Small businesses are important to gross domestic products even during an economic crisis. That is why small businesses are important for economic growth.
Considering the significance of small businesses, no wonder if there is a concern from community to encourage the growth of small business addressing their problems. One of the main problems of small business is access to funding.
Overcoming this problem, P2P Lending platform may be the best solution for small businesses funding needs. P2P Lending loans allow small business owners to get funding faster.
Why small business need P2P lending? The main reasons are no collateral required, easy procedure, lower interest rate, and faster process than conventional loan.
1. No Colateral
The limited access to loan faced by small business is due to a mismatch between the financial products offered by traditional institutions and the needs of small business.
Most traditional institutions require the borrower to provide collateral before the loan can be disbursed.
Meanwhile, most small business tends to lack assets or collateral to be able to meet the requirements of institutions such as banks.
Loan products from traditional institutions also require a loan application process that is quite complicated and usually takes a long time to process.
This of course makes it even more difficult for small business that need fast loans to meet their business funding needs.
P2P Lending, on the other hand, are a suitable loan option for small business because they do not require collateral.
P2P Lending are based more on whether the small business is deemed worthy or credible enough for the funds requested.
To get funds from P2P Lending, small business need to submit capital requirements to the P2P Lending platform.
If the proposed business is deemed feasible, the P2P Lending loan company will collect the requested funds from a group of individual investors.
Funds obtained from investors are then directly provided as a form of funding loans for small business that apply for loans.
2. Simpler Process
Usually, funding loans proposed by small business will be used for operational and cash flow from a business.
Of course, making loans is needed quickly to support the continuity and development of a business.
Example: you are an electronics store business owner.
Once upon a time, a lot of the latest electronic models came out, where these models really became best sellers among users.
To sell these newest electronic products, you need to buy them first/deposit money from the manufacturer before you sell them.
In this case, you will need sufficient money as one of your business development needs.
The faster you are able to provide the latest product, the faster you can benefit from the product that is the best seller.
In this example, it can be seen that small business is also racing against time regarding the capital requirements required for business development.
Unfortunately, some types of bank loans usually take 2-3 months to get approved.
Without sufficient money, small business are in a dangerous position.
One of the selling points of P2P Lending is the simple and fast application process, usually online based.
If a business is considered feasible, then the process of disbursing funds will not last long.
Most P2P activities are provided by fintech companies which will allow you to easily open a P2P Lending account, and complete an application for small business loan within 10 minutes.
3. Lower Interest Rate
P2P Lending tend to provide lower interest when compared to other similar loans.
The small interest given is of course very helpful, especially for small business owners.
4. Apply Anytime and Anywhere
Along with advances in the field of fintech today, all things are very easy and possible to do. Currently, you can easily apply for a loan anytime, anywhere.
Only by visiting the website from an existing platform, the loan submitted will be disbursed within the allotted time.
Challenges for P2P Lending
P2P lending industry still far reach its full potential. There are many out there who are still not comfortable enough with the relatively new business model to use his services.
In addition, there are several factors that will determine the future growth of P2P Lending. If interest rates rise, the non-performing loan amount can also increase.
P2P Lending provider need to overcome this or risk experiencing a bubble pop. In other words, if the overall economy is doing well, the number of non-performing loan will remain stable.
