Peer-to-peer Business Loans: Loan Requirements

Peer-to-peer business loans have emerged as a viable alternative to the traditional lending institution. The ability to borrow money from a private lender is appealing to many people because of their dislike of banks. In order to get the money you seek, there are many of the same requirements as with traditional lenders. However, you can get a lower interest rate, fewer fees, and generally have a better experience in the process. So what does it take to qualify for peer-to-peer loans? 

How Peer-to-Peer Works

Peer-to-peer loans are an old concept with a new twist. Personal loans have been around forever. Loaning money to your nephew for a new business has been a common thing for hundreds of years. However, with technology, the process has evolved quite a bit. You can log onto any of the peer-to-peer sites and find a lender willing to lend. Theses sites take it upon themselves to match lenders with borrowers. They do this through a number of different ways including auctions and personal profiles. Once a lender and borrower meet, they take care of everything from beginning to end. 

Good Credit Score

Just like traditional loan requirements, you must have a good credit score to qualify for a regular loan. While there are some bad credit loan programs out there, the bulk of personal loans go to those with good credit scores. In this arrangement, the individual lenders do not pull the credit history of the potential borrowers. The peer-to-peer company pulls the file and checks the credit score for the lender. This way, the lenders can still be protected by checking potential borrowers credit without seeing all of their information. Each lender has different criteria for determining which credit scores they will lend to. Even if you have less than perfect credit, it is still worth putting a request out there. Some lenders will happily work with middle of the road credit scores.

Ability to Repay

The ability to repay the loan is essential for lenders to see. You need to have some type of income coming in on a monthly basis. They do not want to see someone sitting at home without a job applying for a loan. Not many lenders will go for this type of loan. They will loan for almost any purpose under the sun as long as they feel comfortable with your ability to repay the loan. Make sure that you fit the criteria before applying for your first peer-to-peer loan.