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Are Banks Turning You Away? You Might Want To Consider Person To Person Lending
In an age of tightening credit, when banks care about nothing more than your fico score and financial statement. More people are turning to micro lenders such as Prosper that help facilitate person to person lending.
By: Cash Miller
In an age of tightening credit, when banks care about nothing more than your fico score and financial statement. More people are turning to micro lenders such as Prosper that help facilitate person to person lending.
By: Cash Miller
About two years ago I was in the process of searching for money to help stabilize my company's financial situation. My bank had refused to extend my line of credit and I had spent weeks trying to line up a new bank. While I was in the process of looking for money I ran into a website called Prosper.com. What an eye opener this site was. Now at the time I wasn't able to apply for a loan because I was in the state of Nevada which wasn't at the time covered by Prosper but I continued to look through the site further because I was intrigued by what they were doing.
The concept itself is pretty simple. Prosper acts as a middle man connecting potential borrowers with people interested in lending money. Imagine it like borrowing money from a friend. You're in need of a loan. You ask a buddy if he can loan you some money. But because of how much you need you can't pay him back all at once. So you agree to pay back a certain amount each month with interest.
The system works the same as a standard bank loan. Prosper makes its money by charging a fee of 1% of the loan that it takes out before it transfers you your money. When you ask for a loan Prosper does all the necessary credit checks and issues you a credit rating.
The way it works is like this. Say you need to borrow $5000. You start by signing up at Prosper.com. You next apply for a loan and state the interest rate you're willing to pay. Prosper does a credit check and assigns you a credit rating. You then give prospective lenders a rundown on what you'd like to use the money for. Then you give a breakdown of your finances so lenders can see that you have the ability to repay the loan. Your loan request will then be posted online. It will then have a certain amount of time to become fully funded. If it doesn't make the time limit it will be pulled.
Now don't despair if your loan doesn't become fully funded. All you have to do is list it again. Your loan just might need some tweaking. Maybe you need to ask for a smaller amount of money or offer a higher interest rate. As long as you show that you have the ability to repay your loan and you have a decent credit history you should be able to get what you need.
From a personal perspective I like the idea of helping people that might truly deserve the help but for one reason or another have been denied. The loan itself might be for a small business but many of them are for personal reasons. If your searching for money person to person lending may be right for you.
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
The concept itself is pretty simple. Prosper acts as a middle man connecting potential borrowers with people interested in lending money. Imagine it like borrowing money from a friend. You're in need of a loan. You ask a buddy if he can loan you some money. But because of how much you need you can't pay him back all at once. So you agree to pay back a certain amount each month with interest.
The system works the same as a standard bank loan. Prosper makes its money by charging a fee of 1% of the loan that it takes out before it transfers you your money. When you ask for a loan Prosper does all the necessary credit checks and issues you a credit rating.
The way it works is like this. Say you need to borrow $5000. You start by signing up at Prosper.com. You next apply for a loan and state the interest rate you're willing to pay. Prosper does a credit check and assigns you a credit rating. You then give prospective lenders a rundown on what you'd like to use the money for. Then you give a breakdown of your finances so lenders can see that you have the ability to repay the loan. Your loan request will then be posted online. It will then have a certain amount of time to become fully funded. If it doesn't make the time limit it will be pulled.
Now don't despair if your loan doesn't become fully funded. All you have to do is list it again. Your loan just might need some tweaking. Maybe you need to ask for a smaller amount of money or offer a higher interest rate. As long as you show that you have the ability to repay your loan and you have a decent credit history you should be able to get what you need.
From a personal perspective I like the idea of helping people that might truly deserve the help but for one reason or another have been denied. The loan itself might be for a small business but many of them are for personal reasons. If your searching for money person to person lending may be right for you.
Cash Miller is the Editor of SmallBusinessDelivered.com and hosts his own blog at www.SmallBusinessDelivered.com/cash-millers-blog.
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