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Peer-to-Peer Lending Services

January 10, 2010

Creativity is the most important currency in business; yes, it is more important than money because it can help you generate money.  One creative way to get money to start or build your business is from fellow citizens.  Recognizing this golden opportunity, a few visionary businesses have created professional, reputable peer-to-peer lending services that you can easily access and use online. 

Since one of the top questions I get is “How do I cover the cost of starting and running my business?” I thought I’d share a couple I have come across that are known to be credible—one of which I have personally used to make loans to fellow citizens.

I have personally used Prosper to loan to others and have had a good experience and have made all my money back plus interest.  You can contribute to or receive loans of up to $25,000 using this service.  (One of Prosper’s partners also offers loans of up to $75,000 for businesses that meet certain criteria but this is not peer-to-peer.)  Prosper handles collection of the funds, distribution of the loan, administration of the loan and if ever necessary, debt collection, too.  Check out for yourself how Prosper works before you use it.  If you plan to lend, perhaps start small to get comfortable.  If you need a loan and have top notch credit, go for the gusto.  If you have a lower credit rating you need to make a strong and detailed case for why you need the money and how you will repay it. 

Lending Club works much the same way as Prosper with these key exceptions:

  • The rate of return you will receive as an investor/lender on Lending Club will be set while on Prosper your Rate of Return (ROR) could be higher or lower depending on the particular borrower.
  • In addition to lending or borrowing on Lending Club, you can trade loan notes.

Learn more about how Lending Club works before you get started.

There may be other citizen-to-citizen programs available on the Internet but I am most familiar with these two and believe they are reputable. 

If you have questions about creative business financing post them in the Comments section below or follow me on Twitter and I will get back to you.

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