The P2P lending is known to address a gap in existing credit cycle by facilitating independent individual lenders to come forth and finance small loans. You must be aware that peer-to-peer loans are usually advertised as basically business loans. However, they seem to be unsecured personal loans utilizing business owners’ credits as the bases for the debt. So the process for loan request and filling the loan application would be quite different from the usual standard business loans from traditional institutions.
P2P Loan Markets
The first place where usually P2P borrowers head to for a loan is naturally a lending website. You would find a host of P2P websites that have been created precisely for this purpose. A P2P website would be taking a very small cut of your loan as a payment for matching a borrower and a lender. The P2P lenders are not big lending houses, but small independent financiers. Therefore, the P2P website would be serving as the primary platform for brokering loans. If you are not in the habit of browsing too often the Internet, you may contact Small Business Administration in your state and request them for the list containing the peer-to-peer lenders located in your locality. Get in touch with reputed sites such as https://www.libertylending.com/ for best deals.
Submit a Bid
When you have managed to find a list of local lenders and even a reputable brokerage site, it is high time you submitted a bid for a P2P loan. In the case of a P2P transaction, you would be listing the exact amount you would need and inform the lenders the precise interest rate you are happy to pay them. In this context, you must know that P2P loans would not provide anything over $30,000. Interest rates are bound to be high in such transactions. You must then submit your bid to the lenders. After submission, you may need to respond to a few queries from the lenders. They would be competing for your P2P loan initially.
Securing a Loan
Once you have many competitive bids, the peer lender would focus on underwriting. This seems to be pretty similar to the conventional lending. The peer lender would be examining your business plan, ability to pay, and your credit report meticulously. You could request a deposit that is non-refundable on the loan before this step takes place so that you are offered a competitive bid. The loan would be sanctioned to you personally and not to your small business. The peer lender would be assessing and evaluating your credit report to analyze your creditworthiness.
As the loan is specifically in your name, it is natural that you would be held responsible if things go wrong. This implies that you may face certain financial consequences including credit score dips, financing penalties, and also, asset loss in case you fail to repay your debt timely. You must remember that during the loan term, your credit report would be showing a large debt. This could be the reason for your disqualification for some other loan from private lenders. If you keep these facts in mind, your P2P loan could help you attain your business goals.