Over 250 million British Pounds have been exchanged in peer to peer lending across the UK — fine proof that social lending is not only here to stay, it has plenty of room to grow. You can use social lending for just about any purpose you can think of, but many UK entrepreneurs are realizing that it’s the perfect way to kickstart your first, or even your next business. However, many more are a little afraid to trust something so important as their business funding to the online crowd. Are their fears warranted, or should they let go and embrace something new? It’s all about looking at your options and going with what makes the most sense.
First and foremost, you are going to want to spend a lot of time refining your proposal. The proposal is the core of your social lending push. You literally cannot get funded without one, and you might as well make it good. Think of it as your top plea to the lenders on the site. You are trying to convince them that you have a worthy cause that deserves to be supported. If you only stick to the facts, people might not get why you really want the money. Make sure that you make it clear that what you want to do matters to you. Sure, everyone wants to run a business in their own way — but what makes you stand out?
If you can get someone else to look at your plans, they will be able to help you round out your proposal. You will also need to set a rate of interest based on your credit. If the interest rate is too low, your proposal will not be funded. It’s all about risk — if you have very bad credit, you will have to entice lenders to take a chance on you simply through having a higher interest rate. On the other hand, you might want to go with working on your credit a little more. The monthly payments might be more than what you can handle. Always use a loan calculator before you get too deep into the social lending process. Be sure to look at the fees the site is going to charge you — these can be a lot more than what you bargained for, so don’t hesitate to explore all of your options.
Is this going to replace a bank? Not always. Shop around and look at both social lending and traditional banks. However, if you have poor credit and you really want that extra boost outside capital would bring to your business, then social lending is definitely something to consider. Check it out today!