Holvi Blog for Makers and Doers

Creative way to get money for your small business without going to the bank

Business tips, Starting your business · 27/02/15 12:24 · Elena Zozulya

Banks used to be the place to go if you needed to borrow money to fund the growth of your small business. Banks have high rates for borrowers, cumbersome application process and they are not that eager to provide credit to entrepreneurs, sole traders and small businesses. Luckily, today banks are not the only way to get financing – online peer-to-peer lending is the new kid on the block that has grown big within the recent years.

In a nutshell, peer-to-peer lending platforms match small businesses or individuals that need to borrow money with savers that have money to lend. The catch here is that both can benefit from better rates than those offered by traditional financial institutions and cut out the complexity of dealing with banks.

In the UK, peer-to-peer (P2P) lending started in 2005 . Although it’s still a relatively young industry, it is quickly moving mainstream and today is the leading source of online alternative finance for UK small businesses and consumers. According to the new report, in 2014 over £1.2b was lent to SMEs and consumers through P2P online lending platforms. In 2013 the sector more than doubled in size.

Below, we’ve put together the list of P2P platforms in the UK that you you should definitely consider when looking to borrow money either as an individual, sole trader or limited company. If you are not based in the UK, make sure to Google your local peer-to-peer platforms. Many European countries are catching up with the UK in terms of alternative finance, so no matter where you're based in Europe chances are you can secure money for your small business through one of P2P platforms.

For sole traders, peer-to-peer lending means that they are evaluated as individuals that allows them to get access to funds within a couple of days rather than a few weeks. As a sole trader, when applying for a loan on a P2P site you only need to provide personal details, not reams of company information.

1. Zopa is the pioneer of P2P lending and the biggest and best known site to date, according to Guardian. With Zopa, you can borrow between £1,000 and £25,000 over 1 to 5 years as an individual or sole trader. The platform offers flexibility to repay loan early or make extra payments. As a representative example, a loan of £7,500 over 5 years will cost you £150.74 per month at 7.9% APR. Zopa promises to make a decision on your application within 48 hours on business days.

2. RateSetter is another major player in the peer-to-peer lending space in the UK whose personal loans you can use to fund the growth of your small business. To date, they've lent out over £521m. You can borrow between £500 and £25,000 over 6 months to 5 years with today’s representative APR for loans at 7.1%. Remember that personalised APR can vary. The platform promises to evaluate your creditworthiness within 24 hours since the application has been submitted, and in case of a positive decision the funds can be available on your account on the same day or within 24 hours.

3. Funding Circle is a marketplace that connects businesses looking to borrow, with people, other investors and even the UK Government. If you’re an established business looking to borrow money, this can be your place to go for an alternative finance. The platform launched in 2010, is now the fourth-largest net lender to small businesses in Britain. According to their site, 5,000  businesses have borrowed from them to date. You can apply for a business loan as a sole trader or limited company between £5,000 - £1m over 6 months to 5 years, with rates starting at 6%.

4. FundingKnight is a crowdlending platform that offers loans between £25,000 and £500,000 to UK sole traders, limited companies or LLPs over the term of 6 months to 5 years. To qualify for a loan at FundingKnight, your business needs to have traded at least for 2 years and it is profitable with a minimum turnover of £100,000. The loans are provided with personal guarantees pledged by principal(s) of the business taken with every loan.

5. Folk2Folk is a local P2P platform for businesses based in the South West of England. They offer loans for businesses and individuals looking for funds that are secured against property. To qualify for a loan, you need to be an individual, company or partnership based in the UK, own property in the South West, and the sum you’re looking to borrow should be more than £25,000.

This list of P2P platforms available in the UK is far from being exhaustive as there are many more sites you may want to consider. 

At Holvi, we are building the open banking ecosystem for small businesses that will integrate the most modern current account with P2P platforms and other financial services. 


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