There are a variety of reasons that a traditional bank loan might not be an available or attractive option for a given small business owner. Given this, it is important to remember that such loans are not the only financing avenue small companies can pursue. Among the recent trends for small businesses is a growth in alternative financing options.
One such option that has been gaining popularity is peer-to-peer lending. Broadly speaking, this financing route involves getting a loan from an individual or business without a bank’s involvement. Such loans vary in size, but tend to be smaller. The loans are often arranged through online platforms in which companies can put up listings to try to attract lenders.
There are a range of benefits that peer-to-peer lending could have for small businesses, including:
- The potential to get better terms than a standard bank loan
- The availability of smaller loans
- The ability to get money fairly quickly
Now, as with any financing option, there are a range of things that can impact how well-suited peer-to-peer lending would be for a business’ particular needs. So, it can be important for company owners to give careful thought to their goals and situation when deciding whether to turn to peer-to-peer lending for financing.
Now, just as can happen with traditional loans, troubles with paying back peer-to-peer loans can open the door to difficult financial situations for small businesses. When a company is facing serious debt troubles in connection to any type of financing option, whether traditional or alternative, its owner may want to promptly look into what routes for addressing the difficulties would be the best fit for their overall goals. In some situations, small business bankruptcy could prove to be a helpful avenue.