Get Your Business Funded: Creative Methods for Getting the Money You Need

How P2P Lending Works

Let's start with the bad news: Although peer-to-peer lending made a big splash when it first hit the market in 2007 or so, there were many ensuing bumps along the road. The major ones were that investors lost a lot of money investing in the small businesses that initially populated these P2P sites; businesses that looked better on paper than they were in reality.

Since then, the good news is that things are tighter and more uniform now. Those problems are receding. But that also means that fewer projects are getting accepted to these sites for possible funding and fewer still are getting funded.

That said, there are still businesses that do get accepted and funded. Step one is to find the right site for your business. There are several P2P sites from which to choose. The main ones are:

• Prosper.com
• LendingClub.com

Once you choose a site or sites, the next step in the P2P process is to fill out the online loan request form and profile. Being able to post your request on these various sites is not automatic. Like any good lender, the P2P sites now have stringent credit standards. At Lending Club, your debt-to-income ratio must be below 25 percent and you must have a FICO score of at least 660. At Prosper, it's 640. If you do not meet these standards you will not be able to post your request on the site. Once that happens, P2P sites offer instantaneous feedback, so you will know immediately if you qualify to post your project on the site (and it is free to fill ...