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Secured Start Up Loans

Starting a new business is an exciting yet stressful process. Building a business plan and the idea of a successful business is a great start. But to get this business up and moving there is often a huge need for financing. Yes you can put every penny of your personal savings into your new business, but do you have to? Secured startup loans can help you get the money needed to start your new business without depleting your personal savings.

Get The Money You Need and Keep Your Savings

Secured startup loans offer a way to start a new business without tapping into your personal savings. However it does require you to place your personal assets as security on the startup loan. Commonly new business owners will use a home, vehicles, boats and other large assets as collateral on startup loans. This offers the lender security the the loan will be repaid. Failure to repay the loan will result in the possession of the property placed as collateral which will then be sold to cover the cost of the loan.

Is a Secured Startup Loan Right for You?

If you are ready to start a new business and want to keep money in your pocket this may be the best financing option for you. Secured startup loans often have lower interest rates, allowing for affordable monthly payments. As long as you repay the loan as agreed there will be no long term affects to your personal property. If you have large assets and are ready to turn your dream business into a reality then a secured startup loan may be right for you.

How to Get a Secured Startup Loan

  1. Submit an application to a business lender
  2. Provide the lender with a business plan, list of personal assets, your personal credit history and report as well as any other requested documentation.
  3. Review the terms to the startup loan.
  4. Make negotiations if possible to ensure your new business is getting the best terms and interest rate available.
  5. Sign the contact and set up a repayment schedule

You can have the business of your dreams, a secured start up loan can help.

The Ins and Outs of Peer to Peer Lending

For nearly a decade, peer to peer lending has been all the rage. Not only does this have benefits for those who are looking to borrow money, but the same holds true for individuals who are willing to lend their cash.

Before we go any further, let’s take a closer look at the definition of peer to peer lending, as provided by Investopedia:

“A method of debt financing that enables individuals to borrow and lend money – without the use of an official financial institution as an intermediary. Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios.”

Who Uses this System?

Traditionally, a person in need of a loan would visit a local bank to discuss their options. With peer to peer lending, this is no longer required. Instead, a borrower is able to request the money they require from other individuals.

Many people use this type of borrowing system for a variety of reasons, including but not limited to taking on a home improvement project, paying an unexpected medical bill, and buying a car.

The Pros and Cons

Before you get started with peer to peer lending, either as a borrower or lender, it is essential to understand the pros and cons. This is a big financial decision, so you need to know what you are doing every step of the way.

Here are three borrower benefits:

  • Ability to secure a loan, despite the fact that a bank has denied you due to poor credit or other circumstances.
  • Faster process, allowing you to get your hands on the money you need in a shorter period of time.
  • Lower interest rates than a local bank. This is not always the case, but it could work out this way for a person who has an above average credit score and solid credit history.

On the downside, consider the following:

  • Some borrowers do not qualify because their credit score is too low.
  • There is a lot of work that goes into the process, especially when it comes time to make a final decision on who to borrow money from.

While some people are only interested in borrowing money through a peer to peer lending service, others become part of the other side. These are the lenders.

The primary benefit to a lender is simple: the person has the ability to earn more money in interest than they would through a traditional investment, such as a CD or savings account.

Another benefit has nothing to do with money and everything to do with good will. Some people are down on their luck and unable to get a bank loan. You can help this person out by lending them the money they need. Of course, you must always have your best financial interests in mind.

There is a downside of being a peer to peer lender. The biggest risk is the chance of default. Just because you lend somebody money doesn’t mean they have to pay it back. Additionally, your funds are not typically insured.

The Top Peer to Peer Lending Services

If peer to peer lending sounds like something for you, either as a borrower or lender, it is time to learn more about the major players that make up the industry.

While there are always new services popping up, it is best to stick with those that have been proven reputable over the years. Here are the top five peer to peer lending sites:

  • Lending Club. Founded in 2007, this service has been around for many years and has facilitated billions of dollars in loans.
  • Since 2006, Prosper has been a dominant player in this space, thanks to its user base of approximately two million members.
  • Funding Circle. This site may not have the same name recognition as the two above, but it is a top provider in the United Kingdom and is now growing into the United States.
  • This company is relatively new to the game, being founded in 2012, but it is already making noise.
  • Founded in 2005, Kiva takes a different approach to peer to peer lending. It is a non-profit organization with the goal of helping individuals in developing nations, via a peer to peer lending platform.

Conclusion

The peer to peer lending industry is still in its infancy. That being said, borrowers and lenders continue to rely on the services above, among others, to get involved. Understanding the pros and cons, as well as other related details, is the best way to understand if this is the right financial decision for you.