Alternative finance refers to financial channels and instruments that have developed outside of the traditional finance system such as regulated banks and capital markets. It is a 21st century substitute to traditional banks for financing businesses or individual needs.

In other words, Alternative Finance refers to non-banking financial services that fill the gaps left by traditional institutions, offering greater variety, more flexibility and easier access to funds. This serves populations more.

Alternative Finance is increasingly finding ways to combine the best of technology with personal support to help both individuals and businesses.

Some of the first Alternative Finance institutions in Nigeria were the microcredit schemes, which targeted those that don’t have access to finance like the poor members of the community, women’s groups, minority groups, Micro, Small and Medium Enterprises (MSMEs) with no credit history. Now we have other types of Alternative Finance coming up, among which are the Crowdfunding and Peer-to-Peer lending options.

Since the establishment of Nigeria’s first Fintech bank, SunTrust Bank Nigeria Limited in August 2016, the prospects of Crowdfunding and Peer-to-Peer lending looks bright.


CROWDFUNDING

Crowdfunding is a form of Alternative Finance that small businesses, corporate organizations and individuals raise money for their projects and needs through contributions from many people through a web platform or portal. Typically, the parties to a crowdfunding transaction include a project owner/campaigner, contributors and a web- based intermediary/ platform, through which the public donate the money.

Crowdfunding has recently emerged as an innovative source of finance for micro, small and medium scale enterprises (MSMEs) with an estimated value of USD 16.2 billion raised in funds, globally as at 2014. The sector has an enormous potential of becoming the largest financier of SMEs worldwide as entrepreneurs continuously seek flexible ways of raising funds beyond traditional bank loans.

Funds raised by way of Crowdfunding ensure that small businesses have the credit to grow their business, which in turn creates jobs and stimulates economic growth.



Types of Crowdfunding

Lending Based – Direct lending where contributors are lenders and project owners are borrowers

Equity Based – Funds are contributed in return for shares in the project/company while it is unlisted on a stock market

Reward Based – Funds are contributed in return for products and services

Donation Based – Funds are contributed for project owners as a form of charity without returns

The foremost benefit of crowdfunding is that it bridges the finance gap for MSMEs and ultimately, leads to job creation and growth of an economy.

PEER-TO-PEER LENDING

Peer-to-peer lending, sometimes abbreviated P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Since the peer-to-peer lending companies providing these services operate online, they usually operate with lower costs and offer lending services more cheaply than banks. Thus, businesses and individuals who cannot easily get conventional funding are lent money by savers who earn much higher interest rates than they can get by putting their money in a savings, while borrowers receive money at lower interest rates.

Peer-to-peer lending brings much-needed competition and choice to the banking industry, providing funds to creditworthy businesses and individuals. With peer-to-peer lending platforms, consumers and businesses can ‘depend on each other’ for borrowing and lending.

Peer-to-Peer lending will grow fast and become a viable source of funding for MSME’s and individuals. Private Investors should also start looking at it as an avenue of investment.

Taking a loan always comes with big decision making like how much, how long do you intend taking it for and the interest rate of the loan.
The interest you have to pay back on loans depends on the type/term of loan you acquire. Owing money for long periods and watching the interest accrue can take its toll on a borrower emotionally and psychologically. This is why it is beneficial to opt for short term loans instead of the long term loans.

BENEFITS OF SHORT TERM LOANS

Short-term loans generally come with higher interest rates than long-term loans, but you usually pay less over the long-term.

Short term loans helps in cash emergencies and can be paid back soon enough, making you worry-free of debt. They also come with no collateral too.

Short term loans is also a viable strategy for building good credit history. You can take it with a special target of improving your profile.

It is much easier to predict and budget for a short-term loan. No one wants to be responsible for payments far into the future. With a short-term loan, you will have paid off your debt much quicker and be free of that burden. Always find flexible terms to work with.

Use Short term loans to tell lenders that you have a high chance of repaying debts in order to increase your access to more loans in future.

For more details on how you can use your credit history to increase your access to loans, visit crccreditbureau.com/product or call on 08182152016. We are also available on Whatsapp.

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Your identity is the complete set of characteristics that defines you. This includes your name, date of birth, gender, address, schools attended, your work history, position – to mention but a few.

Our identity is an important aspect of our live that must be protected to avoid being impersonated. As individuals the strength of our identity is further, a function of the role, status, position as well as the information available at our disposal. Our net-worth, sensitivity of information in our possession and the work relationship we enjoy with families, colleagues and business partners are things we ought to guide jealously.

Today, technology has made information easily accessible to all, unlike when information can only be documented and filed away in cabinets but gets exposed as desired or gets lost if not properly kept or secured. With the advent of online activities and social network platforms (example: Twitter, Facebook, Youtube, Snapchat, Instagram, LinkedIn, and so on), the speed through which information is being disseminated cannot be contended with.

The best protection is prevention. Here are some tips to safeguard your good name:

Some of these characteristics never change!

1. Keep your important papers secured, shred documents with sensitive information before you put them in the trash.

2. Check your statements carefully. Go through your creditcard and bank statements every month. Unexpected entries can be the first indication that somebody is stealing your money.

3. Limit your social networking - Protecting your identityonline is one of the most important things you can do. It’s tempting to include basic information such as your full name and date of birth in your online profiles, and then add interesting details such as your pets’ or children’s names and nicknames. Don’t — these are the kind of details that you probably use for passwords and PINs, so leave them out. Your cyber-friends might be fraudsters looking for enough data to steal your identity.

4. Don't risk important documents – Do not carry your passport, driving license or even credit cards unless you know you’ll need them. Never write down your PINs or passwords. If your bag or wallet is stolen, you could be handing the thieves your identity as well as your cash.

5. Don’t respond to cold calls or to unsolicited e-mails - Never reply to e-mails or to cold-callers asking for details such as PINs, passwords or account numbers — and don’t fill in your details on any unfamiliar e-mail or website.

6. Make sure any online credit card charges are handled through a secure site or in an encrypted mode. You'll know you're on a secure site if the Web page on which you conduct your transaction begins with https instead of the usual http.

7. Only shop on Web sites that offer a privacy policy. Know how your personal information will be handled. Print out privacy policies, warranties, price guarantees and other important information.

8. Limit the number of credit cards you carry. The fewer you have, the easier it is to track them.

9. Never leave paid bills in your mailbox for the mail carrier to pick up. Drop them off at a post office box.

10. If you're moving, contact all your creditors and update them of your address changes immediately. You don't want credit information and new credit cards being delivered to the wrong address. Likewise, if your credit card expires and you don't receive a new one, call your creditor immediately.

Cultivating the necessary precaution would not only help eliminate the possibilities of compromising your identity, but also safeguard your accessibility onto any forum/medium or platform.

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Credit bureaus were established by the Central Bank of Nigeria to play the vital role of managing credit risk while financing the economy. Credit bureaus provide the relevant information that enable lending institutions make good lending decisions and also increase their lending to more individuals and organizations.

Credit Bureaus have consistently improved transparency in loan application processes in Nigeria over the years. They provide consumers with the credit report that loan providers will use to do a check on them when they apply; so they are aware of what is reported about them.

Credit reporting systems have proven to be the fastest and most successful way to facilitate the necessary growth in accessing loans/credit. The main aim is to promote responsible behavior in borrowers so that the rate of non-performing loans can reduce. However, it is not enough for individuals/organizations to only pay back their loans as at due time, they must also monitor the reports. Sometimes accounts go into debit as a result of charges and we may not be aware especially if that is not our main account. The owners of these accounts are reported as debtors to credit bureau without them even knowing.

Credit experts recommend that consumers request their credit report at least twice every year to check for inaccurate information. Understanding your credit report and keeping track of what is reported of you to credit bureaus is the key to building a good credit profile. This is being proactive... You get to see if there are any anomalies reported about you by any institution and ensure they are corrected/updated. Then you can confidently approach any bank to apply for loans because you have successfully reduced the chances of getting rejected.

How much to you know about your credit status?

Visit http:///2jHRyHE for more details.