A point to peer lending can fund your new small business

If you try to start your own business, you probably already know that it is almost impossible to be approved for a bank loan to get the funds you need. With increasing regulations and stricter lending standards placed in banks after the financial crisis of 2008, which are simply handing out loans to aspiring small business owners as in the past. Fortunately, other avenues have opened for entrepreneurs determine ready to fire your boss and securing your financial future.

In fact, last month, Prosper and Lending Club, the two sites of larger loan peer-to-peer, were responsible for more than $ 280 million in loans assemblies. The rise of peer-to-peer or P2P lending has been well documented, and it is estimated that the industry boom generated more than $ 3.4 billion in loans since its launch in 2006.

Although most of the loans issued by these sites are used for debt consolidation, Lending Club, Prosper, loans and other networks peer-to-peer also offer credit to small businesses by offering debt plus an option that does not exist a decade. For entrepreneurs and ordinary people with correspondent investors, peer-to-peer lending are able to make banks and intermediaries of the equation, supply, loans at low fixed interest rate for people to use as want.

So if you are looking for capital to start a small business, loans peer-to-peer has become privileged financing solution.

Who is eligible for a Peer-to-Peer loan?

Most lending networks peer-to-peer does not offer business loans. However, if an entrepreneur or start potential need of a loan to pursue a business idea, you can borrow as an individual. Instead of the loan granted to a business entity, which is issued to a person, he or she can use the funds as they wish. The loan will be simply classified as personal debt.

If this is true for most lenders peer-to-peer lending network peer-to-peer specialize in financing small businesses that need $ 35,000 or more and are also available. Therefore, aspiring small business owners can use peer-to-peer lenders for any of your financial needs.

Ready understanding between individuals

Loans peer-to-peer is similar to eBay. Just create an account with one of the peer-to-peer networks such as Lending Club loans, loan guidelines reading the site, and to examine the types of loans that fund. Lending Club and Prosper Although not officially offers commercial loans, financing entrepreneurs looking to start a small business.

After registering an account, enter in the loan amount you need and the maximum interest rate you are willing to pay. Once you create the list, investors will begin to send more deals indicating the amount you are willing to you and the interest rate they would like to pay pay. As with any type of loan or financing is higher your credit score the better.

It is also important to note that a score of 640 or higher credit needs for funding of most lenders peer-to-peer. If you have a good credit score and history, you may receive a lower interest rate than expected, because unlike traditional lenders, peer-to-peer lenders offer loans only 6 78 percent.

Best of all, the monthly payments and interest rates are fixed and the interest rate also depreciated. There are also fees prepaid, so you can pay your unsecured loan for small businesses as soon as you want without penalty.

As previously mentioned, since you may need more than the maximum loan amount $ 35,000 offered by most lending networks peer-to-peer, some lenders peer-to-peer as Dealstruck are specializing in providing loans greater of $ 100,000 or more in the small business market. Typically, sites like these offer the loan terms from two to five years, with low interest rates of only five percent.

The cost of borrowing Peer-to-Peer

Companies often find that the loan from a lending peer-to-peer is much cheaper than borrowing from a bank because there is no middleman. Besides having more overhead, banks are still struggling to recover money lost during the financial crisis.

This additional financial effort was reduced to borrowers in the form of higher interest rates, which are able to get a loan at all. Since lenders peer-to-peer compete to offer you the loan you need to start your business, you are able to benefit from the lowest possible rate of interest.

From dream to reality: the story of Rob

There are two years Rob, strong dreamed of opening his own landscaping business. Although he pinched pennies and saved for years, there was still need for additional funds to buy the equipment needed to finally launch his dream of being your own boss.

Sick and tired of fattening the pockets of someone else every day, a day Rob decided enough was enough. Unfortunately, I still needed $ 10,000 to buy all the necessary equipment, so he went to his bank with the business plan; hours to do to get a small business loan for the money spent needed. Despite the banking presence for years, the banker refused his request because his credit rating was only five points below the threshold.

"What am I going to do now?" he wondered. Fortunately for Rob, he was browsing online two days later and ran through a lender equals more. "Worth it" he thought. After five minutes to complete the application and enforcement of their profile, turned his computer and waited. Two days later, Rob connected and was surprised to see that 50 investors had provided him with offers. the next day received the full amount needed.

Two years later, Rob landscaping business is booming. Currently has 20 employees and earn six figures a year, while "working" 20 hours a week.

There are thousands of people sharing the story of Rob. Thanks to Peer-to-peer lending, people across the country were able to realize his dream of becoming small business owners. With the growing industry of peer-to-peer lending every day, thousands more are sure to become success stories too small businesses.

The idea of starting a small business is very attractive for many people today, including the author, and are seeking ways to borrow money for the purpose. One possible avenue to ensure the effective protection of initial capital for a small business loan is peer-to-peer. Readers interested in learning more about the P2P loans and how you can give the money to start a small business in the current economic environment can read here about the benefits of peer-to-peer lending.