Alternative Lending Sources

Prosper alternative lending sources are where individuals and institutions pool money together and then use a bank lending institution to distribute funds to qualified borrowers. The terms on the money are not as stringent as normal bank lending would be, meaning that the money is unsecured and is lent to people that might not otherwise be able to borrow through a normal bank.

The interest rate through Prosper Alternative Lending Sources is very competitive and may even be better than what your local banker is offering, especially if you have great credit but lack the collateral to secure the loan.

The people who are lending the money are often Entrepreneurs and Investors who are looking to invest their money in other sources making the relationship a win-win. I’ve personally lent money through Prosper over several years and found it to be very rewarding.

You’ll create a profile that will tell investors what you are going to do with the money and then they opt in to fund your loan. Prosper will process your loan and issue a check as soon as you have agreed to the terms of the loan and are fully funded. It’s a great way to get your Start-Up Company seed money while you are seeking investors or just getting off the ground.

Prosper Alternative Lending Sources allows you to ask for up to $25,000 and interest rates start in the 6.5% range and goes up depending on the credit and the number of people who are willing to invest in your loan.

Many people who launch businesses often need the money to get rid of personal debt to reduce start-up cost needs for business. This type of debt is not something that you want Investors to see intermixed with your business. If you have an issue like this, consider making a loan through Prosper for your personal debt reduction instead.

Investors are going to ask you what you have tried to get your business funded. They want to know you are willing to do anything to get your business going including borrowing from any resources possible. That shows you are committed, even if lenders like Prosper turn you down. That just shows that you are not afraid to take on the calculated risk.

If you’re looking to get your business funded through Alternative Lending Sources, don’t pass up the opportunity to secure up to $25,000 in start-up capital from Prosper.

Comments

  1. Sounds interesting. Also, may I suggest researching Foundups.org ?

    • I haven’t heard anything about foundups.org before. I just went to it and appears to be a LinkedIn group. Would you be interested in doing a guest post on this option?

  2. Very good alternative source of funding. Unfortunately, it’s not available to businesses or individuals outside the U.S. Thanks for sharing just the same.

  3. Anne Thomas says:

    Peer to Peer lending seems to be gaining momentum.

    • I agree, even though Prosper has been around for years. Watch for the laws to change in the future allowing people to invest small amounts of money into start-ups through similar models. It’s coming.

  4. Thanks for the introduction. I’m sure some of my client could use such an alternative source for a short term loan. I’ll certainly check out links included.

  5. Jim Thompson says:

    Of course, the inexperienced lender should approach Prosper with caution. There are reasons unsecured loans are sometime very challenging to get. Regardless, the idea is wonderful and should be encouraged!

    • Prosper is pretty easy for lenders. I did very well with it when I was actively lending. I spread my money around to several different loans, some conservative and some high risk. Most of the loans on Prosper are people who have strong credit but aren’t willing to use collateral to secure the loan. Still, you are correct, education is necessary to make good loans to anyone.

  6. Great info Kirk. I had not heard of this and I’m really interested in seeing how this grows.

  7. Bob Warren says:

    Have a Great Sunday Night!

  8. Jason flaugh says:

    Peer to peer is great, but I am not liking the middle person/organization in alot of cases. For example, Kiva is a great idea, but some of the lenders charge way too much in interest. Take Prosper for example, “APRs by Prosper Rating range from 6.59% (AA) to 35.84% (E) for first time borrowers.” I will explore in the future, but not really in love with the high interest rates in general; Accion can be just as high.

    • Jason, it all depends on what your credit score is and then how many lenders bid on your loan. You can specify what you want to pay max for interest and you also don’t have to take the loan if it doesn’t fit. Just an option for you…. Thanks for sharing your thoughts.

  9. It is an interesting alternative to traditional loans.

  10. it is a good alternative for those that try to fund a start-up. Getting unsecured loans with good credit is nothing unusual. From experience in business and commercial banking, the problem lies with those that have credit problems.. And that number is rising.

  11. The good thing about bad times is that creative solutions are born. This sounds like a great trend which will benefit both investors and start-ups. Done well, a win/win.

  12. Appears to be a good way for a lender to bring in some extra cash, as well as a good way for a borrower to get smoe ready cash, with both parties being agreeable to the terms of the loan. Could very well become the new norm.

  13. Last baby Boomer says:

    Appears to be a good way for a lender to bring in some extra cash, as well as a good way for a borrower to get smoe ready cash, with both parties being agreeable to the terms of the loan. Could very well become the new norm.

    • I’m not sure how it works today, but the borrower used to be able to specify the maximum interest rate that they were willing to pay. Lenders would bid on the loan. When the loan was funded, lenders still bid until the closing date. The lenders would offer their money at a lower rate which would bring the final interest rate down by outbidding other lenders.

  14. Been thinking of approaching an investor, you seem to have read my thoughts.

  15. Tom Laing (@tomlaing) says:

    Great article Kirk – good advice too!

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