Earlier this month, the momentum behind the online lending industry was in full view at LendIt—an industry gathering that didn’t exist four years ago, but grew from about 700 attendees last year to more than 2,500 this year. What was clear is that it’s no longer a question of whether these disruptors will change the game in small business lending, but how quickly.
In fact, in his remarks at LendIt attendees in New York City, former Treasury Secretary Larry Summers predicted that online lenders could eventually capture upwards of 70% of the small business lending market. That may be an overly optimistic prediction, but one thing is clear online lending is a
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- It stands to be noted, that even though some banks were standoffish at first, many are jumping onboard and actually investing in peer-to-peer lending platforms and funding small business unsecured loans through p2p lending platforms.
- The ease of transaction is one of the major differences between applying for small business loans through the peer-to-peer lending platforms. While big banks are notorious for stacks of paperwork and making you jump through hoops while balancing a plate on your nose, getting a P2P loan can be as easy as ordering clothes from Amazon.
- Borrowers simply fill out a loan application online, which usually takes 30-45 minutes on average. They get an answer within a few hours and the funds are quickly directly deposited to the borrower's bank account within a matter of days. Between 2-8 days is the norm.
- Another reason that a business owner might find peer-to-peer loans attractive is that an online small business loan through the P2P lending sites fits the desired size of loan that small businesses want. Banks often don't want to bother with loans under $250,000 but that's exactly the type of loan that startups and small businesses desire.