The arrival of businesses offering business loans via peer to peer networks reflects both technological capability and the fact that interest rates, since the Banking crisis of 2007/08, have been so low.
The platforms put together those looking for a return on their money with businesses looking to borrow. With interest rates so low, peer to peer returns can look very attractive but funds lent, across a P2P platform are NOT covered by the Financial Services Compensation Scheme.
Businesses borrowing using P2P can be expect to pay considerably more than they may for conventional facilities, simply because the platform has to offer high returns, to encourage investors across the platform.
Because the P2P platforms are technology reliant borrowers can expect little or no business support or experienced advice.
P2P is a complex area for both borrowers and lenders; anyone thinking of lending money across such a platform MUST take appropriate advice. Borrowers should consider it as an option but must closely consider all the costs, especially those over and above the headline interest rate.
I have worked closely with two P2P providers and seen examples of where P2P Business Loans work and, sadly, more examples where they do not work.
There’s a blog post here with my current views on the P2P market – as at August 2020.
If you would like to learn more about whether a P2P business loan may suit your business then call/text 07966 492154 or email enquiries@factoringpartners.co.uk