If you need cash to get your business off the ground or to keep operations running, a loan or business credit card can be a solid way to get money but they aren’t the only options out there. Crowdfunding platforms make it easy for businesses to raise money through online campaigns.
These campaigns get pushed out to millions of potential supporters who pledge small amounts of money to help your business reach a larger fundraising goal. Many of these platforms are pretty much risk-free, with the exception that if you don’t hit your fundraising goal, you don’t get to keep any of the money you raised.
Below, CNBC Select rounded up some of the best crowdfunding platforms for business operations. Read on to see which of these platforms may be right for you. (And see our methodology below.)
Best crowdfunding platforms for businesses
Best for a loan: Kiva
Standout benefits: Even though borrowers must repay the money they crowdfund, Kiva doesn’t charge interest on the loan.
Kiva
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Types of loans
Peer-to-peer crowdfunded loan
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Better Business Bureau rating
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Loan amounts
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Terms
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Minimum credit score
No credit score requirement
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Minimum requirements
You must be 18, live in the U.S., use the loan for business purposes, not be in foreclosure, bankruptcy or have any liens.
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Availability
Available nationwide except for businesses registered in Nevada or North Dakota.
Pros
- Ability to borrow with no interest
- Loans are geared toward borrowers who are unbanked and have trouble qualifying for financial products
- Ability to market your product to 1.6 million lenders on Kiva
Cons
- You need to prove your creditworthiness by inviting friends and family to lend to you
- It can take a while to receive your loan since investors need to raise money
- No BBB rating
Best for creative businesses: Kickstarter
Standout benefits: It’s free to sign up and launch a project on Kickstarter and creators set their own campaign deadlines that can last as long as 60 days. However, Kickstarter’s website says 30-day fundraising windows usually work best. The platform does take a 5% fee off the top of your funds if you successfully hit your fundraising goal.
Kickstarter
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Cost
5% of total funds raised; payment processing fee of 3% + $0.30 per pledge
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Standout features
Project categories are quite diverse and range from arts and crafts, design, dance, music, publishing, technology and more. Business owners and creators launch a project and set a funding goal with a deadline. You’ll only be charged if you reach your funding goal by that deadline.
Pros
- Free to sign up and launch a project
- Wide range of project categories supported
- Offers resources/crowdfunding tips
- Your project gets in front of a large online audience, especially if chosen to be highlighted on Projects We Love
Cons
- Kickstarter takes a 5% fee if you meet your fundraising goal
- You don’t get to keep raised funds if you don’t reach your goal
- In many cases, Kickstarter funds are considered taxable income
- Not every campaign can be featured on Projects We Love
Best for startups: Fundable
Standout benefits: Unlike other crowdfunding platforms, Fundable doesn’t take a percentage of the money you raise, so you get to keep all the money you crowdfund. It does, however, charge a monthly $179 fee to fundraise on the platform.
Fundable
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Cost
Free to get started but $179/month to fundraise
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Standout features
Equity-based crowdfunding, self-managed campaigns and guided fundraise campaigns
Pros
- Doesn’t take a percentage of the money you raise
- Offers a self-managed campaign and guided campaign option
- Guided campaign options come with a ton of support including targeted research on potential investors, crafting initial outreach emails, building your pitch deck for you and providing coaching on certain areas
Cons
- Costs $179/month to raise money, which may feel pricey to some
Best for nonprofits: GoFundMe
Standout benefits: Claiming your nonprofit’s page on GoFundMe is free.
GoFundMe
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Cost
2.9% + $0.30 one-time transaction fee
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Standout features
Project categories offered include nonprofits, businesses, creative projects, environmental impact, travel, volunteer work and more.
Pros
- Easy to use
- Accessible to both individuals and nonprofits and organizations
- Offers social media integrations
- It’s free to start and manage a campaign
- Optional donor contributions to GoFundMe
- Offers GoFundMe Pro, which is exclusively for nonprofits and this tier is custom priced
Cons
- Charges a transaction fee of 2.9% + $0.30, which is automatically deducted from each donation
- 5% fee per donation for recurring donations
FAQs
What’s crowdfunding?
Crowdfunding is a strategy for raising money where you get a large pool of people (sometimes called donors or investors) to pledge small amounts of money to help your business reach a larger fundraising goal.
What are the types of crowdfunding?
There are four main types of crowdfunding: rewards-based crowdfunding, equity-based crowdfunding, donation-based crowdfunding and debt-based crowdfunding. Donation-based crowdfunding is what platforms like GoFundMe offer. All the money pledged is considered a donation and donors don’t expect anything in exchange. With rewards-based crowdfunding, businesses and creators offer donors some type of perk (like free merchandise) in exchange for their pledge. Equity-based crowdfunding involves giving up future equity in your business to investors in exchange for their capital. And debt-based crowdfunding is where you raise money that has to be paid back.
What are the downsides of crowdfunding?
Crowdfunding makes raising money more accessible, especially if you don’t have a wealthy network, however, it can take a long time to successfully hit your goal and you’ll typically have to do a lot of the marketing for your campaign yourself. Many campaigns end up not reaching their fundraising goal and aren’t able to keep any of the money they did raise. And if you’re doing equity-based crowdfunding for a startup, not hitting your goal can be seen as a negative thing if you try to raise money again in the future.
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Why trust CNBC Select?
Our methodology
To determine the best crowdfunding platforms for businesses, CNBC Select analyzed dozens of online platforms. We categorized our picks by best for loans, best for nonprofits, best for startups and best for creative businesses.
When determining our picks, we considered factors like:
- Pricing, where applicable
- Platform fees
- Transaction/processing fees
- Platform features and capabilities
- The types of ventures featured
- Support offered by the platforms
- Customer reviews, where applicable
Terms and fees are subject to change.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.