Peer to Peer Loan
Peer-to-peer lending is a unique type of financing that often occurs in various online forums. Members of the forum will offer borrowers capital at a pre-determined interest rate. Most of these loans normally do not need to have collateral. Borrowers can assess different peer-to-peer loans on offer and select the most competitive rate in the marketplace. Because of the openness of the forum, lenders must compete to provide borrowers with the lowest possible rates. The following are characteristic of traditional peer-to-peer loans:
- Lenders can choose which borrowers they’d like to communicate with
- No previous history between lenders and borrowers is required
- Most interactions take place through an online platform or forum
Should My Business Get a Peer to Peer Loan?
There are a few advantages in accessing a peer-to-peer loan.
For one, because of the competitive nature of the market place many borrowers can access quite low-interest rates for unsecured capital. But the time it takes to apply and assess competitors can be a hassle when you are trying to run your business. In addition, some details of your private financial situation and history will have to be published to the online forum or market place. Also, if you don’t have previous experience in finance, choosing the correct lender can be a complicated process. Lenders will want to ensure that you have a strong credit score and decent revenue stream. They will also want to make sure that you don't have too much debt currently attached to your business. This can be problematic for a new business owner who may not have an established credit history or customer base. In addition, it is likely you already have a large amount of debt attached to your business as you haven’t had time to make significant payment contributions.
Lastly, the legal framework of peer-to-peer lending is still fairly ambiguous, agencies are still undetermined as to what framework or regulation these types of lenders fit into — there are obvious risks associated with this.
How Can My Business Get Capital?
If you’re unsure on whether a peer-to-peer loan is the correct fit for your business, you should look into the wide array of funding options online lenders like us offer to their clients. We can get borrowers working capital extremely quickly and at short notice. We also provide our clients with ongoing access to cash, not just single sums that have individual funding requirements. Traditional lenders will want extensive and lengthy paperwork during your loan application. This can be time consuming and prevent you from working on the ins and outs of your business.
We’ve invested heavily in making our application process as painless as possible for our borrowers. Our entire application is streamlined through our online portal which can deliver automated decisions at a fraction of the rate of our competitors. Don’t wait weeks, or even months, for your lending decision. Apply online today!
Learn More About Specific Loans for Your Business
Unsecured Small Business Loans