Everything About Peer-to-Peer Business Loans

Setting up a business requires significant funds, but so does running it! If you’re just starting a business or prepared to take the next step, getting a peer-to-peer business loan, also called P2P loans, can get your plans rolling and how!

This loan instrument is immensely flexible and caters to your funding needs in a short period, and without requiring any lengthy procedures. Wondering how to apply? Here’s everything you need to know about P2P loans.

What is a peer-to-peer loan?

Unlike traditional lending services, peer to peer business lendingoccurs directly between individuals over an online lending platform. One or a group of lenders pool their money to grant the loan amount you’ve applied for. So, essentially, you’re getting the money from an investor/peer and not a financial institution. However, you can only borrow a loan amount ranging between Rs. 50,000 to Rs. 5,00,000 as per RBI guidelines.

Additional Read: Secured vs Unsecured Business Loans: Know the Difference

Advantages of a P2P loan

• You can get a P2P business loan even without a spotless credit history, and slightly lower credit scores (as low as 600). This simply means easier terms of approval.
• A P2P loan usually has a lower overall cost due to competitive interest rates, so your EMIs are affordable. 
• Since the complete lending process from loan application to verification takes place online, P2P loans are convenient and faster to avail.
• Because a P2P loan is a form of unsecured credit, you don’t need to worry about pledging any asset as collateral.

Now that you know about P2Ps and their advantages, the next step is choosing the right platform to get your loan. Here are a few considerations.

How to choose a platform for a peer-to-peer loan?

• Ensure the founders of the platform have some experience in investing, banking, and credit, so you know you are in safe hands.
• Check the statistics page to find the track record of successful lending on the platform.
• Ensure that the company is transparent with its investment numbers and its lending model. This way, you can be assured of timely disbursals.

How to apply for a P2P loan?

1. Create a loan account with your lending platform of choice by providing your KYC details.
2. Then, upload the digital copies of the required documents like photographs, ID proof, birth proof, address proof, bank details, proof of income, income tax returns, contact proof, etc.
3. Finally, provide the loan purpose, loan amount, tenure, and other details to complete the application.

And, you’re done!

Additional Read: Can You Get a Business Loan with Low Revenue?

Over to you

P2P loans are a viable choice if you’re looking for a fast and convenient funding option for your business. However, if your credit score is on the higher end and you want to get faster disbursals, availing of business finance is also a wise option. And if you are currently in the market for one, look no further than Tata Capital.

Avail of simple documentation and structured EMI plans when you apply along with competitive interest rates. Additionally, you can use the business loan EMI calculator to plan your EMIs today.