Peer To Peer Lending Gives SMEs Motivation

Small and medium sized enterprises (SMEs) are still having a difficulty in finding funds despite of their substantial contribution to the economy. Why do these vital economic contributors still faced with the same issue on finding finance?

According to Keren Bobker, independent financial advisor at Holborn Assets, many banks viewed small businesses as risks and that there was rarely much support available. She also said that many companies are funded through their families’ private loans. “It seems that few of the traditional banks are very keen on assisting SMEs and those that will, make the process both complicated and lengthy”, Bobker added.  She also emphasized that banks should work with SMEs and know the issues with cash flow in making repayments.
SUBSTITUTE RESOURCES

Many entrepreneurs are starting to look outside the institutional funds so they can expand their operations. This is where peer to peer lending comes in with a bunch of benefits.

Peer to peer lending is the process in which borrowers and investors are matched. This is facilitated by platforms in the form of websites. One of these sites is Stratosphere Inc. Limited.

P2P sites rarely impose penalty charges when the business makes an early repayment, unlike most traditional banks do.

Other advantages of peer to peer lending:

·     Simplified application procedure

·     Funding decisions are made instantly

·     Borrowers can access the status of their loan anytime

·     Stratosphere peer to peer lending gets involved – face to face

Investors are also starting to notice the favorable nature of P2P. What makes them excited about peer to peer lending is that they can invest a little amount but can obtain better returns compared to the investment returns they can get when depositing to banks.

Peer To Peer Lending Gives SMEs Motivation

AWARENESS IS VITAL

There is a need for businesses to be mindful of the fund sources and whether the borrowing/lending is regulated.

Here in the UK, peer to peer lending is being regulated by the Financial Conduct Authority (FCA).

The borrowers must be aware of the repayment requirements and should be able to repay on time.

If you are a newbie and do not know much about peer to peer, you better read these:
·     Be clear on your business, goals, brand and ethics. It is important for the visitors to understand everything about your business so that they will be confident in investing.
·     Recheck and be sure to keep your business plan updated.
·     Make sure your accounts are in order so you can show to your investors that your company is a good one.
·     Your business should also have a strong management – this is also another way to entice the investors.
·     Never forget to read the small print.
·     Interest rates can be more expensive compared to traditional banks ’ rates – typically ranging at 7%-12%
·     It is necessary to check the upfront arrangement fees, which can be greater than 2% of the cash you borrow. We charge a flat 1% fee.
·     Compare and contrast the stock of the payments being charged by bank and by P2P lender.

Our primary business niche is lending for property development secured as a first on a property or asset the borrower owns to protect our group of investors. However, we are always in the market to fund businesses in general providing there’s some sort of security available.

Please get in contact us for me information and don’t forget to review our FAQ section.