Peer to Peer Lending
Peer to Peer Lending Explained
Peer to Peer Lending often referred to as ‘P2P‘ is a relatively new form of alternative finance. Its purpose is in being able to offer businesses a new additional route to finance. Thus, providing UK businesses with an extra option to get the much-needed access to finance they may otherwise fail to get via the more traditional lending routes.
Business funding via P2P Lending is available via online applications whereby the funding which a business seeks has the ability to be matched with suitable investors and savers who are themselves looking to invest their own funds for the longer term, as well as for a good return.
P2P investors and savers do not seek any equity of the business which they may elect to invest in. As they purely wish to obtain a better monetary percentage return on their investment(s) than they otherwise would receive by leaving their money in a bank or building society
This relatively new type of funding is not available through the traditional financing routes, such as banks or building societies – which is where the term “Peer to Peer” comes from.
As this model of funding ultimately cuts out the ‘middleman’ such as the banks or building societies. Means therefore that business who use this route as a way to borrow their finance requirements, will benefit from lower interest rates on their business loans, more than they otherwise would if borrowing from a traditional loan provider.
Businesses who seek to access finance via the Peer to Peer model, are approved by being credit checked and subsequently rated according to the risk which they may pose.
Peer to Peer Lending should not be confused with crowdfunding, the difference here being that when directly related to a business raising funding via crowdfunding involves investment(s) for an equity stake in the business.
P2P lending is a direct alternative to a bank or building society loan and in a majority of cases can often be arranged more quickly. It can also be often included as part of a bespoke funding package with other funding products such a business grants and asset finance.
Interested Peer to Peer Lending?
Not even knowing what it was, we never considered peer to peer lending as a way to get business funding before talking with these guys. They not only suggested it to us, but guided us all the way in successfully being able to access the finance we needed.
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