Small businesses hate the coming spring. Unlike employees, who look forward to receiving their April refund, they fear Uncle Sam will take its cut. Small businesses that struggle to make a profit in a highly competitive business environment have to pay taxes each year.
Many small business owners are caught between two rocks when it comes to paying the taxman. Small business owners are left with limited funding options for their taxes, despite having steady sales and revenue and thousands of dollars worth of inventory. Traditional lending institutions and banks simply don’t offer small business loans as they did in years past.
This problem has been solved by peer-to-peer lending or social lending. Modern social lending platforms have linked millions of borrowers and individual investors through these modern marketplaces. Borrowers get low-interest fixed-rate loans with a fixed rate that can be paid back in between two and five years. On the other hand, investors are eligible for decent returns in an economy where there is a sinking bond or savings rate.
It’s a win/win situation for small business owners who need immediate funding and investors who want to make a little profit while helping others and view more at The Today Talk blog.
One Man’s Peer-to-Peer Lending Venture: From Desperation to Exultation
John Mitchell, an Ohio-based small-business owner, found himself in this predicament last year. John Mitchell was the sole hardware store in his small town. His store thrived for the first few years.
After adjusting his inventory, pricing models, and management, John decided to open a second store in a nearby town. John invested all his profits in opening his new store. This left him short of funds when it came time to file his taxes. He thought that he could get a loan from the bank that held his accounts and gave him the loan he needed to start his business four years ago.
He was shocked to see the impact of the recession on lending regulations. The banker he knew for years refused his loan application. He couldn’t get a loan from there.
John was at the brink, and he turned to the internet to find loan options. He found peer-to-peer loans after searching forums and trying several different search options. After completing the simple application, he was approved for a personal loan at a very low-interest rate and received the amount he requested in less than one week. John received the check for the entire amount from the IRS a week later. He could repay the loan using the profits from his new business less than eight months later. Get Smal business website development with Tokla App
How peer-to-peer lending works
Every generation sees a breakthrough product or service. In the early 2000s, social networking was the breakthrough. Social networking has had a significant impact on our lives, from helping to overthrow political regimes to keeping in touch with family and friends and affecting our daily lives. It’s also changing the landscape of small business financing.
Peer-to-peer lending is a social networking tool for small businesses looking to secure alternative funding. Peer-to-peer lending sites like Prosper or Lending Club are designed to connect investors with people in need of funds. These sites have become an important tool for small-business owners who cannot get funding from traditional lenders.
Peer-to-peer lending is a quick and easy way for small businesses to get funding.
Step 1: Create an account and list your loan.
There are many peer-to-peer lending sites to choose from. Make sure you research them all and then create a profile on each site. A loan listing is basically a free ad that indicates how much money you require and the interest rate you desire.
Step 2: Let the bidding process begin.
Investors have the option to start bidding for your listing once it goes live. They will offer you the interest rate and loan amount that they are willing to pay. This bidding process has a major advantage: it can get more intense as more lenders compete for your business.
This will cause interest rates to drop, which could allow you to get a lower rate than you anticipated. However, it is important to remember that credit scores, income and debt-to-income ratio all play a part in lending decisions.
Step 3: Financing and repaying the loan
Peer-to-peer lending is a great way to borrow. You can accept multiple bids for the amount you need. This makes it easier for borrowers to receive the money that they need. Instead of making five payments, you will only have to make one, as the peer-to-peer lending site distributes the money to lenders until the loan is fully repaid. This service is free of charge, but they do charge a small fee.
Increased lending regulations have made it more difficult for small businesses than ever to obtain the funds they need to grow their business or pay taxes. Peer-to-peer lending is proving to be a viable alternative in the small business lending market. Peer-to-peer loans are an excellent option for small business owners who find themselves unable to pay their taxes in April or back taxes.