Peer to Peer Lending for Business Financing

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Peer to peer lending has gained significant traction over recent years for its ability to offer competitive fixed interest rates through bypassing the traditional banking system business model. Peer to peer (P2P) lending agencies serve as merely risk managers between small businesses and investors. Through this, it offers interest rates starting at 6%, competitive with the government subsidized SBA loans in the United States. One of the most popular companies for P2P lending, Lending Club Corporation, promotes the ability to borrow up to $100,000 USD with 1 -5 year terms. In 2011, loans under $100,000 USD had an interest rate of 7-8%.

For those looking to bypass the bureaucracy of banks with competitive financing terms, the exploration of a P2P lending system may be an attractive option. While some foreign banks may offer interest rates of 6-7%, lower than the domestic options, P2P can potentially provide an option for serious consideration. While Pro Business Plans does not argue these options are better than the banks, they are growing into the mainstream decision process when considering financing options.

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