Top tips for getting Peer-to-peer finance for your business

Since the financial crisis, peer-to-peer (or P2P) business lending websites have exploded onto the scene – offering borrowers lower rates and/or loans when they would have had difficulty securing them otherwise. Peer-to-peer lending sites are match-makers – they introduce people with money to lend to people or businesses who want to borrow money. Each lender has a wish-list of traits which their ideal borrower will have, leaving the P2P middlemen the task of matching the right lender with the right borrower. From the lending side, peer-to-peer has given hard-pressed investors and savers the chance to earn higher returns on their spare cash. This has sometimes fuelled the belief that peer-to-peers loans are easier to access than mainstream ones. This is not necessarily true. What's true is that peer-to-peer loans can offer more flexibility than traditional loans. As the borrower, you can have more influence over the terms of the deal. You set the amount and due date, describe how your business will use the funds, and wait to see if people will back you. For the best chance of success with your peer-to-peer borrowing application, here are some tips and hints from us: Be realistic about how much you want to borrow. Has your business already been rejected for a loan by traditional lenders? If so, don't just reapply to a P2P site with the same demands. Re-assess your business plan and see if there is any way you can do more with less. Man sites have ratios they apply in terms of maximum loan size relative to turnover and/or assets. Being unreasonable or unrealistic will probably mean your project won't get funded at all. Find the right P2P site for your business. Each peer-to-peer business website serves a slightly different audience and some of them specialise in lending to specific sectors. Funding Circle lends about £1m a week to small businesses but their criteria are fairly rigid; ThinCats lend less but their approach is more hands-on, flexible and interactive as your application will have to have an established sponsor from the financial sector who will vouch for the business plan and credibility of the application. Another P2P business lender, YouAngel, will look at loans to sole traders and partnerships but deal volume and sizes vary. Speak to us at Choice Loans and we can direct you to the site that best fits your funding needs. Be prepared to present a full picture of yourself to lenders. You're more likely to get funded by including information in your profile or application that will assure lenders of your ability to make payments. Therefore it is standard to have to produce full year-end accounts as well as management accounts and a list of assets, charges, loans and creditors. Also, don't be afraid to explain a poor credit score or other financial problems. For example, if a personal or family crisis set you back, but your credit was good before and after the event, make that clear—better-informed lenders are more likely to open their chequebooks. Give the lender enough detail to make an informed decision. Many sites ask open-ended questions like "Why should we lend to your business?" or "What will the money be used for?" as part of their application process. A well-phrased answer can make up for some shortfalls in the financials. Sell your vision! Interact with your Lenders. As the process progresses questions will come from would-be lender about your business. Stand ready to answer them in as fulsome a manner as you can and you will ingratiate yourself to the lenders and increase your chances This is a growing sector and good advice is important. At Choice Loans we can assist you in finding the best peer-to-peer funding solution for your business and we do not charge for our consultations. If you'd like to chat to an expert then please either complete our Peer-to-peer Commercial Loan enquiry form or call us on 0845 1260350