How To Use A P2P Loan To Fund Your Business

How To Use Them To Fund Your Business

P2P Loans

How P2P Loans Work

Prosper and Lending Club were enabling people in the United States to borrow and lend to each other. These firms enable borrowers to get an instant interest rate quote on a three or five year loan, fill out a loan application online, and find investors willing to lend them money.

Before the words “crowdfunding” came into vogue,

The borrower receives a lump sum, minus an origination fee. The origination fee can range from two to five percent. The loan is paid off in 36 or 50 equal monthly installments. At the end of the term of the loan, the loan will be fully paid off, provided there were no missed or incomplete payments. The average interest rate is around 15%.

When the loan is funded

Lending Club Businesses vs. Personal P2P Loans

However, to qualify for a Lending Club business loan, a company has to be around for at least two years, and have at least $100,00 in annual revenues. If you meet these requirements, you can learn more about Lending Club business loans here.

Lending Club offers both Business Loans and Personal Loans

Should one take a personal P2P loan for business purposes?

Of its personal loans are for business purposes. However, this number may significantly undercount the number of business loans, because the number one reported loan purpose is refinancing debt. The borrower may be refinancing personal debt acquired as part of launching or funding a business.

Lending Club reports that approximately 2%

The negativesOf taking a Personal P2P Loan

If you have a successful business, you may be able to borrow or access a much greater amount of money

through other means.

The maximum amount you

can borrowed is

only $35,000

In other words, if you are working full time on the business and have not been taking a salary, this may adversely impact your ability to get a loan. If you are not getting a reasonable paycheck, it creates concerns about the ability to payback monthly loan payments.

Your approval is solely based on your personal finances

However, this is also true with many business loans. Both Prosper and Lending Club report to credit agencies. If you don’t pay off the loan, your personal credit score could take a big hit. This could impact your ability to get personal financing in the future for major purchase like buying a house.

Your personal credit is at stake

The positivesOf taking a Personal P2P Loan

Such as using personal credit cards. For those with similar credit ratings, loans from Lending Club appear to be about 2% per year cheaper than credit cards geared to similar borrowers. The actual interest rates on P2P loans can be as much as 5% lower than credit card interest rates per year.

The interest rates are more attractive than other options

Credit Cards vs. Lending Club Loans

If approved for the loan, you will generally be able to get the money in less than two weeks after submitting the initial application.

Access to cash is relatively quick

How to Proceed

And will not result in them pulling information on your credit history. (If you decide to move forward, they will pull credit information which can have effect on your credit rating.) While rates on Prosper and Lending Club can differ slightly, it pays to comparison shop.

Getting pre-approved by Lending Club or Prosper only takes minutes

How to Proceed

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How to Proceed

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How to Proceed

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