Business Loans For Small Business

It's also important to note that you need a credit score of 640 or above to receive funding from most peer-to-peer lenders. If you have a good credit score and history, you may receive a lower interest rate than you expect, because unlike traditional lenders, peer-to-peer lenders provide loans starting at only 6.78 percent.

Best of all, the monthly payments and interest rate are fixed, and the interest rate is amortized as well. There is also no prepayment charge, so you can pay off your unsecured small business loan as soon as you want without penalty.

As mentioned earlier, since you may need more than the $35,000 maximum loan amount offered by most peer-to-peer lending networks, some peer-to-peer lenders, such as Dealstruck, are now specializing in providing larger loans of $100,000 or more to the small business market. Typically, sites like these offer two to five-year loan terms with low interest rates starting at only five percent.

The Cost to Peer-to-Peer Borrowers

Businesses often find that borrowing from a peer-to-peer lender is much cheaper than borrowing from a bank, because there is no middleman involved. In addition to having more overhead, banks are still struggling to recover the money they lost during the financial crisis.

This added financial stress trickles down to borrowers in the form of higher interest rates, if they are able to get a loan at all. Since peer-to-peer lenders compete with one another to provide you with the loan you need to start your business, you're able to benefit from the lowest interest rate possible.

From Dream to Reality: Rob's Story

Two short years ago, Rob Strong dreamed of opening his own landscaping business. Although he pinched pennies and saved for years, he still found himself in need of additional funding to purchase the equipment necessary to finally launch his dream of being his own boss.

Sick and tired of fattening someone else's pocket each day, one day Rob decided enough was enough. Unfortunately, he still needed $10,000 to buy all of the necessary equipment, so he went to his bank with the business plan; he spent hours upon hours completing in order to get a small business loan for the money he needed. Despite banking there for years, the banker denied his application because his credit score was only five points below the threshold.

"What am I going to do now?" he asked himself. Luckily for Rob, he was browsing online two days later and ran across a major peer-to-lender. "It's worth a shot," he thought. After spending five minutes filling out the application and setting up his profile, he turned his computer off and waited. Two days later, Rob signed in and was shocked to see that 50 investors had provided him with bids. The next day, he received the full amount he needed.

Two years later, Rob's landscaping business is in full swing. He now has 20 employees and earns six figures a year while "working" 20 hours a week.

allied cashIf you're looking for a start up business loan, it goes without saying that you will need to write a convincing business plan.