Personal loans for business.
While the Peerform borrowing platform does not have a separate application procedure for small business as opposed to personal loans (Peerform loans are non-collateralized personal loans), the purposes of a peer-to-peer loan can vary widely. These include micro-entrepreneurs needing a peer-to-peer personal loan for small business operations, for an expansion, or for just starting out.
In a previous post we talked about how successful peer-to-peer borrowers get their personal loans funded, and those strategies apply here, but we’ve also blogged about the increasing sophistication of peer lenders participating in the peer-to-peer lending market. This increased sophistication means that potential peer lenders will be giving loan requests, no matter what the purpose, increasingly close and detailed scrutiny. We advise borrowers therefore to make every effort to create a loan request that will both reassure and impress potential lenders, especially if it is a relatively large loan for business purposes.
The bottom line is that even though a peer based small business loan is still a personal loan, your chances of getting such a loan funded may be increased by treating the loan request as a traditional small business loan request, and the first step is to construct a simple business plan that you’ll ultimately present to peer lenders.
The benefits of developing a business plan are not always understood by those forming a new business or already running a business. The essence of a business plan is the identification and organization of goals and business objectives and outlining strategies to achieve those goals and objectives.
Most formal business plans are written to be presented to marketing and financial people. Addressing financial items from the beginning in your business plan will show your potential peer-to-peer lenders (i.e., investors) that you understand their importance in the success of your business.
Even if it is not a formal business plan, your loan listing can benefit from this information. Investors will probably be more likely to fund a borrower that presents a solid plan to pay back his loan.
Here are some items you will want to include in your loan request. You’ll use this information when you’re ready to provide a loan description on our peer-lending platform:
Note that none of these items are required to apply for a loan on the peerform.com platform, but the more detail you can provide in your small business loan request, everything else being equal, the better your chances of having your loan funded by our peer lending members.
9 Tips For Getting Your Peer-to-Peer Small Business Loan Funded
- Include a brief summary of your business. This can include your background, a description of the product, market description, and key financial data such as the amount of money requested and how it will be used. Note: do not reveal any personal information about yourself as borrower and lender identities are kept strictly confidential in our system.
- Include a section about your management team. Because you’re likely a micro-entrepreneur, you probably don’t have a large management team on staff, but you probably do have personal advisors and mentors who you consult with. Without revealing any personal information, mention their roles in this section. Include their accomplishments, educational background, and any other relevant qualification, but – again, don’t reveal any personal information.
- Include a section about your product or service. Such an explanation of the product (or service) would include how it works, how it is unique, and/or how it compares with other like products or services.
- If possible, include a section about your market. Who will be your customers? What would they be willing to pay? Who is the competition? Why would the customer choose your product or service over the competition?
- Include a brief about your marketing plan, if you have one.
- Include an operational plan. This portion ties many of the above sections together. It specifies how the company will operate, how the funding will be used, how the product will be distributed.
- Include a financial analysis section. This section will probably be the most important to your potential lenders. Go into detail. Itemize cost and revenue projections. Include the cost of the loan you’re applying for. Use this section as an opportunity to assure lenders that you have a plan for paying back the loan.
- Include a section on business objectives and milestones. Outline how progress will be measured, and what will happen at various points.
- Finally, only reveal information that you’re comfortable with.