The lending marketplace became popular in 2008. This was a result of the restrictions imposed by traditional banks on borrowers. With the growing need for loans, entrepreneurs saw an opportunity and grabbed it willingly.
They responded to the restrictions by developing online lending platforms independent of banks. Also referred to as peer-to-peer lending (P2P), marketplace lending is a situation where both private and public companies talk to investors to offer capital that can be lent to borrowers inside a P2P platform.
Benefits of marketplace lending to borrowers and investors:
- Application is first and easy for marketplace loans
- Investors are the ones who set the terms and conditions for loans
- Marketplace lending offers an alternative to traditional loans
- Lenders and borrowers can negotiate on the interest rates
- It is possible to get lower interest loans compared to traditional lenders
Here are 5 things to know about the lending marketplace:
1.One can compare options
This is probably one of the common things about marketplace lending. Unlike traditional borrowing where you have to choose a single lender, marketplace lending gives borrowers the option of choosing between several lenders within the same platform.
All you have to do is log in to a specific marketplace and go through a list of loan offers. You can then be able to borrow from a lender with the best interest rates and better terms and conditions.
2. It is more flexible
When there are several financing options, greater opportunities are opened to solve different types of problems. For example, if you have a large inventory that requires a lot of capital, then you will definitely need a huge short-term loan with reasonable interest rates.
This is where marketplace lending comes in. Borrowers are able to access large sums of money within a short period of time. The only thing a borrower needs to do is find a lender in a marketplace platform willing to lend that kind of money.
3.It saves time and effort
The other advantage of marketplace lending is the fact that everything is done within a single platform. The application process is also simple and straightforward and the loan can be processed in a matter of hours.
The approval process is easy because it directly involves the lender and borrower. The loan is approved as soon as the two parties agree on the terms and conditions.
4.You have access to expert guidance
When you apply for a loan through marketplace lending, you can get guidance from experts within the platform. The experts will be able to answer all your questions with regards to the advantages and disadvantages of different types of loans.
5.It’s easy to find funding that’s in line with your needs
The major concern of most businesses is how quickly they are able to access loans when they are needed. The good thing about marketplace lending is that you are able to choose a lending option that best suits your needs.
In general, marketplace lending has a lot of benefits to borrowers. Reputable websites like Lantern Credit offer some great expertise in this area and can be a great place to start if you’re not confident. For instance, one can access Lantern’s PPP lender picks with favorable terms at any time.