Another is Mosaic, a website that allows accredited and non-accredited investors in California and New York to invest in solar projects that cost between $55,000 and $2 million. Investors contribute fractions — called "notes" — of the total loan needed for a given project. As solar projects sell the power they generate, they repay investors with interest.
Returns are around 4.5 percent, higher than U.S. Treasury bonds, according to Mosaic. Investors can contribute as little as $25. The company has fully funded 12 solar projects and raised more than $1.1 million since it launched in 2011. Although Mosaic vets solar projects carefully, but using the platform does carry some risk.
Investment has grown since the platform shifted to an interest-bearing model, said spokeswoman Lisa Curtis. Before, the average contribution was $100. Now that people can make money while funding a cause they care about, the average contribution jumped to around $1,000.
Pretty much anyone with a dream can apply to borrow money through Pave, a platform that began with the hope of offering a better alternative to traditional student loans. Pave matches so-called prospects, U.S. citizens who are 18 and over, with a team of backers willing to help fund schooling, business ideas, or creative projects. To settle the debt, prospects commit to giving backers up to 10 percent of their income for the next decade.
Pave payments adjust depending on how much a prospect earns at a given time. Because repayment is based on income, Pave argues that the investments aren't high risk: Chances are, the prospect will figure out a way to make money, even if the project they raised money to fund doesn't work out.
Pave launched last December with eight prospects, ranging from an engineering student to a filmmaker. Prospects have sought to raise an average of $20,000, and backers must invest at least $500 in a given prospect. Backers are also encouraged to mentor the young person they have invested in. A similar company, Upstart, focuses on college graduates.
3. Lending Club
Lending Club allows borrowers to crowdfund personal loans and gives investors an opportunity to build a portfolio of "notes," small portions of those loans. More than $1.5 billion has been invested since the platform launched in 2007, earning investors over $133 million in interest. Members can open joint accounts, corporate accounts, trust accounts, and even retirement accounts.
Lending Club's investors have earned an average rate of return of over 9.5 percent, according to the company, and borrowers pay lower interest rates than they would on many credit cards. Almost 80 percent of borrowers use low-interest, fixed-rate loans from Lending Club to pay off other debts.
Although Lending Club does charge fees, they are lower than those found at most traditional banks. Borrowers can seek loans up to $35,000, which they must pay off in monthly installments over three to five years. Interest rates are calculated according to an individual's creditworthiness — and Lending Club members are very creditworthy. The company rejects ninety percent of individuals who request a loan, focusing only on those with high credit scores.