How to Get Your Small Business Loan Faster & Cheaper than from the Bank

Did you know you could borrow up to $25,000 for your small business without going through a bank?  Not only that, if your credit is decent, you can even get the loan for a better interest rate than the bank would offer!  In addition you don’t even have to risk your home or any other asset as collateral; you can get an unsecured loan for up to $25,000 if you have good finances and a positive credit report.

Borrowing Startup Capital from Others

How is this possible?  How are entrepreneurs getting loans more quickly, with less paperwork, and for better rates than a bank or credit card would offer?  An innovative new method of funding called peer to peer lending provides platforms that allow individuals to lend money to other people in a formal/structured manner.

Peer to Peer Lending

The two largest peer lending sites are Prosper and Lending Club, both facilitate loans anywhere from $1K–25K. Can you get a business loan there? Sure thing, according to Prosper and Lending Club at least 20% of the loans funded on their sites are used for business purposes.  The Wall Street Journal and Entreprenuer.com recently took a look at some of the small business owners that have successfully borrowed money with peer to peer lending:

• Alex Kalempa needed $15,000 to expand his motorcycle racing component business.  After being offered only a $5,000 credit line and $500 credit line from two different banks, he was able to borrow $15,000 at a 9.6% interest rate from Lending Club.
• Patrick Kelley, was denied a small business loan for his eBay business three times by financial institutions, then he turned to Prosper and was able to borrow $18,500 at an interest rate of 10.97%.
• Michael & Amy DeFabio needed money to launch their newest product for their holistic health care company but were repeatedly refused funding by the banks.  After only a few weeks of listing a loan on Lending Club, they had $15,000 to take their new product to market.
• Madeline Smith was able to raise $5000 on Prosper to start her own business, Madeline Pet Clothier, in the booming pet industry.

Borrowing Money with Prosper or Lending Club

The peer lending model uses the micro-loan concept, many different people loan out small amounts, usually $25–100, and the p2p system aggregates them into one big loan for you. Of course people won’t just lend you money without convincing, you have to create a loan listing describing why you need the money and how you’ll use it to grow your business.  You also have to submit your financial information as shown below but the listings don’t include your name or address so you don’t have to worry about the whole world knowing your financial situation.

Here is an example of a business loan for $22,000 that was funded at an 11% interest rate:

Lenders were confident in lending this business owner money based on the borrowers financial profile, shown below:

As mentioned earlier, you should explain why you need the loan and how the money will be used.  Here is the detail provided for the above loan listing:

Purpose of loan:
This loan will be used to expand an already succesfull design and drafting business. We, as a company, have broke into the expanding energy and oil business in Western Colorado, designing and drafting blueprints for some very acknowledged companies. We have upcoming contracts to design and build for these companies. We plan to expand into another city closer to the “action”. We feel we can serve these companies better having an office closer to their main operations in Western Colorado.

My financial situation:
I am a good candidate for this loan because I have proven over and over again that I am trustworthy and honest. I started my business with very little money and created some great opportunities for exceptional people, and exceptional communities. I have never been late on a payment in my life. I have never defaulted on a loan, got in over my head, or made a late payment on a loan or credit account. NEVER! I have proven to budget very wisely and create positive situations for my company.

To show that I am serious about this opportunity for my company, I have already bought the land to build on. I have a large stake of my net worth in this opportunity, and I would not have jumped at the chance without extensive research and confidence in my company. I need another $22,000 to qualify for the rest of the financing for the construction project.

So if you’re in need of startup capital or some extra funding to give your small business a boost but have been avoiding it due to the paperwork and time involved, give Prosper or Lending Club a try. eBay business owner Patrick Kelley, who borrowed $18,500, confirmed that the peer lending process was much quicker and easier than going through a bank.

“He estimates that each bank-loan application he submitted took several months to prepare. There’s more paperwork, and banks want an updated business plan and tax returns, he says. By contrast, he says the loan-application process on Prosper took a couple of weeks, from the time he applied for a loan to the time the money was in his bank account.”

Thanks to technology and the innovation of entrepreneurs, now it’s possible for small business owners to get a loan faster & cheaper than from a bank.  Take advantage of this new funding alternative and grow your business today!

• Apply for New Business Loans on Prosper
• Apply for Small Business Loans on Prosper
• Apply for Business Loans on Lending Club Loans

References:

– Where Either a Borrower Or a Lender Can Be

– Business Loans Get Personal