There are numerous alternatives to traditional financing formulas like bank loans. Many of them have already been discussed in other articles on our blog, but in this post we want to talk about a new form of financing, such as P2P loans, explaining what they are and mentioning their main characteristics.
What are P2P loans?
The P2P loans (peer to peer), also known as loans between individuals, have as a fundamental pillar the crowdlending. Essentially, a P2P loan is a loan granted through platforms that act as intermediaries, and whose objective is to put people or companies in need of financing in contact with investors who want to take advantage of their savings.
This type of loan is constituted as a alternative financing formula, which usually offers more profitability than traditional channels related to banking entities, such as bank loans.
These personal loans can be accessed by both individuals such as SMEs and large companies. For individualsIf they have a good profile, it is a great way to get low interest loans. On the side of the companiesThese types of loans can be used to diversify sources of financing, as well as a method of financing less usual projects.
You can find around 300 P2P loan platforms, 50 of them being located in Spain. It is worth mentioning that as a prior step to requesting a P2P loan, you must check the conditions offered by the different platforms.
Regarding whether there is an additional risk for going to B2B platforms to request financing, we would like to highlight that the existing risk is the same as in banking entities. Although for this to really be the case, you have to make sure that the platform in question is certified by the National Securities Market Commission (CNMV) and by the Bank of Spain.
The types of projects to finance with a P2P loan They can be of a very different nature. Here we will show some examples:
- vehicle acquisition: You can resort to P2P loans when it comes to buy a vehicle, as an alternative to dealers and banks.
- home renovation: So much for little as for big reforms, loans between people can provide the necessary funds to carry them out. The amount of the loans for this type of project is usually greater than in the case of the acquisition of vehicles.
- Completion of higher studies: They can also be an option to consider when you want to pursue higher studies, as the case of master's degrees.
- Debt reunification: Some of the P2P platforms offer the possibility of merge loans that are not yet due in a loan with a high amount without endorsement.
However, each platform will indicate which projects it is willing to support, so they should be consulted beforehand.
Characteristics of P2P loans
The P2P loans present a series of peculiarities compared to other existing forms of financing. In this sense, its characteristics are:
- Fees charged: Intermediary platforms charge a management commission for its services provided, which are their way of making profit. These commissions usually vary between 0.5% and 15%.
- Linked Products: there is no need that when resorting to a P2P loan you have to link to some type of product or to change banks, since this is not required by any of the existing P2P platforms.
- Cost: This is a variable that depends on the following factors: the end of obtaining the loan, he upright of the same and the applicant profile. The better this profile is, the lower the percentage of interest corresponding to the credit received.
- quantities: This variable is also seen influenced by the purpose and the profile of the interested party. The amounts usually range between 1,000 euros and 50,000 euros.
- expiration period: Depending on the purpose, the maturity of P2P loans ranges from 1 year and 10 years.
- Grant speed: Thanks to the fact that it is a procedure with a high degree of automation, this type of loan is constituted as fast credits as soon as your approval. However, obtaining the money that is the object of the credit can be extended for several weeks.
- 100% online: They can be considered as online credits, since both the delivery of the relevant documentation and the signing of the loan contract are carried out through online means.
Projects that require financing within businesses can have very different purposes. Through this article, we wanted to explain a very useful method for financing projects that can be considered less common, the P2P loans.
Also, at Alter Finance, as experts in business financial advice, we offer you our services crowdlending. Contact us without obligation.