Peer-to-Peer (P2P) lending companies connect investors with businesses or individuals that want to borrow money. By using technology to cut out traditional middlemen like banks and brokers, P2P lenders can reduce costs for borrowers and give investors a good return on their money. Heralded as a lending solution for growing businesses, P2P lenders can help SMEs that may struggle to get a loan from a traditional institution.
Peer-to-Peer lenders provide funding opportunities for businesses that need finance quickly and easily, or whose needs aren’t met by traditional financial institutions. While P2P lending is a developing industry that has its own teething problems, it represents a move towards making lending more democratic and accessible for small businesses.
Accountants recommend that businesses start looking for finance 6 months before they need it. Loan applications through P2P and other online lenders tend to be much quicker than through a bank.
P2P business lending has accounted for 36 per cent of total online alternative finance market volume in the Asia Pacific region over the past three years, according to a report by KPMG and Cambridge.