Compare business loans
As online business funding becomes more and more prevalent, Australian business owners and operators have more options to choose from than ever. One such funding method is peer-to-peer lending, so you can find out how it works and compare your finance options for your business here with Savvy.
|Lumi Unsecured Business Loan|
Boost your business with fast hassle-free funding from Lumi. Apply online in five minutes without harming your credit score and get funds in as quickly as 24 hours. For a limited time: Business Loans with No Repayments for the first 6 weeks. T&C apply.More details
|Lumi Lux Rate Reducing Business Loan|
Lumi Lux™ is an innovative rate-reducing business loan that rewards customers with good repayment histories and no contractual breaches throughout their loan term by dropping interest rates by 25 basis points (0.25%) every six monthsMore details
|Valiant Finance Business Loan Broker|
Valiant is Australia’s leading business loan broker with a network of over 80+ lenders. Apply for a business loan between $5,000 and $1 million and get approved in as little as 24 hours.More details
|ebroker Unsecured & Secured Business Loans|
Compare, find and match fast to over 80 bank and non-bank lenders accessing much needed working capital from a unsecured business loan.More details
Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.
You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.
Peer-to-peer business loans
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.
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.
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.
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.