Looking for alternative sources of funding? If you need some extra money to help your business grow, you might want to consider peer to peer (P2P) business lending.
This article will help you understand what P2P lending is and how it works.
Peer to peer lending connects businesses that need money with people who want to invest their money directly. This is an alternative form of finance to getting a loan from a traditional bank. It has become a popular option for both investors and businesses. For businesses, the approval process is generally faster, it provides greater accessibility to finance and usually comes with better interest rates. For investors, P2P lending provides an alternative investment that can potentially offer higher returns compared to traditional savings. It also allows for more diverse investment across various sectors and risk categories.
Currently, P2P lending operates by connecting borrowers with multiple individual investors through online platforms. The business looking to borrow money will complete an online application. After a short description of their business, the business looking to borrow will explain why they need funding, the desired amount, and when they can repay. You can for example use our online platform to submit an application to a peer to peer lender. Capitalise works with 100+ UK lenders, including peer to peer lenders, so that you can compare multiple options.
Once a peer to peer lender receives your application, they’ll likely check the business’ credit score as part of their assessment. They’ll also evaluate the supporting documents and details you provide to come to a decision. As the process is all online, this can be very quick, with decisions able to come back in as little as 24 hours.
If approved for a loan, you’ll receive details such as the amount, the interest rate payable, the terms and any arrangement fees.
The money lent to you will have come from a number of investors, but will all be facilitated by the peer to peer lending platform.
You can use a P2P loan for almost anything that helps your business, whether it's for increasing your cash flow, buying new equipment, or hiring more staff. As long as it’s for a business purpose, you’ll be able to use the funds as you need.
✅ Know your business credit score
✅ Understand the factors impacting it
✅ Alerts on risks to your profile
✅ All features from as low as £19/month
To be eligible for a peer-to-peer (P2P) loan, businesses need to meet certain criteria set by the lending platform. These requirements can vary depending on the lender.ere are some common ones:
Applying for a peer-to-peer (P2P) loan can be a straightforward process, especially when you know what to expect and prepare accordingly. Here’s a step-by-step to help you through the application process:
1. Evaluate your needs
Before applying, clearly define why you need the loan. Whether it’s for expanding your business, purchasing equipment, or bridging a cash flow gap. Understanding your needs will help you choose the right loan and amount.
2. Understand how much you can borrow
Find out how much you can potentially borrow. This assessment will align your business needs with realistic financial planning. You can do this using our free Business Loan Calculator.
3. Gather necessary documents
You can gather your documentation beforehand to streamline the application process. Typically, you will need to provide annual financial statements and recent business bank statements.
4. Fill out your peer to peer lending application
Apply for funding through your Capitalise account to access over 100 UK lenders, including peer-to-peer lenders. You’ll need to complete your application, then you will be able to send it to up to 4 lenders at once.
5. Review any loan offers
If your application is approved, you may receive offers from potential lenders. You will need to review these offers carefully, paying attention to:
6. Accept an offer
You should choose the offer that best fits your needs and budget. Upon accepting an offer, you'll typically need to sign a loan agreement electronically.
7. Receive your funds
Once the agreement is signed, the funds will usually be deposited into your business account within a few days. With some peer to peer lenders, you can receive the funds in as little as 24 hours.
8. Repay the loan
You’ll repay the loan, plus any interest, according to the agreed upon terms.
Capitalise is an FCA regulated platform dedicated to UK businesses. Our mission is to help businesses to take control of their financial health. We support business owners by providing easy way to access over 100 lenders and compare their loan products. Our advanced platform makes intelligent matches and ranks lenders, based on their past successes, to help businesses select the best funding solution.
Capitalise also enables businesses to check their own Experian business credit score to better understand their financial health. Plus businesses can check the credit profiles of the companies they work with to reduce risk.
Small and medium-sized businesses, startups, and even established companies can apply for peer to peer business loans. The specific eligibility criteria will vary depending on the individual lender.
Interest rates on peer to peer loans can vary widely depending on the lender and the borrower's creditworthiness. They are often competitive compared to traditional lenders.
Peer to peer lending platforms typically charge fees to both borrowers and investors. These fees may include loan origination fees, servicing fees, and late payment fees.
The amount you can borrow depends on factors such as your business's financial health, revenue,the strength of your business credit score, and the lender's policies. Use our Business Loan Calculator to estimate how much you can borrow, the total loan cost, and your monthly payments. This will help you to get an idea of how much you can afford to borrow.
Capitalise gives you access to 100+ UK lenders so you can compare the best rates available to you in the market. This includes a number of peer to peer business lenders.
Yes, you can often repay your peer to peer loan early. If you can afford to do so, it can be a wise decision as it allows you to save money on interest. However, it's important to first check the details of your loan agreement. Some lenders may impose early repayment penalties, so you'll need to assess whether the interest savings outweigh the penalty fee.
United Kingdom 
South Africa 