When it comes to borrowing money from a peer-to-peer lender rather than a traditional financial institution, explore how PeerForm loans work.
As a business owner, you know how important steady cash flow is to your company’s success. You also know that it’s not always easy to get your hands on the money you need.
If you’re in a financial jam and are struggling to get approved for traditional business loans, you may want to consider peer-to-peer lending.
Read on to learn more about peer-to-peer lending and PeerForm loans, specifically. You’ll learn how these loans work and how to tell if they’re a good option for you.
Peer-to-Peer Lending: The Basics
Peer-to-peer lending (sometimes referred to as P2P lending and marketplace lending) is an alternative to traditional lenders like banks and credit unions.
Instead of filling out an application and waiting to hear back from your bank, you can take your financial needs to a peer-to-peer lending site or company.
Through these platforms, individual investors will fund loans to individual borrowers.
There’s no middle-man when you use these platforms. The money gets exchanged directly between the borrower and the lender in accordance with terms that both parties agree upon.
How Does It Work?
Peer-to-peer lending relies on special software programs to pair lenders with borrowers. Each platform uses its own software, but there are a lot of similarities between them.
In order to borrow through a peer-to-peer lending platform, you’ll need to fill out an application. You may also be subject to a credit check. After filling out the application, you’ll learn what your interest rate will be if you decide to borrow from a lender on that platform.
If you accept that interest rate, you can move into the funding stage. Here, investors will review your loan application and may agree to fund the loan.
If your loan gets funded, you move on to the repayment stage.
In the same way that you would with a traditional lender, you’ll make regular payments to the individual (or individuals) who fund your loan. You may also have to pay some additional fees (as will the lenders who use the site).
Benefits of a Peer-to-Peer Loan
There are lots of reasons why you might want to turn to peer-to-peer lending to help fund your business or keep it afloat. The following are some of the greatest advantages peer-to-peer lending has over other lending options:
Greater Chances of Approval
If you’re having a hard time getting approved for a loan from a traditional lender, it’s worth it to consider peer-to-peer lending. Peer-to-peer lenders tend to be more willing to work with those with low credit scores, as well as those with high debt-to-income ratios.
Alternative to Risky Lending Practices
Peer-to-peer lending is a better alternative to risky practices like payday lending or excessive credit card usage. You’ll get much lower interest rates with a peer-to-peer loan, in most cases, and you’ll have more time to pay the loan off.
It’s easy to customize your loan to fit your specific needs. When you’re filling out your application, you can determine how much money you want to borrow and the terms that work best for you.
Easy Application Process
It also doesn’t take long to fill out your application. Most of the time, you can complete the process in just a few basic steps.
In addition to filling out the application quickly, you’ll also hear back from potential lenders very quickly. Often, you’ll hear back right away from individuals who are interested in helping to fund your loan.
Choosing a Peer-to-Peer Lending Company
If you’re convinced that peer-to-peer lending is the right option for you, your next step is to decide which company you’re going to work with. There are lots of factors you need to consider when choosing a peer-to-peer lending company, including the following:
Minimum Credit Score
Find out what the minimum credit score is for a particular lending company before you decide to work with them.
Many lenders are willing to work with those who have subpar credit, but they still have minimums in place to increase the likelihood that their loans will get repaid on time.
Check to see what qualifications the lending platform has in place for borrowers, too.
In addition to a minimum credit score, do they require a certain debt-to-income ratio? What kind of information do you need to present before your application gets approved?
Average Loan Amounts
You’ll need to find out what the average loan amount is for the lender you’re considering, too. Make sure that they offer loans large enough to cover your specific business needs.
In the case of major lenders like PeerForm, you can usually get loans that range from $4,000 all the way up to $25,000.
Make sure you’re okay with the interest rate quoted to you before you agree to borrow from a specific peer-to-peer lender.
You ought to find out whether the interest rate is fixed or not, too. This information should be listed right on the website for you.
Finally, don’t forget to see what other borrowers have to say about the lender you’re considering. The information from online reviews tells you a lot about what kind of experience you’ll have working with that lender.
For example, if you look at PeerForm reviews, you’ll get an idea of how much people typically borrow and whether it’s a good fit for people with lower-than-average credit scores.
Apply for PeerForm Loans Today
Now that you know more about peer-to-peer lending and the benefits of choosing PeerForm loans over other options, are you ready to apply?
If you think a PeerForm loan will help you get your finances in order and get your hands on the money you need to start a business or keep your business running, you ought to go for it.
Keep this information in mind and you’ll have a much easier time having your application approved.
Don’t forget to check out some of the other finance-related articles on our site today for more information on proper money management for your business.