Peer-to-Peer (P2P) lending
is the practice of lending money to individuals or businesses through online platforms that match investors directly with business owners. Businesses can take advantage of Peer-to-Peer loans
. P2P loans are particularly advantageous for SMEs. Businesses applying for financing through a P2P lending platform offers a faster, simpler process – very useful for small businesses that need quick hits of working capital and cash flow aid. Whether or not you need a business loan depends on your financial condition, but if you are looking at financing options, P2P loans can be the business financing solution for you if you fit the categories below.
Businesses Looking to Grow
If your business is looking into expanding into new markets and new geological areas, you will definitely require more capital and funds. You can expect to incur many new expenses, which may include various administrative costs as well as cost of hiring new employees to ensure your business is not only operational, but sustainable in the new market.
Businesses with An Immediate Financing Need
A small business, no matter how profitable or healthy, needs constant cash flow. Many businesses, from time to time may encounter cash flow problems and may require immediate working capital to ensure business continuity. With the faster processing and approvals, P2P lending platforms enables businesses to get access to funds relatively faster than from traditional financial institutions.
Businesses with a Limited Operational or Financial History
Why is P2P lending an excellent option for young SMEs? Even though many new young businesses may be financially healthy and are generating good revenue, they usually lack the financial history or large assets to allow them to qualify for business loans from traditional institutions.
For a P2P lending platform such as Funding Societies, businesses seeking term loans or invoice financing must have operational histories of at least one year and annual revenue of at least S$300,000. In comparison, traditional banks tend to require multiple years of operational history and more than twice as much annual revenue compared to Funding Societies.
Peer-to-Peer loans generally have competitive rates and no collateral requirements, making it ideal for small businesses hungry to expand their companies (or maybe just need financing to fund a new project). Peer-to-Peer loans have a structure that is short-term with competitive rates. Considering Peer-to-Peer loans for business financing? On various Peer-to-Peer platforms, campaigns can expect to raise around S$20,000 and above. Funding Societies, for example, can provide loans up to S$1,500,000.
In need for funds? Check your eligibility now!