Peer-to-peer lending (P2P) has really taken off in the last few years and is expected to become a £40 billion industry by 2016.
What is Peer-to-Peer Lending?
P2P loans are a relatively new advance in commercial lending, that allows individuals and companies to invest and fund the business loan in return for the interest rate payment. Basically, instead of the bank making a return on your loan, others can now.
How does peer-to-peer lending work?
A Business owner gets the loan arranged via a ‘platform’ that uses different types of checks and technology to underwrite the loan, check eligibility and therefore which investors have access to it. Riskier loans are valued at much higher interest rates so the investor gets a potentially higher return for their riskier investment. This can benefit business owners in riskier sectors or with a lower credit scoring.
Once affordability and risk is assessed, your business loan is packaged and is placed (or sold) on a platform at a pre-agreed and fixed interest rate, and the investors (retail and institutional) fund the loan. This stage can take anywhere from 1 day to 45days, depending on platform used.
Its a popular new form of lending with new platforms cropping up weekly. THINK business finance has exclusive access to many of these new platforms, due to our expertise and experience.
There are now over 50 Unsecured peer-to-peer lenders in the market, all favouring different sectors and purposes and all with different acceptance criteria and preferences. Finding the best one for your business is something THINK prides itself on. Successfully placing 1000’s of UK businesses with the right lender
- Usually unsecured: no security required
- Fast: process takes a few days
- More accessible than bank finance
- Interest rates can be higher
- Doesn’t suit every business
- Interest Rates from as low as 4.9%
- Personal Guarantees often Required
- Terms from 1mth to 5 years