PEER TO PEER LENDING FOR BUSINESSES
The peer-to-peer lending model emerged in the second decade of the new millennium. UK innovators created the web lending platform to connect borrowers to individual lenders. Today loans total in the billions of pounds, and the practice is growing in popularity in the US. Borrowers receive comparable terms to traditional lenders, but much quicker and easier. Investors are able to receive reliable returns. Rates and returns can range from ±4% to 10%, or more. P2P makes business lending accessible fast, to a set of business owners underserved by the traditional model.
Loan Types: P2P LendingAvailability: UK (Only Established, Profitable, Businesses)Securities: SecuredLoan amount: £50,0000 – £3,000,000Interest: Representative APR: 6.41% to 16.86%Overall Rating: Good 3.0 / 5.0 About Thin Cats Founded in 2011, ThinCats was established to meet the borrowing needs of businesses following banks’ withdrawal after the financial crisis of 2008. Their business doubled twice annually during its first two years of operation, and the company quickly built a reputation for a very high quality standard for the P2P loan process. Using a
Loan Types: P2P Lending Availability: UK Securities: Unsecured Loan amount: £1,000 – £25,000 Interest: 7.2% to 16.7% Overall Rating: Experienced 4.1 / 5.0 About Zopa Founded way back in 2005, Zopa was ostensibly the UK’s first P2P lender. Today, the company is among the world’s largest. Based in London, Zopa is backed by Benchmark and Wellington Partners. It is that rarest of P2P lenders: a company available to people without lots of money, that doesn’t have sky-high rates and dubious
LendingClub Review in Numbers: 2020 Updated 💰 Loan Amount $5,000 to $500,000 💸 Loan Term 1 to 5 years ⛔ Unsecured? Unsecured for loans/lines under $100,000 ⌚ Requirements At least 12 months in business Minimum of $50,000 annual revenue No recent bankruptcies or tax liens Own at least 20% of the business and have at least fair personal credit ⭐ Client Reviews 98% 🌐 Website: Lendingclub.com 🌝 Easy to Apply: Yes 📃 Required: Estimated credit score (minimum of 640) Annual
Funding Review in Numbers: 2020 Updated 💰 Loan Amount $10,000 – $500,000 💸 Loan Term 6 months to 5 years ⛔ Unsecured? Secured ⌚ Requirements Needs to be a small business Have been trading for at least three years At least $400,000 in annual revenue The business has a good and clean credit history 680 FICO for personal Guarantor Positive book value (assets > liabilities) ⭐ Client Reviews 88% 🌐 Website: FundingCircle.com 🌝 Easy to Apply: Yes 📃 Required: Filling-in
How Does the Peer to Peer Business Loan Mechanism Work?
While there are variations, the standard P2P Business lending practice is to acquire a set of qualified investors who want to lend money directly to qualified individuals.
The P2P companies act as brokers, but with much easier terms than traditional bank lending programs. Because there is no middleman and often no shareholders to pay, the rates and terms can be favorable to both lender and borrower, fueling economic growth according to the needs of real businesses.
What Risk is there Within Peer to Peer Loans?
Like any new financial product, some wonder about the security of P2P. But since its inception, the UK P2P industry has grown to be regulated by the FCA and the SEC (in the US).
How do P2P Companies Hedge Without Securities?
All P2P lenders have some minimum requirements for borrowers, to prevent default, but some are more lenient than others. The most secure brokers provide insurance to lenders against borrower default, but most prevent it from ever occurring by ensuring that businesses can handle the loans that they are issued.
The P2P Boom in the UK and US
With the UK leading the way, the P2P e-commerce market has become the fastest growing lending format in the developed world. UK companies like ZOPA boast nearly a billion pounds in total loans issued, on their own. The US tends to have a different spin on the model, with frequent cash and invoice options appearing in the dozen, but the model is becoming more well known. The UK P2P industry is valued at over £2 billion as of 2015.