Business loans from individuals, businesses and institutions, generally given through online platforms.
Peer-to-peer (P2P) lending is a fast-growing type of finance type in the UK. It works by matching borrowers with lenders via online platforms or offline brokers.
You fill in an online form and answer questions about how your business will use the loan, the amount you want to borrow, and how long you need the money for. You also need to provide certain company information.
On some P2P platforms, a decision can be made almost instantly, meaning you might receive the loan in as little as a couple of days.
If you receive a loan, you might first need to pay an arrangement fee to the P2P platform. Then you pay back the loan, with interest, by making regular repayments for the duration of the loan agreement.
There are several peer-to-peer (P2P) lending platforms in the UK and they all operate in a similar way.
You complete an online form, answer questions about your business and the loan you need. Then the P2P platform matches you with suitable lenders. When you submit a formal application, the platform will conduct credit checks.
Loans can vary in size between platforms. Depending on the amount you need to borrow, and your business’ profile, the lending might be:
- unsecured, and driven by the cashflow your business generates
- secured, with you putting up assets as security
Each P2P lender has its own appetite to risk. So, if one lender rejects you, it doesn't mean another lender will too.
Wide range of platforms
You should be able to find a lender that closely suits your needs.
Small to large loans catered for
The flexibility of this type of funding means you shouldn't have to borrow more or less than you need.
Simple to borrow
The lending process is straightforward and decisions are made quickly, meaning you receive the money with little delay.
Retain full control of your business
There's no obligation to surrender ownership of part or all of your business, as there is with other types of finance.
These can be higher for peer-to-peer loans than for standard business loans.
Because lenders conduct credit checks, this can have an impact on your credit report. Being late with a repayment, or missing one altogether, can also harm your credit rating.
Charges and fees
You might have to pay to arrange the loan. And it's likely you'll be charged if you miss payments or repay your loan early.
If you fail to make the repayments on a peer-to-peer loan, the provider may pass the debt on to a debt collection agency, or it may take you to court. This could affect your credit report.
About your business
- Business stage: Established with a trading history
- Annual turnover: Any
- Sectors: All
- Regions: All
Here are some important questions you'll need to consider before proceeding with peer-to-peer lending:
- How much money do I want to borrow?
- How will I use the loan?
- What’s the interest rate?
- Are there fees involved?
- For how long is the loan?
- Will I be charged for paying back the loan early?
- Will I have to pay a fee for missing payments?
- Can I afford the loan repayments, interest and all the fees?
You can search for peer-to-peer (P2P) lenders online. Once you've found one you think is suitable for your business, you can set up an account with them.
To learn more about how to get started with P2P lending, read the Money Advice Service's guideLink opens in a new window.
“For general enquiries – such as asking questions before making an application – any credit search a lender conducts will be a soft one. Businesses can find this useful, as it means they can explore options without the risk of affecting their credit score.”
Other finance options
Corporate Venture Capital
|Purpose of financessss||Acquisition, research and development|
|Amount of finance||£1m+, depending on business|
|Duration of finance||3-5 years|
|Cost of finance||None|
|Time of finance||6-12 months|
|Annual turnover||Depends on the business|
|Purpose of financessss||Creating new products, acquisition finance, product development, project fulfilment, entry into new markets|
|Amount of finance||Up to £4.3m without a prospectus, higher with a prospectus|
|Duration of finance||Dependent on the business being funded|
|Cost of finance||This is platform specific. Platforms often charge a success fee (usually a percentage of the amount raised) with a listing fee. Others will charge a percentage of profit|
|Time of finance||Once your documents are in order, it can take as little as a month|
|Business stage||Pre-revenue through to more established businesses|
Leasing & Hire Purchase
|Business stage||Early stage to established with a trading history|
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