David Allan

Expertly compared by David Allan

Products Updated June 11, 2018

Peer to Peer Business Loans

We have listed our top choice P2P lenders and business finance brokers from the market place. Peer-to-peer funding solutions are available to all business types including limited companies, sole traders, partnerships and self employed applicants.

Our business finance experts can compare the market from over 70 approved lenders. From start up's to SME's we've got you covered:

3 providers expertly compared:

Learn More
All credit types
Rated 5.0/ 5

Choice Loans Why?
Why?

This provider is our Expert’s Choice in its category as it won tops marks for the following.

  • TRUST
  • VALUE
  • EXPERTISE & KNOWLEDGE
  • CUSTOMER SERVICE

Learn more about how we review and assess the providers here on Lending Expert.

Loan Amount
£5,000 - £10,000,000

Representative APR
From 2.6%

Loan Term
1 - 35 years

Loan Type
Business Finance Broker

Status
Sole Trader & Limited Companies

Choice business loans can arrange a wide range of business finance solutions for business of all sizes. Services include business loans. Crowdfunded business Loans, Short term unsecured business loans, Merchant cash advance, Pension led business finance, Overdraft alternatives, Asset finance, Asset backed loans, Invoice finance, Commercial mortgages.

3 providers expertly compared:

Learn More Available via broker only
All credit types
Rated 4/ 5

Funding Circle

Loan Amount
£5,000 - £1,000,000

Representative APR
From 3%

Loan Term
1 - 5 years

Loan Type
Business Use

Status
Sole Trader & Limited Companies

Funding Circle say yes to funding a business every 5 minutes. They offer fast, affordable finance to help your business grow. Unsecured loan up to £500,000.

3 providers expertly compared:

Learn More
All credit types
Rated 5.0/ 5

Funding Options

Loan Amount
£5,000 - £10,000,000

Representative APR
From 2.6%

Loan Term
1 - 35 years

Loan Type
Business Finance Broker

Status
Sole Trader & Limited Companies

Funding Options is a credit broker and not a lender. They match small businesses like yours to different loan providers every day. Whether it's business loans, commercial mortgages, invoice financing, asset leasing, growth finance or something else, they can help find you a great deal.

Everything you need to know about Peer to Peer Business Loans

P2P Business loans explained

P2P Business loans explained

Peer to peer lending for business is a relatively recent concept that has already grown hugely in popularity and demand. It is on the verge of overtaking traditional lending methods, and more and more investors are looking to get involved in making the most of the high returns that are available. Recent technologies and the growth of the internet across the globe in the past decade have given investors and small businesses an excellent opportunity to connect through peer to peer business loans.

What is a P2P business loan?

A large number of private investors fund peer to peer loans as opposed to a traditional bank loan. Usually peer to peer business loans are managed over online platforms, allowing businesses to connect with investors from across the globe, and often, this type of funding offers both lenders and borrowers a better rate than they could get from a bank.

A peer to peer lending company will facilitate the arrangement between the collection of investors and the business that is borrowing the funds. As a borrower, you will be arranging and applying for the loan through this lending company; the only difference is that the funds are coming from individuals instead of a bank or finance company.

What are the requirements?

Borrowing with this type of loan is very similar to borrowing with a traditional bank loan. The lending company require information about your business’s turnover, trading history and revenue, and will often run a full credit check to ensure you are able to make the repayments. The exact criteria for peer to peer business loans are dependent on the lending company, but usually, your business will need to have at least two years of accounts and an annual turnover of at least £100,000.

Once the lending company has approved your business, the loan is opened up to their investors who can each offer a small amount of funding that adds up to the total loan amount. This stage is managed differently by each lending company, and once investors have funded the full amount of your loan, the cash is released to you.

What can I expect to receive?

Peer to peer business loans can vary quite a lot depending on the lending company’s terms and conditions, but usually, they range from anywhere between £5,000 to £1,000,000. Loan terms can be anywhere between six months and five years, with repayments being a fixed monthly amount with a fixed interest rate.

Some lenders require some form of security, which can be in the form of a personal guarantee or an asset. Most peer to peer lending companies charge fees between 2% and 5% of the total loan amount, with no extra or hidden charges involved. Repayments are set up as fixed monthly instalments for the predetermined loan duration.

Advantages

  • Interest rates are often more competitive than with traditional banks and building societies.
  • The loan application process is often a quick and simple online form, unlike lengthy application processes from traditional lenders.
  • Funds are usually released quickly, in as little as two weeks or less, although this can depend on the investors and the lending company.
  • The majority of peer to peer business loans are unsecured, so no additional security or collateral is required.
  • Depending on the lending company’s criteria, peer to peer business loans can often be more accessible than bank finance options.

Disadvantages

  • As peer to peer business loans are fairly new, there are fewer policies in place for control and protection for both investors and borrowers.
  • Not all lending companies will be regulated by the Financial Conduct Authority (FCA).
  • Some lending companies cannot lend directly to a business account, and so the loan must be applied for as an individual which will use your personal credit score for eligibility.
  • As everything is managed through the lending company, there is no ability for the borrower or the investor to build a lasting relationship which can have a negative impact on interest rates.
  • Peer to peer business loans are still growing rapidly and becoming increasingly popular for both businesses and investors. They offer a range of benefits over traditional bank loans, making them perfect for some small businesses to access the funds they need to grow and expand. If you are considering this type of loan, be sure to properly understand all the rates, fees and risks involved before beginning the lending process.

 

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