Peer-2-Peer Lending is becoming a better and better option for small business owners. In many cases, entrepreneurs are looking to Peer-2-Peer Lenders to replace traditional bank financing as they seek small business expansion loans.
Small business owners are applying in droves to these lenders for three reasons:
#1 – Approvals are Usually Faster
It can take months for a typical bank loan to get approved. If you’re a small business owner who needs cash for rapid expansion, this can put a damper on your plans. Peer-2-Peer Lenders will often approve your loan in 10-14 days.
#2 – Applications are Easier
If you’re a business owner who’s ever applied for a small business loan, you know how excruciating this process can be. Entrepreneurs typically need to spend 25-30 hours working with their bank to get a loan approved.
Not so with Peer-2-Peer Lenders! The online application is significantly streamlined and can be often be completed in 1-2 hours.
#3 – Approvals Happen More Often
So, after spending 25+ hours with your banker, you want your loan to be approved, right? Unfortunately this happens less than a third of the time at traditional lenders. Only 31% of small business loans are approved at traditional banks. Peer-2-Peer Lending isn’t a whole lot higher at a 38% approval rate, but it continues to tip the scales in favor of this option for entrepreneurs.
For longer-term loan options, consider these two Peer-2-Peer Lenders:
Loans range from $25,000-$500,000 with origination fees of 1%-5% and interest rates ranging from 5.49%-18.29%. Loan terms range from 1-5 years.
These small business loans are offered up to a maximum of $300,000. Origination fees are 1%-6% and interest rates range from 5.9%-25.9%. Similar to Funding Circle, loan terms are offered for 1-5 years.
For shorter term loans, you can think about:
These short-term loans must be paid back in 3-12 months. Loans are offered up to $300,000 with a 2.5% origination fee and APR’s starting at 9.99%
This lender has recently expanded its offerings. Previously loans were only offered for 3-24 months up to $250,000 with a 2.5% origination fee and an APR starting at 9.99%. Now, small business owners seeking a somewhat longer term, can get loans approved up to $500,000 and On Deck is even offering flexible lines of credit up to $100,000 to be more competitive in this rapidly evolving space.
Before you start seriously considering any of these lenders, keep in mind that they all require that you’ve been in business for at least a year and have minimum annual revenue requirements ranging from $60,000 to over $200,000 per year for some of these options.
However, if you meet these criteria and are in need of fast cash to expand your business, Peer-2-Peer Lending is an excellent option to consider!