Small Online Business Loans for your Startup
So you have a killer business idea that actually requires a fairly amount of significant startup money. As a college student, your lack of a substantial credit rating pretty much rules out a business loan from a “brick and mortar” bank. Even if you do have an impressive credit rating, your age and lack of a track record will probably prevent you from getting a loan.
So what then? Forget launching your business and watch potential profits go to someone else? Not the best option… A good alternative to “traditional” loans lies in the peer to peer loan industry, which is lead by Prosper. Prosper.com is the leader in this [not so micro lending] niche, and it offers an outstanding loans to its American users.
Simply, Prosper is a social network that lets users create profiles and ask for loans for X% interest rate. The interest rate depends on your credit rating, debt to income ratio, and your credibility. Other users looking to lend their money for profit can then lend any amount of money to you for your desired interest rate. For example, if you’re looking for a loan of $5,000, 100 users can lend $50 each at 16%.
If you invest time into the Prosper community by joining groups, writing up a good pitch and profile, it is likely that you can walk away with an acceptable loan for your business. The process is easy and very beneficial to those who take advantage of it, and it is perfect for student entrepreneurs who may not be taking seriously by traditional loan institutions. By adding a personal touch displaying the viability of your business plan, you will surely get funding.
For British users, Zopa is Prosper’s clone across the pond. Zopa has been planning a launch in the US, but it has been delayed for a good while now, making it seem unlikely.
And now my little disclaimer: although it is relatively easy to get a loan on Prosper or Zopa, don’t forget that this is a very regulated and legal process. Don’t think that you “just won’t repay it” because it “doesn’t seem real,” because it’s very real. Late or nonexistent payments will be reflected negatively on your credit report, which is serious. Fortunately, both sites do a good job of getting their point across in their lengthy registration process.
But if you do have a real, feasibly business plan that needs funding, Prosper can be a great source of funding for your startup.
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