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Payday Loan Help Directly or Peer-To-Peer Lending Services

download (3)Do you feel like you are fast payday loan help for friends and family? Is it something that you enjoy doing or feel obligated to do? Have you ever thought of making it an investment and get a return on the loan? Peer-to-peer lending is gaining popularity within the short-term lending world.

If you have access to the Internet, you have opportunity to make small gains on lending to those in need. It wouldn’t take much to find a lending site online. You should take some time to look through your options before you send in money. Find a reputable one and understand all lender and borrower terms and conditions before you send in your first investment. It is important to know what the risks are.

Peer-to-peer lenders have more security measures than direct payday loan lenders. There are credit checks involved in application approval. This makes these loans different than payday loans.

 

Insights to Lending Requirements

images (3)Sometimes it can be daunting approaching the bank for a loan but did you know there are things you can do to better your chance of being approved? Here are suggestions for Business and Commercial property investors to help you prepare for a positive outcome.Think about what you are offering as security.

The Bank will need to obtain a valuation of the properties being taken as security and will rely on the valuers recommendation as to what the property is worth. We have no control over this. If you are purchasing a property it is a good idea to do your research on current market values. If the property is vacant and property is for investment only, be sure to check how long it has been since it held a tenant.

Be realistic about the value of your existing property. Over estimating the value won’t help as the valuer will override your estimate anyway and this may cost you unnecessary money in valuation fees.

Generally speaking Banks will offer better rates for residentially secured business loans, if buying a commercial property and you have a residential property or two, it is worth asking your Business Banker what rate would be offered if residential security is thrown into the mix. Banks can also split the loan so that the residentially secured portion is on the cheaper rate which can save you quite a bit in interest expense over the life of the loan.

Banks like a well thought out Business Plan that outlines the direction of your business and its prospects for future growth. Whilst this is not something we always ask for, it shows good management to have one and that your business direction is well defined. Know where you stand against your competitors and rate yourself accordingly. The Business Enterprise Centre has courses on preparing business plans and can help with them in general.

We also like to see a sound succession plan. If something happens to you, will the business still be sustainable and who will run it? Should you consider some Keyman insurance or something similar for yourself if you are instrumental in keeping your business operating. It gives Banks more confidence in lending to you if you have considered these implications and taken action to minimise the risk if it is applicable. It should also give you some comfort knowing that should something happen there is insurance in place to assist you and your family.

 

Is Peer to Peer Lending The Best Choice For Small Business Funding?

images (2)If your small business is in need of a loan, but doesn’t have a credit profile that wins instant approval from the banks, the next step is usually applying to an alternative source of funds such as peer to peer lending.

Instead of applying to an established financial institution for a loan, you make a proposal to borrow from a collection of individuals who, if they accept your offer, subscribe to your loan request in amounts as little as $25. In return for their risk taking, he or she receives an attractive rate of return on their money based on your credit profile as determined by the company that administers the lending platform – Prosper or Lending Tree for example.

Qualifying for a loan

Although the loan proceeds can be used for any purpose related to your business, the loan is made on a personal basis and doesn’t take into account the assets or cash flow of your business. Since personal credit history is the sole criteria used to determine credit worthiness, a rejection rate of up to 90% is common for most peer to peer lenders.

Approval time

While traditional lending sources such as banks or credit unions take up to a month to approve (or reject) your loan request, most peer to peer lenders employ “automated decisioning” software that either accepts or rejects your loan application almost instantly. Once approved, most peer to peer lenders are able to fund your request in as few as five days.

Interest rates

According to a recent article in the Wall Street Journal by Ianthe Jeanne Dugan: “Many applicants wash out in the vetting process. Those who are approved are quoted an interest rate based on the credit risk. Lending Club says annual interest rates range from 6% to 26%, with the average rate for a 36-month loan around 13%. Prosper says rates range from about 6% to 35%.”

Borrowers are also charged an origination fee of 1% – 5% of the loan amount based on credit risk.

Repayment schedule

Payments are a fixed amount with terms up to 36 months.

Is peer to peer lending a good way to borrow funds for your business?

The peer to peer model is worth considering as an option as long as you have very good credit and can come up with the fixed monthly payment when business is slack. After all, peer to peer lending is geared toward consumers and not business owners.

A better choice for most business owners is any one of a number of alternative funding firms that specialize in business loans or merchant cash advances to businesses in a wide variety of industries.