photo credit: Alan Nakkash

If you were thinking of investing in peer to peer loans and were scared away by the commitments, Lending Club’s trading platform has just added some liquidity.

Investors in peer to peer loans like it for several reasons. One is they could be helping someone. The borrower might need funding to start a business or pay for school. Second is the often the nice return investors see on their money, with many loans earning above 10%.

Certain investors liked the idea, but stayed away for a couple different reasons. One major reason is once you entered into a peer to peer loan you were locked in for the duration of the loan. With most loans being three years, peer to peer loans were not considered a liquid asset. If times changed and you needed access to money, your peer to peer loan was not the place to look.

Today, this might be different and has to do with the major changes to the industry in the last year. The SEC has stepped in and stated that issuing peer to peer loans without proper registration is illegal. This effectively shut down the industry and has done so for some time. Banks that want to open back up have to fill out the appropriate paper work with the SEC before issuing any more peer to peer loans. For those banks that do register, their peer to peer loans become securities and are tradable.

Today, Lending Club is one of the first to complete the registration and back open issuing loans. They have also added a trading section to their website. There, visitors will find it is being managed by Folio a member of Financial Industry Regulatory Authority (FINRA). This is a huge securities regulation firm that clients include the NASDAQ and ASE.

This addition has resolved the problem of liquidity. If you want to get out of a loan because you need the money, you can attempt to sell it on Lending Club’s trading platform. Furthermore, if you are looking to invest in a peer to peer loan, but only for a year or so, you can buy a loan listed on this exchange. For traders, Lending Club provides the information about the loan as well as the current credit standing of the borrower. This information protects traders, allowing them to judge the overall risk before buying a particular note.

This has also added some validity to the industry. The SEC has got involved and setup proper regulations for peer to peer lending sites. No longer is it seen as unregulated and lax in procedures. Also, this opens the door for a larger exchange of peer to peer loans. The possibility of complete exchange, where investors are able to trade between several different lending sites is now very plausible.

If you are looking for more information about peer to peer loans, you need to visit Kyle’s website. There you will find even more excellent information about peer to peer lending

photo credit: juhansonin

Starting a business is an overwhelming thought. One of the first things to consider is the funding you will need to get off the ground. In the past, you would need to either find investors, an angel investor, or attempt to get a business loan. Today, peer to peer lending is a new option that people are finding it as a viable option for funding a business.

The advantage of using peer to peer lending is the scale of your application. When you apply to a bank or approach an angel investor this is just one potential lender. If you use peer to peer lending, you are submitting a request for funding to thousands of potential investors. Everyone that is on a peer to peer lending site is a potential investor. Large sites like Prosper have a couple hundred thousand members. That is an exposure not easily achieved through the other models.

There are specific peer to peer lending sites that are designed for entrepreneurs. 40 billion is one of these sites. They offer a large range of funding from $1,000 to $99,000. It allows you to then sell your loan and business by giving you the ability to upload power point presentations and video. You can also invite people to invest in your loan to gain exposure and possible funding. To further help entrepreneurs, 40 Billion has business to business classified. This list could include attorneys, web development, and business cards.

The cons of using peer to peer lending for business loans are the limited amount of funds you could receive. If your idea is a large one and you need more than just a $100,000 then peer to peer lending might not be the route you want to take. Secondly, the loan will not be in the business’s name but in a person’s name. This person is then responsible for the loan regardless of how the business does. As a single entrepreneur this might be fine, but getting funding as a group means one person needs to take responsibility.

Peer to peer lending for small business has its place. For a person looking for just some start up money or just to expand, it could be ideal. Also, there is no guarantee that it will be funded so the borrowers need to sell it. If you are thinking about applying for a peer to peer loan be very clear on what it is for and what are your goals. This is a sign of a person who has direct and makes for a more confident business proposal.

To learn more about peer to peer loans visit Kyle’s website. There you will find great information about peer to peer lending

photo credit: karpov the wrecked train

In the past getting a loan used to be a pretty intimidating process, getting dressed in your Sunday best, looking your best and venturing into town to the bank for a date with the Bank Manager. Once there you used to have to throw yourself at the mercy of the manager and plead for them to lend you money, getting declined for a loan was often a demoralising and embarrassing process.

These days applying for a loan is much more stress-free with the decision on whether you get given the money being based more on details such as your income, credit report and other factors, but still people can get turned down for reasons other than a poor credit record. In light of the recent credit crunch many banks are being more cautious about whom they lend money to and in some cases have ceased offering unsecured loans.

Luckily there is another option for those turned away, and no it isn’t visiting the local mafia! Peer to Peer Lending is a recent phenomenon in the lending business where organisations bring people looking to borrow money together with people who are willing to lend money. Companies such as Prosper, Zopa and Lending Club offer this service and have proved popular.

These personal loans are a bit of a hit and miss though with some lenders sticking to a high Interest rate in order to make their investment worthwhile, lenders are warned that the larger the amount they are willing to lend is, then the more risk they are putting themselves into. Obviously all loans from these services are not secured loans and so there is little equity for the lenders to be assured by.

Lenders are urged to check the site’s procedures for getting repayments as in some cases the lenders may default on their repayments and this is to be expected as the type of borrowers this scheme appeals to are mostly people who have been deemed high risk by the banks and refused conventional loans.

If you are struggling with debt and other expenses then maybe consider arranging personal loans for smaller amounts or if you need larger amounts and own property then consider secured loans as an option. As with all loans ensure you are able to make the repayments and consider the APR

photo credit: karpov the wrecked train

As the credit crunch continues, more and more business owners and entrepreneurs are turning to less traditional methods of business financing. Usually, the requirements for receiving these non-traditional business loans are not as strict as bank requirements, even during times of a booming economy. Now, as people who would normally qualify for bank loans are facing bank denials, the various non-traditional business financing sources are experiencing an influx of qualified applicants.

Peer-to-Peer Lending

Wikipedia describes peer-to-peer, or P2P lending, as a lending system that “…occurs directly between individuals (“peers”) without the intermediation/participation of a traditional financial institution.” According to a recent article, many peer-to-peer lending sites, say users are frequently listing “credit crunch” or “banks tightening their credit policy” as reasons for turning to social lending networks.

This type of lending often works out for the benefit of the borrower because lenders auction of loans online, competing for the borrower by offering lower interest rates. Usually the lender offering the lowest interest rate wins.

Angel Investor

An angel investor is an affluent individual who invests in start-up small businesses, providing funds for new entrepreneurs. Many angel investors participate in such investments because they feel they can get “…a higher return than they would see in traditional investments” (smallbusinessnotes.com). Some angel investors even join together forming angel groups and/or angel networks. Usually angel investors are also seasoned business owners and have already experienced the difficulties of business start-up. Therefore, they can offer advice, expertise and experience in addition to funds.

Merchant Cash Advance

A merchant cash advance is a form of credit card factoring. Borrowers sell their businesses’ future credit card receivables at a discount. Meaning they pay a flat rate for upfront money. Then the amount of the merchant cash advance and the flat rate are paid via the deduction of a small percentage of the businesses’ daily credit card sales. This small percentage is taken until the entire payback amount is repaid. Merchant cash advance borrowers can usually have their money in a matter of days after approval.

Gaston C. writes articles about Business Loans and Small Business Loans for Merchant Resources International.

photo credit: The Digital Movement

For individuals seeking a loan for the reasons of debt consolidation, auto loan, student loan, small business loan or any other personal loan, there is a new option of funding through peer to peer lending. This option is relativity new and has become a completely separate industry. It is growing at a fast pace and for many people find it services a need not easy filled by other options.

The idea is based in person to person lending and is much like lending family members or a friend money. The bank involved acts to connect individuals who want to engage in lending or borrowing. For the borrowers, the bank helps find lenders. For the lenders, it does all the due diligence on borrowers such as a credit check and handles collection of payment. The credit checks have the purpose to reduce risk to the individual lenders and assign a max amount the borrower can get and sometimes the interest rate on a loan.

Why do borrowers love peer to peer lending? There are several benefits. The first reason why, it is most commonly used is debt consolidation. It often gets a lower rate than other forms of consolidation and at the term of the loan the debt is completely paid off. The second reason is it is easy to seek funding. If trying to start a business, a business loan is very difficult to get from your local bank and if denied the person has to go bank to bank. With peer to peer loans, lenders often find you. There is a bit of selling your loan in the market place, but it is available for funding to thousands of potential lenders. Third, the interest rate is often lower than other forms of personal loans. Peer to peer loans reported by Lending Club, a peer to peer lending site, have an interest rate starting at 6%. This depends on your credit standing. In comparison, a credit card is usually around 10% to 20% interest and can go as high as 30%. Furthermore, the rate is set and not subject to change like a credit card.

Why do lenders love peer to peer lending? The biggest reason is return. The rate of return, reported by Lending Club, ranges from 6% to 19%. This is extremely high rate of return in any investment. The second reason is actions taken to reduce default by peer to peer websites like Lending Club such as the initial credit screening. They list the default rate at just above 2%. This is low considering these loans are unsecure, meaning there is no collateral backing the loan. To further curb the risk, lenders are not allowed to fund just one loan with their capital. They must spread it out among several loans as to diversify their risk.

There are several other reasons and many could be personal to the individual lender or borrower as to why people love peer to peer lending. Its history is relatively short and for the most part unknown. The trend of growth in peer to peer lending will not slow for sometime as more people discover this alternative method of investment and credit.

To read more about peer to peer loans visit Kyle’s website. There you will find more great information about peer to peer lending