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Peer To Peer Lending For Business
This video is by The Fox Business News Channel. This an excerpt from a segment on peer to peer funding.
The guest is Chris Larsen, the CEO of Prosper, which is considered as one of more established peer to peer marketplaces. He is talking about the overall financial strength of Prosper for anyone who may be looking for a loan.
In this segment he does talk more about personal loans, and the options if you may want to invest. However, this page provides basic information for those who are seeking funding specifically for a business. We have a direct link to Prosper where you can post a free loan request. It is at the bottom of the page.
What Is Peer to Peer Lending? The easiest way to explain it is to just simply replace the word Peer with the word People. The concept is simply people connecting directly with other people. Or your peers.
This is made possible by the ever increasing growth of the internet. Those who are making the loans are everyday people just like you. Except they are in a better financial position. They have money, and looking for opportunities to invest it. But for years now banks, credit unions, etc. pay very little interest. And we know that something like the stock market can be a very big risk. So many people feel that they can get a better return by investing in other people.
It is also often referred to as social lending, crowd sourcing, or crowd funding. It can be a promising alternative to obtain loans for many small businesses. Whether you are starting a new business. Or operating an existing business.
We already know that many entrepreneurs can find it challenging to obtain credit from traditional lending sources, such as a banks or credit union. In many instances, that brand new small business owner may lack a record in their new industry.Then it becomes the typical catch-22. You need an established business history to get a business loan. But how do you get experience, or a track record, if no one will fund the business.
Then there may be past credit issues that may hinder their ability to get loans. It is not unusual for owners of small start ups to turn to borrowing money from family, friends, etc. P2P lending sites build upon this approach by allowing you to pitch your business proposals. Except these are not family, friends, or people you already know.
What Is Prosper? Prosper.com is the leader in the peer to peer loans. They are a member of the BBB. They have been featured on CBS, NBC, ABC, Fox, CNBC, CNN, The Wall Street Journal, The Financial Times, etc. They are definitely a well known, and legitimate, company. Prosper has been lending money since 2005.
People looking for a loan create a free account. People who have money to lend create a free account. And Prosper connects the two sides together. Typically, loans are funded by multiple people all over the world.
Here are some basic tips that will greatly improve the chances of your loan request being approved:
- Understand that Your Credit History Matters. Unlike most traditional lending institutions, you are normally not required to provide collateral for P2P loans. Because these loans are unsecured loans, your credit history plays a key role in whether or not you qualify for P2P lending. Most social lending sites ask individuals to complete an application to help verify borrower identity, such as U.S. citizenship, to allow access to an applicant’s credit score, and to determine a proprietary credit rating system.
- Create a Strong Business Pitch for Your Loan. We know that the traditional lenders will require a written business plan. You should do the same thing here. The more compelling, professional, and clear your pitch for the funds coupled with strong creditworthiness, the more likely you are to attract potential P2P lenders.
- Examine the Borrower Fees. Peer to peer funding dose charge various fees to qualified borrowers. As a borrower, you may have to pay a variety of fees, such as a loan closing fee based on a specified percentage of a loaned amount, an insufficient funds fee for failed payments, and late fees for overdue loan payments. Be sure to evaluate the site’s fees and compare them to conventional lenders’ fees if you plan to use P2P lending sites.
- Understand Your Terms. You may enjoy chatting with potential lenders about your business strategies and goals. But, this is a business relationship, and not a social connection. Keep in mind that these individuals want to earn profit from your loan which is greater than what they might earn from other traditional investments. Loan repayment periods can vary, often running from 1 to 3 years or 3 to 5 years. Whatever loan agreement you enter into, make certain you thoroughly understand its terms as well as your obligations.
- Make Timely Loan Payments. Like any loan, it is important to make payments on time. Your failure to make the payments may result in additional fee assessments and reduce your chances of qualifying for future loans. Furthermore, defaulting on your loan will harm your credit history and damage your future credit score. Despite the informal, convenient nature of these sites, it is important to recognize that these loan agreements are contracts and promissory notes.
YOU CAN POST FREE REQUESTS FOR A BUSINESS LOAN AT PROSPER
This video was created by a guy named Jonathan. He gives a quick explanation of prosper lending. He has actually used the service and is talking about his personal experience.
He is describing how he was able to use it to accomplish what he needed to do. He also gives a couple of quick tips, advice, and some things to keep in mind.
These are unsecured loans! This means that you do not have to put up any collateral, like a house, or car, or co-signer, etc. So, of course, these networks would prefer to work with individuals who have established good credit, and a good credit score.
Another good thing about a prosper is that it only does what is called a soft pull of your credit report. This means that it will not impact your credit. This eliminates a concern that some people may have if they only want to apply just to see their options. You are never under any obligation to accept the money that is offered to you.
This video shows the step by step process of actually submitting a loan request. He does a good job of showing how simple the process is.
You create an account. The desired amount of the loan. You let them know what you intend to use the money for. You should also include a statement that explains why you should be approved. Then you can easily track the status of your request.
We created our page to provide this information because many people do not know about this. Prosper usually does not advertise on TV, Radio, or Magazines, etc.
There are others, but Prosper is the oldest, most popular, and most trusted, peer-to-peer lending site. And, more and more, this is becoming a popular alternative to traditional loans options like going to a bank. This service cuts out the middleman. The Prosper Marketplace simply connects people who need money with those who have the money to lend.
Probably the most important thing is that you need to make people feel comfortable, and confident, about loaning you their money. This means the more information you can provide, the better. Let them know who you are.
Remember, it is free to post a loan request. So you can just see what your options are.
You will know everything upfront. Then make the decision if you want to accept the money, or not.
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We Help You Get Info About Peer to Peer Lending For Business