4 Signs P2P Lending is the Right Way to Fund Your Start-Up
Many start-ups will need to find additional funds to fuel their growth. If you’re involved in such a business and need to secure funds, it’s well worth considering P2P lending. Here are just four times it will pay to do so.
1) When You Want to Cut Out the Middle Man
The greatest thing about P2P lending is that it allows you to get the funds you need while avoiding big banks and institutions. This is perfect for investors as well; people with money to invest are looking for more attractive return rates than can be afforded by simply sticking their cash in the bank, but few are happy playing the stock market or taking other time-consuming and tricky to manage routes.
2) When You’re Worried About Attracting Funds
Unfortunately, not all start-ups succeed; in fact, many will fold quite quickly. Traditional lending institutions and investors are well aware of this fact, so attracting interest might be tough. Luckily, this isn’t as much of a problem when it comes to P2P lending. Plenty of investors are happy to stake some money on a riskier project; after all, your loan could come from 20 investors putting a little into the pot instead of one person taking all the risk.
3) When You Want to Lower Your Costs
You know that middle man that you cut out by going with P2P lending instead of a traditional borrowing route? That middle man rarely comes cheap, and removing him from the equation means that costs are often dramatically lowered. After all, P2P lending platforms are internet-based. That means low overhead fees and fierce competition. The upshot is that you’ll often find yourself missing out on the high fees associated with conventional business loans.
4) When You Don’t Need the Money Right Away
There is one drawback of funding through P2P lending: you won’t necessary get all the money that you need as quickly as possible. It often takes longer than it would to sort out a traditional loan, so P2P isn’t always the answer if you’re in a time crunch. When you need access to start-up capital or emergency funds with a minimum of delay, it’s probably going to be easier to get a personal loan or use a credit card.
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