P2P Lending and Crowdfunding – Explore the New Frontier for Small Business Lending | SBA.gov

P2P Lending and Crowdfunding – Explore the New Frontier for Small Business Lending | SBA.gov: "What is Peer-to-Peer Lending?

Peer-to-peer-lending (P2P) essentially involves sharing your idea to other people in hopes they will invest in your business. Sites like Prosper or Lending Club connect people who want to lend money with those who need to borrow money – often in increments as low as $25. Quite literally, you determine how much you need to borrow, define the purpose of the loan, and post your listing online.

What’s in it for the investors? Well, returns can be in the range of 10 percent across their portfolio, creating a steady stream of income, not to mention the altruistic payoff of helping businesses succeed.

Obviously, you can’t just cross your fingers and hope for the best when you post your listing. Some factors that can sway your investment-worthiness include these:

Have a plan – It’s more than just describing what you’re going to do with the money; it’s important to share findings from market research, competitive analysis, financial forecasts, expected returns, and so on. Here are a few tips for creating a business plan (obviously you can’t share it all, so be sure to have a clear synopsis).
Tell your story – What’s your background? What are your dreams for your business? This will help humanize and frame your case.
Share your achievements and progress – What have you invested in your business already? At what stage is your business? What landmarks have you already achieved? Potential investors will want to know how invested you are in your business and that their investment in you will pay off."



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