Money for Small Business | Using Prosper for Funding a Small Business

Using Prosper for Funding a Small Business

 

One place to locate funding for small businesses is Prosper.com. They have been established for a few years now and are gaining in popularity. To date Prosper has facilitated $175,000,000 in loans. Here’s a chart to show how they can compared to traditional lenders recently:
 

 

Prosper 8.68% APR

Citibank 14.55%

Capital One 15.84%

Chase 16.24%

At Prosper you create an account, and describe why you want the money and what it will be used for. The more honest and sincere you are the more likely you are to get your money. So, if you have had a bad couple of months due to, say a health problem, let them know. People are understanding and more likely to give you money for your business if they feel you are telling the truth. Prosper also allows the lenders to ask you questions on your listing page. It is a good idea to respond as quickly and honestly as possible.
The way Prosper works is by brining ordinary people together to work as lenders and borrowers. The money you are seeking for your small business is placed in the Prosper marketplace and bid upon by the lenders in an auction format. Most people spread their risk by loaning small amounts to several borrowers. So, you may be getting the money from hundreds of people, but don’t worry, Proper collects the monthly payments from you and distributes them to the lenders. Prosper also reports to credit agencies and uses collection agencies to try and keep people from defaulting on the loans.

Prosper also uses your credit report to assign you a credit risk when joining. This is how the lenders gauge the risk they are willing to assume in loaning you the money for your small business. The better your credit rating the better the interest rate you are likely to receive. Rates can vary wildly on the loans, but generally if you make a strong argument for the money and have good credit, lenders should bid your rate down to below what you would receive from traditional lending on a personal unsecured loan.

 

 

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