What are the Differences Between a Secured and Unsecured Loan?
A secured loan uses your personal or business assets as collateral for the amount of money you are borrowing from a lender. An unsecured loan doesn’t do this, but will probably charge you higher interest in order to offset the cost of borrower default. P2P/B2B loans are typically unsecured, but there are exceptions.
Why Do Businesses Prefer Unsecured Loans
Obviously, a business wants the loan that isn’t a threat to their assets in the event that they default. The alternative lending market is built around the needs of borrower, so the loans are typically unsecured. There are lots of other reasons why P2P/B2B is better for businesses than traditional loans, but this is one of the best.
When Did the Business Loan P2P Market Begin?
The small, alternative business loan market emerged after the financial crisis of 2008, though there were versions of it that existed before. In the economic climate of the day, businesses needed financing, but many traditional lenders weren’t providing loans, at least not to very qualified candidates. With faster networking and internet speeds, P2P was an idea whose time had come.
What Are Differences Between P2P and Quick Loan Companies like EZBob?
P2P stands for “Peer to Peer”, referring to loans that are given from individuals to other individuals, through an online broker. Because this model takes out the middleman (the banks and their shareholders), these loans can be granted faster and often with better terms for borrower and lender. Companies like EZBob have private investors, but provide the same sort of fast, easy loans to qualified candidates. They do not provide a forum within which individual investors can lend money.
What are the Differences Between Cash Advance and a Loan?
- These are two different lending models that exist in the P2P/B2B E-commerce industry. Cash Advances are short term loans paid off in a couple of ways. Some are repaid with a percentage of daily credit sales. More frequently, advances are given to a borrower against a line of credit, paid off as invoices from outside clients are paid. More cash can be advanced at any time, each advance acting like a mini loan.
- Regular Business Loans in P2P are lump sums given to qualifying businesses and paid off at X APR for X months or years. The terms are generally longer and the loan amounts greater than are typically seen with Cash Advances.
Where Can I Find Feedback and User Reviews About P2P Lending Companies?
Larger companies like ZOPA and RateSetter have a lot of formal press that can be found with a quick Google search. Individual customer reviews can be found on sites like TrustPilot and ReviewCentre. Potential borrowers are encouraged to look at user reviews as well as journalistic coverage when considering a new P2P/B2B lender. Sometimes these sources are not in agreement, but together they generally paint a clear picture of each company’s reputation and credibility.
What Does This Site Do, and How is Each Company Reviewed?
We look at prominent P2P/B2B lenders and do a lot of research about each. We look at how customers feel about the application and approval process, and about their ability to understand the terms and pay them off as planned. We look at the rates at which lenders issue loans, as well as their reputation within the industry. After reading one of our reviews, a reader will understand whether or not each company is a good option to pursue when seeking a business loan.
Is P2P/B2B Financing Expensive?
Yes and No. The answer will depend entirely upon the company issuing the loan and the qualifications of the borrower. Many borrowers find loans with very low interest and excellent terms through P2P/B2B lenders, but others find the rates very high, usually due to poor credit.
How Long Do I Wait For Funding After Being Approved?
This will depend on the policies of the company issuing your loan. Some take hours or even a couple of days to analyze your company health and your ability to responsibly take on debt. Others use instantly accessible data to quickly determine your business creditworthiness, and can approve and issue funding in 20 minutes or less. Some B2B companies make speed their #1 selling point.
What Are the Risks of Using P2P/B2B Lenders?
Generally, P2P/B2B companies are responsible and credible. But some aren’t. For this reason, we always highlight credibility in our reviews, as the industry is not free of usurious practices. Such companies may have confusing policies, specifically regarding interest rates, repayment policies, and fee structures. Even among fully legitimate lenders, APRs may be very high, making long term loans too expensive for some borrowers. In all cases, terms must be followed in order to incur no additional fees or higher rates, but can usually be paid off early
Is this Model Widely Used and Trustworthy?
Yes. This E-commerce lending model is the fastest growing in the financing industry. In the UK, P2P/B2B lenders are regulated by the FCA, the SEC in the United States. A few minutes of research (as well as our own reviews) will give you a good sense of the reliability of individual companies, but the industry at large issues billions of pounds in loans, annually, and is expanding.