Peer to peer lending

Peer to Peer lending or P2P as it is more commonly known is a platform for businesses to borrow money from a collective group of unrelated individuals who bid on a reverse auction basis to win the chance to lend a portion of the funds required.

Loans can be provided for almost any purpose with rates set at the end of the auction process. The time it takes to raise the funds varies and is dependent along with the interest rate charged on a number of factors which include but are not limited to the risk, amount, term and unsecured/secured nature of the borrowing. In some cases the interest rate is set by an intermediary who has met with the client to assess the risk profile of the proposal and in return the intermediary may receive a fee or commission for providing an appraisal of the business.

Most sectors and purposes are eligible for this type of funding. However a business would generally need to have a reasonable track record and have traded for at least two years with most platforms concentrating their focus on lending to business that have growth aspirations.

Key Considerations 

  • Funding can be on either a secured or unsecured basis;
  • Interest rates range from typically 8% to 15% p.a.;
  • Terms are typically 1 to 5 years;
  • The business needs to have at least a two year trading record;
  • P2P lending can be used for almost any purpose including funding for plant, machinery and vehicles etc…

So who can benefit from P2P lending?

  • Businesses that have been turned down for funding by the Banks;
  • Businesses that have a lack of available security;
  • Businesses that operate in challenging sectors such as sports or leisure;
  • Businesses that have been through challenging times but are now seeking to expand.

The search for the right financial solution begins & ends with Cranfield, so contact us today.