FCA. (FCA: Crowdfunding.)
Additionally, people may invest or lend money using organisations or investments that satisfy the requirements in statutory exemptions to be considered exempt from the ned for FCA regulations (for example, enterprise schemes or withdrawable shares issued by industrial and provident societies).
The UK Crowdfunding Association (UKCFA), was set up as a self-regulatory trade body by several UK crowdfunding businesses. For more information on the UKCFA, see its website (UK Crowdfunding Association).