You've got it! You've finally come up with an idea or business that's going to change the World. After you've put together a business plan that outlines who you are, your business' purpose and how you plan to succeed, your next step (if you don't already have the finances to begin) is getting funded.
Unfortunately, starting a business or even capitalizing on an idea is expensive. Small business have started doing away with banks in hopes of better rates and less hassle. If your small business is looking for an investor to get your business off the ground, consider these friendly peer-to-peer lending options:
Kickstarter: For your creative idea or project
Kickstarter is a funding platform that allows individuals or groups to pitch their idea, explain how much is needed to start and explain what people have to gain by giving your business money. Launched in April of 2009, Kickstarter is unique because average people all over the World can invest in your idea. Also, rewards aren't money, but rather gifts or experiences related to the project. Upon publishing ideas, users must set a monetary goal and a timeframe to accomplish that goal. If users do not reach their target goal by the end of the timeframe, all invested money is returned in order to protect investors.
This program is beneficial if you're looking to get the funds needed for a creative idea or project. But with any invention, your idea must let people understand how your product will solve a problem. People looking to invest on Kickstarter are reluctant to invest if they can't relate to the problem your product is going to solve.
Prosper: For your small business
Another great peer-to-peer lender is Prosper. Prosper has the accolade of being the "world's largest peer-to-peer lending marketplace." Started in 2006, Prosper connects trusted borrowers with trusted investors. This service is for the serious small business borrower as it takes a professional approach to the borrowers it allows to register on the site.
In fact, to register on Prosper as a borrower, Prosper makes sure borrowers are trustworthy. To achieve this, Prosper forces their borrowers to include credit scores before registering on the site. A poor credit score (a score below 640) will prevent borrowers from becoming a member of the service altogether.
If your credit is healthy, then you will find that interest rates vary depending on just how healthy your score is. Loans may be paid back on a monthly basis with auction-styled interest rates and no hidden fees. Investors bid on borrowers by offering the best interest rates.
If your small business needs a trusted personal loan, then Prosper is your answer - "Invest. Borrow. Prosper."
Lending Club: For your small business
Lending Club is very much similar to Prosper. As a peer-to-peer service, Lending Club also takes a strict approach to the borrowers it allows on its site, with the goal of getting better interest rates for borrowers. Borrowers will need at least a credit score of a 660 to register with the option of acquiring a personal loan from $1,000 to $35,000. However, Lending Club differs from Prosper in setting fixed interest rates.
Prosper allows its investors to set competitive interest rates when securing a borrower and there is no penalty for a late payment. Lending Club sets a fixed interest rate depending on the credit history of the borrower.
Peer-to-peer lending offers a better solution for personal loans versus banks. The services outlined above will help you get your business up and running.
Have you tried peer-to-peer lending services for your small business? Let us know below or reach out to us on our Twitter page!