Peer to peer lending has become increasingly popular as businesses search for alternative funding solutions outside of traditional bank finance. This type of lending usually commences with a business placing their funding opportunity on an online platform that can be viewed by a variety of approved investors, ranging from individuals to hedge funds. The methodology is designed to bypass the banks, on the basis it makes funding easier to come by and provides better returns for the investor than they would typically receive in the market place.
The current platforms provide secured and unsecured business loans, invoice finance, trade finance and equity finance. Here you can read full reviews from Which? on their services.
How it works
The ‘Seller’ of the opportunity approaches the chosen platform to seek approval for their listing on the particular site. The platform owner will have a group of registered ‘buyers’ who are then able to view the funding opportunity and, if attractive to them, place their offer of finance on the site. With most of the online platforms, the final funding will come from a group of approved buyers, each of whom is taking their portion of the final offering.
Trans Capital Insider tips
In the right circumstances, these online platforms can prove to be a quick and more cost effective way for a business to secure finance. However, they will likely want to see a minimum of two years profitable trading, and a good credit rating before your ‘seller’ opportunity is advertised.
How we can help
You can read a fuller overview of peer to peer lending and other alternative finance solutions that you might wish to consider. Alternatively, you can set up a confidential consultation today if you would like to discuss how we might help you with this or any other business finance solution.