Lending Club.. The Alternative to Bank Financing

pennypinch · #1 10-04-2008, 04:09 AM

As everyone knows, it is extremely hard to get any kind of financing for small businesses these days and because of this businesses are struggling to keep afloat.

The number of small businesses using financing from bank loans is at a 15 year low. The SBA (Small Business Association) has a flagship program which gives banks guarantees on loans they make to qualifying small companies. They have backed 30% less this year than they did one year ago.

For these reasons, small business owners and those who are trying to start up their own small business are seeking funds elsewhere. One source many have found are individuals on the internet.

Many small business owners have turned to the Lending Club. This is a company who directly connects lenders with borrowers, leaving out the middle men, i.e. banks.

All you need to do is fill out the information on the site. Lenders will then go through the profiles of those seeking funds. They will be able to find out how much you are seeking, what you need the money for, your credit report and how you plan to repay the funds.

Lenders earn money by charging interest such as credit card companies do.

Many small business owners prefer this method rather than turning to the banks for funds. They feel better knowing that the interest is going to an individual instead of a financial institution.

dollardaze · #2 10-05-2008, 11:38 PM

This sounds like a good option for those small businesses that need help these days. So many banks have tightened their belts so much, that these small businesses that are the backbone of our country, are going under without the availability of loans that would keep them afloat.

bigbux · #3 10-06-2008, 02:48 PM

These things existed a long time ago too, I once got a second mortgage for a home from a private lender. A realtor recommended him. It was a temporary loan and all went well with it. The terms were comparable to a bank, a tad better. Plus I could pick up the phone and talk to him if I wanted to change anything. I ended up paying it off early and he forgave the remainder of the interest.

You have to understand the contracts though and best have them gone over by the escrow department at your bank. It costs a fee, but it will give you peace of mind.

pennypinch · #4 10-07-2008, 01:40 AM

Ya, I have heard of these types of things before but didn't know much about them. It doesn't seem as though they were talked about a whole lot until lately. I could have just been missing the info though.

I am glad that you had success with this type of lending and I do agree that it is very important to have the contract checked out before signing. This is a must for any type of contract anymore!