Non-traditional borrowing method for small businesses
For those who have gone through the process of trying to obtain venture capital, the process can be pretty disparaging. If your business doesn’t have a proven record of success or you don’t have much collateral to back a small business loan, your application will likely be denied.
It’s during times like these that you wish you had a friend or someone you know that could lend you the money without making you list out all of your possessions and treasures they can acquire in the event you can’t repay; you know that you have a good idea and can make repayment… but if you don’t have something of equal value to the loan, you decrease your chance of approval.
Prosper.com: where to go when tripped up by red tape
Prosper.com helps entrepreneurs who are tripped up by the red tape of traditional lenders by serving as a peer to peer “online community marketplace for investing and borrowing money.” The company awards small business loans to business owners as a personal loan, and evaluates applicant eligibility based on his or her credit score.
The higher the score, the lower the interest rate the applicant can obtain from their investor. And even if the business is just starting and doesn’t have much to back the loan with, Prosper.com can still be of assistance because it specializes in awarding unsecured business loans.
These investors understand your plight
Prosper.com’s pool of investors scroll through applicant listings, in which business owners summarize their credit score and draft an informational blurb about themselves their business and how the loan will be utilized, along with a specified amount. These investors understand the hardships entrepreneurs face when starting their own businesses, and are willing to invest based on the owner’s personal financial responsibility.
Because the loan is awarded to the owner, that person is responsible for paying back the loan, and any repercussions for default will be directed towards them, so applicants should only accept the loan if they’re sure they can pay it back. But if an owner doesn’t have a home or other assets to list as backing for a traditional small business loan, Prosper.com investors will make a good faith investment based on their personal proven financial responsibility.
Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.