If your small business needs a bit of money, there are plenty of options available. You could visit your personal bank, tap into a credit card, or visit Prosper.com. I was recently made aware of this site, and I thought I’d shed a little light on this site, because it might be of use to local small businesses. Basically, Prosper connects lenders with people who are in need of a quick loan in an eBay style environment.
- Prosper.com is definitely an attractive alternative if you are looking to raise small amounts of money, and the terms are also pretty reasonable:
- no collateral needed
- no prepayment penalty
- a fixed rate over three years
So, how does Prosper work? Well, people who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy. According to Inc Magazine, “Borrowers sign up for a free membership in Prosper, which performs a basic credit check and assigns each member a credit rating. Next, borrowers post loan requests, listing the desired loan amount (up to $25,000), the maximum interest rate they are willing to pay, how they intend to use the loan, and the duration of the auction (between three and seven days), along with a credit score and debt-to-income ratio provided by Prosper. Borrowers then sit back and wait for lenders to offer loans at interest rates either at or below the preset cap. If a loan is fully funded, Prosper combines the bids with the lowest rates into a single loan and deposits the cash in the borrower’s bank account within a few days. Prosper handles all the back-office work, including payment collections. In return, borrowers pay 1 percent of the loan amount up front and lenders pay an annual fee of half a percent.”Please note that landing a loan on Prosper won’t always be easy. Here’s how one business owner navigated the process.