Who Qualifies for a Peer-to-Peer Loan?

Peer-to-peer lending networks do not offer business loans. If an entrepreneur or potential start-up requires a loan to fund their business, they can borrow as an individual. 

Instead of a loan being granted to a company, the loan is issued to an individual who can then use the funds as they wish. The loan will be considered personal debt.

Understanding Peer-to-Peer Lending

Peer-to-peer lending is similar to eBay. Simply open an account on one of the person-to-person loans networks and read the borrowing guidelines. Then, you can review the loan types they offer. 

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Once you have registered an account, all you need to do is enter the amount of the loan you want and the maximum interest you are willing to pay. 

Investors will start sending you bids once your listing has been created. They will state the amount they are willing to lend and the interest rate they wish to charge. The better your credit score is, the more financing or lending you can get.

Peer-to-peer lending requires a credit score of at least 640 to be eligible for funding. Peer-to-peer lenders offer loans starting at 6.78 percent if you have a strong credit history and good credit rating.

The best part is that the interest rate and monthly payments are fixed. You can also pay off your small business loan unsecured without any prepayment penalties.