One of the great challenges of a small company, especially when it is preparing to expand its activities, is to obtain credit for expansion in the traditional market.
Faced with this difficulty, new types of lending have emerged – and peer-to-peer is one of them. Currently, there are platforms that unite peer-to-peer and small businesses, enabling the ease of financial business.
If you are thinking about expanding your company and still don’t know how to get the investment for it, stay tuned to the valuable information that we will give in this post.
What is peer-to-peer?
Peer-to-peer (or P2P) is a type of financing that has recently emerged and its main characteristic is direct negotiation between investors and entrepreneurs, without the need for a bank.
The main attraction of this modality is the lower interest rates. In addition, without going through banking institutions, the process is much less bureaucratic.
On the other hand, for the investor, the financial return is greater and faster. Through peer-to-peer platforms, it is possible to obtain profitability on a monthly basis.
How is the relationship between peer-to-peer and small businesses?
P2P is a line most used by small businesses. This happens due to the characteristic of this type of company when it needs capital for expansion, since it is unable to pay very high interest rates or cannot obtain a traditional credit line with a financial institution.
However, another factor that strengthens the ties between peer-to-peer and small businesses is the investor’s ability to foster the growth of startups and technological advances through their investments.
What are the benefits of peer-to-peer as credit for expansion?
We have already mentioned some benefits of this type of loan for entrepreneurs and now we will detail the main ones. Check-out!
The fact that there is no financial institution intermediating negotiations between the investor and the entrepreneur makes the rates much more attractive for both small companies and entrepreneurs.
To give you an idea, the rates can reach up to 150% per year in a traditional financial institution, according to the chosen line. In P2P, this rate varies between 1.5% to 5.5% per month.
Financial institutions require a series of paperwork that, for smaller companies, ends up becoming a major complicator.
Thus, all this bureaucracy makes it impossible for the company to provide the guarantee of payment of the loan and the bank ends up not carrying out the transaction.
100% online transaction
In a P2P operation, the entire process is done via the Internet. Through a platform, entrepreneurs and investors are connected and close deals.
Through digital means, it is possible to search all the necessary information about both the investor and the entrepreneur, compare rates and do the whole process without leaving home.
How to hire a credit for expansion in peer-to-peer lending?
To hire a P2P loan, it is very simple. Just register on a marketplace platform suited to the requirements of the Central Bank and the National Financial System, request the desired amount and wait for a proposal.
After negotiations are complete, the requested amount can be available in less than 15 days in your account.