Crowdfunding as Business Financing – How It Works with Capital Circle
Crowdfunding has become an increasingly important concept in business financing, but what does it actually mean? Crowdfunding is a form of co-financing where multiple investors contribute an amount of their choice. Together, they raise the requested funding amount. For entrepreneurs, it is a way to borrow money without relying on a traditional bank. For investors, it offers an accessible opportunity to earn returns on savings while supporting (local) businesses.
There are many successful examples of projects that have been realized through crowdfunding. The number of crowdfunding platforms has also increased significantly—this is no coincidence. Banks have become more cautious in granting business loans, making bank-free financing an attractive solution for entrepreneurs. At the same time, interest rates on savings have dropped in recent years, making crowdfunding a compelling alternative for savers and investors looking for better returns.
Investing in Crowdfunding via Capital Circle
How does crowdfunding work at Capital Circle?
Capital Circle is an online funding platform that connects entrepreneurs and investors. Any entrepreneur with a well-founded financial plan can submit it to our platform. The community of investors already active on Capital Circle—both private and professional—can then invest directly in the project. Additionally, the project is visible to every visitor on our website.
To keep crowdfunding accessible and effective for as many people as possible, Capital Circle operates within a clear set of parameters:
- Every entrepreneur and investor is welcome
- Minimum loan amount: €25,000 | Maximum: €5,000,000
- Minimum investment: €100
- Repayment via annuity, linear, or interest-only schedule with a fixed interest rate
- Loan term: minimum 6 months, maximum 60 months
Why Work with Capital Circle?
Capital Circle offers several advantages compared to similar platforms. For both entrepreneurs and investors, this brings added value. We are a frontrunner in technological development and were among the first in the Netherlands to fully align our services with European legislation.
One key change introduced by the European Crowdfunding Regulation (ECSP 2020/1503) is the mandatory collaboration with a licensed payment service provider. Capital Circle has partnered with Online Payment Platform (OPP), which holds a PSD2 license. Since October 2023, all financial transactions are processed via OPP, ensuring safe and reliable money flows for all parties.
In addition, Capital Circle facilitates direct communication between entrepreneurs and their investors—an exclusive feature of our platform. Investors can contact project owners with questions, and entrepreneurs can keep their backers informed throughout the duration of the loan.
Capital Circle also leads the market in legal structuring. All investors’ interests are collectively managed by the Stichting Security Trustee KOM Group. This foundation acts on behalf of all investors and can represent their interests in case of defaults or changes to the loan agreement. Entrepreneurs therefore don’t need to negotiate with individual investors, and investors are protected and represented as a group.
Security for Both Parties
As a crowdfunding platform, Capital Circle values transparency and complete information. Our procedures and checks & balances are designed to ensure this.
Capital Circle Due Diligence
Entrepreneurs submit their plans along with relevant documentation. Capital Circle evaluates the proposal across five categories and assigns a risk score to each. A full risk analysis is published with the project, visible to all potential investors.
Crowd Due Diligence
We involve our investor community as much as possible during the funding phase. All documentation and risk assessments are shared on the platform. Investors can ask questions and share feedback via the comments section. This interaction helps clarify the project for everyone and encourages trust and participation—especially helpful for newer investors.
Risk Classification System
Capital Circle uses six standard risk classes, ranging from very low to very high. Since crowdfunding attracts a diverse group of investors with different risk appetites, our platform offers a variety of projects to match individual profiles.
Stichting Security Trustee KOM Group
As mentioned, the Security Trustee Foundation represents the collective interests of investors. Legally, it is the party that signs the loan agreement on behalf of all backers. If payment issues arise, the foundation can act quickly to resolve the situation and ensure transparency throughout the process. In case of default or liquidation, it also leads recovery procedures.
Costs of Crowdfunding at Capital Circle
Our service fees are relatively low for both entrepreneurs and investors. Capital Circle operates a sustainable model based on success and transaction fees, without taking a margin on interest rates like traditional lenders.
For investors:
- 1% annual fee on outstanding investments
- No costs for account registration or onboarding
- Fees are only deducted from monthly repayments—no fees are taken upfront from your investment
For entrepreneurs:
- One-time assessment fee: €395
- Publication fee (upon agreement): €350
- Success fee (upon full funding): minimum of 2% (min. €2,000), deducted from the total loan
- Monthly admin fee: €0.25 per investor per month
No Administrative Hassle
Capital Circle aims to relieve both entrepreneurs and investors of all administrative burdens. We handle the full loan administration and provide a transparent dashboard. Payments are handled securely by OPP. If a project is canceled (for example, due to failed collateral setup), Capital Circle ensures your investment is refunded within a few days.