Tackling loans can be a difficult task with any business since there is increased pressure to get it right and make sure any repayment method is the right one for you. Unlike crowdfunding, P2P lending provides a quicker alternative for any funding to help get your business venture well and truly underway.
When looking for a business loan, there is certainly a lot to consider. This includes: where you are going to get the funding from, how long will it take and what are the interest rates like. However, peer to peer lending is the perfect solution to tackle these issues with ease. This allows you to receive funding from a series of private lenders on a secure platform within just a few days. The concept is specially designed to ensure that both lenders and borrowers receive the best rate possible for the amount of money that they are looking to borrow. This is far more beneficial for any business as they can borrow the money needed with a much higher maximum amount you can apply for.
What Are P2P Business Loans?
A P2P business loan is a loan that takes investment from a series of private lenders to help fund a business. This is different from a normal business loan as you sign up to a P2P lending platform and sell your business idea. This is very similar to a conventional lending platform as it will ask you questions about your business such as annual turnover and the overall business plan. If this proves to be enough to see you through the initial process, this information will then be shared with a selection of private investors. This is slightly different as you state the amount of money that you need and receive investment to accommodate rather than borrowing money directly to a lender.
The Pros & Cons of P2P Loans
The pros and cons to the P2P loan are fairly simple. Unlike a conventional loan, this involves using a platform to receive money from investors and the loan is then paid back to the lender. Although this can seem risky for a business, there are plenty of reasons for and against P2P lending and it’s vitally important to be aware of all of them. One of the pro’s for P2P lending is that it is more accessible for businesses of all sizes. This is beneficial for a start-up business as this will allow them to receive funding for a product or service in a more reliable way rather than using a GoFundMe page. You’ll also benefit from shorter approval times, the lack of need for any security to be held against your loan and a far more cost-effective way of borrowing.
It’s important to be aware of the less glamorous parts of peer-to-peer loans. They aren’t necessarily appropriate for all businesses, depending on the amount you want to borrow or the current situation of your company. You’ll also face higher interest rates than other forms of loans, and you’re at risk of not being accepted if your business fails the initial assessment.
However, while there are cons, if you are a small business, the P2P loan is a perfect solution as there is no level of security needed. You can, therefore, gain the funding that you need without having to put forward any assets.
Peer To Peer Loans vs. Crowdfunding
A peer to peer loan is often confused crowdfunding, however, these two methods are completely different. A crowdfunding method is where you allow people to buy a portion of your business or make a donation to help you achieve your goals. This is different from a peer to peer loan as crowdfunding is from friends, family or even strangers that are paying to help fund the business venture. Alternatively, peer to peer loans is done through a lending platform and receive funding over a much shorter amount of time. Due to P2P funding being unsecured, there is a process that includes intense scrutiny before you can gain the funding you require. This is in part due to the lender taking a risk on your business and matching you up with investors. If you were to then default on payments, the responsibility is then taken on by the lender and could have a profound effect on them. Here at Think Business, we offer an amazing service that matches you with trusted lenders. Not only will we find you the investors that you require, but we will take a look at your business plan and help ensure you get the results you need.
With all this in mind, there are a number of reasons why a P2P business loan would be perfect for the funding of your business ventures and the future of your company. For more questions on P2P business loans and how they can change your business, feel free to contact us!