New Concept in Raising Capital: Crowd Funding

LendSquare is a new Chicago-based microfinance company that allows existing small businesses to finance growth by borrowing money from their customers and communities. LendSquare provides a web platform, marketing advice, a legal framework, and a payment system that makes borrowing from a group of individuals simple and transparent.

Here's how it works: to secure financing through LendSquare, a business decides on the terms of their loan, including the maximum interest rate the business can afford. LendSquare then hosts the loan request on www.lendsquare.com and works with the business to market the loan to their community. Individuals visit the website to pledge amounts between $1 and the full request. LendSquare aggregates the pledges until the entire amount has been covered, and it uses a simple formula to set an interest rate that borrowers and lenders are happy with. LendSquare then disburses the loan to the business and administers the repayment process until the loan has been fully repaid.

LendSquare allows small businesses to grow incrementally by providing low-interest-rate loans in amounts between $3,000 and $100,000, provides individuals with an opportunity to invest in businesses they know and value, and strengthens the bonds between a small business and its community.