How to Borrow Through P2P

How to Borrow through P2P

By Steve Grice, Director


Ludgate Finance are the experts in raising funding in the fast-growing Peer-to-Peer lending market. Ludgate only raise finance for business and concentrate on debt funding rather than equity.

Steve Grice has been working in the Peer-to-Peer sector since 2011 raising debt funding across all the main UK platforms; these are his top tips for borrowing through P2P:

It’s not about the rate:
P2P is not (yet) about beating the interest rate you would pay if you went to the bank. If your bank has agreed to your loan request, snap their hand off – you’re lucky to have got an offer. 
Generally, the banks will always be cheaper, even if they have more onerous terms and take longer to agree and then pay out the loan, P2P is about availability of funding, speed of decision and flexibility of proposal.

Be prepared to give a personal guarantee:
This applies to most lending, including from banks. P2P is not about unsecured borrowing and you should expect to give a PG to cover your company’s borrowing. The only concession may be when there is an exceptionally strong security package. There are some platforms that will look at lending without PGs, but the proposal has to be very strong.

Be prepared for full disclosure:
Make sure your company’s public image is right. Many retail investors see this as a hobby, as well as a shrewd investment, and have lots of time to trawl the internet and other sources for background information. If you are a restaurant or hotel, pay attention to your TripAdvisor ratings; if you are a manufacturer, make sure your Credit Agency rating is reasonable. If there are any issues that could be found by an interested observer, it’s best to deal with them upfront.

Recognise that it’s a journey:
P2P funding is often the first step in a longer finance journey for your business. As such, it can be more of an enabler than a long-term solution. Because of the flexibility, P2P can help you get the deal done, then move to mainstream finance when the business has seen the benefits.

Finally, use an expert:
Their fees will be worthwhile if it achieves the end result quickly and cleanly. (Disclosure: That’s what I do for a living). You wouldn’t do your own legal work – you’d employ an expert. Why would raising finance be any different? There are 30+ P2P platforms each with a different flavour. Use someone who knows the market and can get you the best deal.


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