Peer-to-Peer Business Loans

Find out more about peer-to-peer business lending and compare a range of business loans with Savvy.

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, updated on July 26th, 2023       

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How do peer-to-peer business loans work?

Peer-to-peer (P2P) business lending differs from more conventional loans primarily in the way that they’re obtained. While the products themselves are usually very similar, the fact that P2P loans are funded by private investors, rather than directly by lenders, sets them apart. In this way, P2P platforms aren’t really lenders at all, instead facilitating the process of businesses applying to, and being approved and funded by, investors.

The investors that use P2P platforms remain anonymous, as you do to them, and can be either a person or a group of investors looking to generate returns on their money. Once your business’ application has been screened and approved by the P2P service, it can be viewed by the various investors on the platform, at which point they can assess your business’ creditworthiness and decide whether to fund it.

Aside from this, though, you’re likely to find the process of applying for and receiving funds from a private lender is very similar to any other type of business loan. This process also takes place 100% online and is a fast one overall. The documentation requirements are likely to be the same also, while the limits on what you can spend your business loan funds on (or lack thereof) are consistent with other loans.

What is the application process for peer-to-peer business loans?

There are several steps in what is often a fast and smooth application process overall for business operators. The process of applying for peer-to-peer investing is as follows:

Gather your required documents

Of course, it’s important to have all the right documentation before submitting your application. In most cases, the only documents you’re likely to need for your application are:

  • Your photo ID (such as driver’s licence and/or passport
  • Your business’ ABN/ACN and GST registration
  • Your business’ online banking information
  • Record of your business’ rent

However, for larger loans upwards of $200,000, you’ll usually be required to submit copied of your business’ financials, which can include:

  • Profit and loss statements
  • Accounts payable and receivable
  • Balance sheets
  • Tax returns
  • ATO Integrated Client Account information
  • Detailed business plan projecting future revenues

Submit your application

Once you have all your documents, you can fill out your quick application form on your P2P platform’s website, which should only take you a few minutes. Submit this form, which will also include details on how much you’re looking to borrow for your business and the preferred repayment term for the loan, and any required documents and wait to receive a response from the platform.

Receive a rate and outcome from the platform

From there, your P2P platform will assess your application and determine your business’ creditworthiness based on factors such as revenue generated, trading history and credit score. It’ll also use these to determine your interest rate, which it’ll set before releasing the offer to its investors.

Have your application posted on the platform

If it’s satisfied with your application, the platform will post your application publicly for its investors to view. This will often be done on the same day you apply, keeping the ball rolling on your application and giving your business the best chance of being funded quickly.

Receive offers from private investors

Businesses whose application appeals to P2P investors can then field offers from across the platform. There may only be one investor who offers your business a loan, but if several lenders are clamouring to fund your loan, they may start to offer lower rates to entice you to choose them over competitors in the marketplace. If there aren’t any nibbles, though, your application will be removed from the site.

Sign off on your loan and start repaying

Choose the best loan suited to your business and sign your loan contract, after which the funds can be advanced to you to be used for your intended purpose. Your repayments will be made directly to your investor via the platform.

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Why compare business loans through Savvy?

The pros and cons of peer-to-peer business loans


Lower interest rates

Because the platform is online and carries fewer overheads, as well as facilitating competition between investors, interest rates are highly competitive compared to bigger lenders.

More relaxed eligibility criteria

Platforms and investors in the P2P business lending process can often relax eligibility criteria for small businesses, making it easier for them to get approved.

Flexible features

When seeking financing via this route, you can also benefit from flexible features such as no early repayment fees, giving your business an option to reduce its interest outlay.


Smaller available loan amounts

P2P lending generally deals in smaller loan amounts when compared to larger, more established lenders, so you may find the loan you’re looking for can’t be approved.

Fewer loan options

Almost all P2P business loans are standard, unsecured finance deals, giving you fewer options if you’re looking to utilise loan security or pursue a line of credit business loan.

Only find out interest after you apply

You may find that you only learn what your rate is on your loan after you apply, as they’re set based on the level of risk your business poses to investors.

Common peer-to-peer business loan questions

Is peer-to-peer investing safe?

Yes – P2P platforms have security systems in place in the same way as any other online business lender, so your data will be safe thanks to their encryption and internal processes. However, that shouldn’t mean that you pick the first platform you find and run with it. It’s important to do some research into each P2P service to find for yourself whether it’s a safe and good option for you.

Am I better off going with a standard business loan?

There’s a multitude of direct lenders who can provide financing to your business quickly and easily, so it’s worth considering what the best, most affordable lender is for your business. Fortunately, you can compare a range of competitive, low-rate business loans from around Australia right here with Savvy. We’re partnered with reputable business lenders to give high-quality options to compare and choose.

Can I access peer-to-peer lending for my startup business?

Yes – because of their often-relaxed eligibility criteria, you may find that it’s easier to get approved for a startup business loan with peer-to-peer lending services. However, it’s important to note that other specialist lenders in the market can approve applications from startups with less than six months of trading. These loans will usually come at higher interest rates than those for more established businesses and cap borrowing ranges at a lower amount, though.

Can my business be approved if it has a bad credit score?

Yes – similarly, P2P platforms and investors can be kinder to businesses which have struggled with their credit scores. Like startup business loans, you’re likely to only have your business approved for an unsecured bad credit loan of up to $30,000 maximum and potentially incur more significant interest and fees, but business operators who find themselves in this position may feel that this is the best option for them.

What is business invoice discounting?

Invoice discounting is an alternative type of finance for businesses who deal in invoicing clients. This involves taking out a business line of credit secured by the value of outstanding invoices which are owed to you. This allows you to access up to 90% of the value of your outstanding invoices immediately, rather than waiting for clients to pay, which frees up more cashflow for your business. Unlike P2P business loans, your line of credit can be approved into the millions of dollars and you can withdraw funds whenever you need, rather than receive a lump sum.

Should I look for an angel investor instead?

An angel investor is another funding option for businesses, whereby an individual or group provides part or all of the funds you need as a business in return for a stake in its ownership. The main benefit of these is that, unlike lenders, eligibility criteria aren’t set in stone and you can potentially win an investor over face-to-face by selling your idea to them. They can also provide more funds than a lender may be willing or able to approve. However, giving away a stake in your business entitles your angel investor to some power over the running and decision-making of the business.

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