Crowdfunding, crowdlending, marketplace lending, P2P lending, online lending, AltFi. These are all terms that Irish business owners are hearing more and more. As FinTech (Financial Technology) continues to transform the traditional financial landscape, SME owners need to understand these terms, particularly P2P lending.
What is P2P Lending?
Peer-to-Peer (P2P) Lending is about connecting people who need to borrow money with people who have money to lend. Generally, P2P lending involves a large number of individual lenders and large institutions coming together online to contribute small amounts of money to a single loan. It’s a simple concept and it’s nothing new.
Large groups of people have been coming together to support single projects since time began, be it the building of Newgrange, raising funds for a new church roof or Jonathan Swift’s Irish Loan Fund from the 1700’s, the concepts behind P2P lending aren’t new.
What is new, is the technology. The digital age means that P2P lending has gotten faster, fairer and more efficient. The internet can connect large groups of people online so the people supporting a loan or a project don’t need to know each other or live close by.
Technology is driving a major surge in P2P lending. In much the same way that Spotify has changed the way we listen to music, Netflix has transformed our viewing habits and sites like Booking.com are transforming the way we plan our travels, providers like Linked Finance are looking to transform the way that businesses borrow.
This is crowd power. Cutting out the middleman. Giving people more control of how they put their money to work. With a growing online community of more than 20,000 ordinary Irish people who are ready to lend to great local companies, Linked Finance is dedicated to giving hard-working Irish entrepreneurs a better way to borrow.
Here are 5 quick facts about P2P lending that every business owner needs to know:
- P2P Lending is on the rise
P2P lenders and crowd-funding platforms have exploded in recent years, giving business owners a much wider choice in how they can finance the growth of their business. In the UK, P2P lending reached £11 billion recently from a standing start in 2010 and that impressive rate of growth shows no signs of slowing.
- P2P Lending is easier
One of the major factors driving this growth in the popularity of P2P is ease of access. P2P lenders use technology to make business lending easier. They have developed comprehensive credit approval engines that can provide credit decisions quickly. They don't need you to produce long-winded business plans or complex cash flow projections.
- P2P Lending is quicker
The efficiencies and speed that these technology platforms bring to the world of business lending mean that you can get the funds you need to grow your business faster. With Linked Finance, you can apply online in 2-minutes, get a credit decision in 8 hours and you could have the funds in your account the very next day.
- P2P Lending is transparent
P2P platforms tend to be more open about their methods, publishing detailed stats on their loan books and lending practices. Traditionally funding requests were always public; published online so that lending communities could decide whether to get involved but as the industry has grown and attracted institutional capital many platforms can now also fund loans either instantly or entirely offline. Thus, removing the public aspect they may have dissuaded some business owners.
- P2P Lending is not a last resort
It’s important to remember that P2P platforms are not lenders of last resort. They conduct the same types of credit checks as traditional financial institutions. They just do it quickly and give decisions fast. Linked Finance for example only provides credit to established businesses, who have been trading for more than a year with a good track record of meeting their financial obligations. They can do this, however, with one working day and applying is very easy.
If you’ve been trading well for more than a year and you have plans to take your business to the next level, talk to Linked Finance today.You can apply online in just 2 minutes and we can give you approval within 8 hours. Just click here...