How Does Peer to Peer Lending Benefit Applicants and Lenders?

There are more options for funding a business startup today than at any time in the past. While traditional business loans are still an option, have you thought about what a P2P loan would accomplish? When utilizing a service like lending loop to establish this type of funding approach, there are benefits for everyone involved. Here are a few points to keep in mind.

Understanding the Basic Concept

Peer to Peer lending is a process that allows more than one lender to be involved in the financing. Rather than having your loan funded by a single entity, several are involved. All of them receive returns based on the amount that they contribute to the funding. As the debtor, you do remit installment payments to a central source. Those funds are in turn distributed to each of the lenders. Unlike an angel investor group, the participants involved in a given loan arrangement will vary.

Applicants Enjoy Easier Applications and Quick Turnarounds on Funding

For you as the applicant, expect to enjoy a quick and easy loan application process. While there is still information that you must provide, the nature of the information may be different than what a traditional lender requires. For example, your experience may carry more weight than your current credit score.

There’s also a good chance that your loan request will be considered in less time. Think of what it would mean if you could be approved and receive the funding within one or two business days. That would make it all the easier to move forward with your plans for the business venture.

They Also Enjoy Interest Rates That are Competitive

You may think that the interest applied to the borrowed amount would be significantly higher than the rates a traditional lender would extend. That’s not necessarily true. You could find that the interest rate compares favorably with what you could expect to get elsewhere. That makes it all the more practical to consider this kind of financing solution.

Lenders Get to Share the Risk

While much of the focus is on how the applicant benefits, it helps to understand what the lender gets out of the deal. Unlike a traditional lender, those who participate in a P2P financing plan share the risk. Each stands to lose less if a debtor does default on the loan. By the same token, participating in this approach also means the opportunity to enjoy excellent returns without carrying all of the risk.

Their Average ROI Is Higher

There is a certain amount of overhead involved when a single lender approves a loan application. In a shared situation like a P2P lending agreement, each participant is likely to experience fewer costs. The result is that the return on the investment is higher. Enjoying higher returns while minimizing risk and keeping loan management costs lower certainly makes this approach appealing to many potential lenders.

Have you seriously considered what P2P lending could do for you? As you turn to Smarter.Loans for business needs, take a look at this option along with the other funding possibilities. You may find that this particular solution is just right for your needs.

Comments are closed.