Startups, small businesses and other types of businesses always need capital in their development. Capital is so important for any business that businesses can’t exist without it. That is where peer-to-peer lending Ghana can come in.
Banks, most times, reject startup business owners’ loans because they are still new to the business. Therefore, peer-to-peer lending becomes an alternative to individuals like this. Meaning of peer-to-peer lending, reason to consider it, etc are all-inclusive in this article.
What is Peer to peer lending?
Peer to peer lending means borrowing money from your peers. It is also lending whereby small business owners and investors get a relatively small amount of money. Peer to peer continues to go digitally by the day. This is because financial institutions are also in the fray of peer-to-peer borrowing. And because of this, they can now borrow millions of cedis at flexible interest rates.
Why should I consider Peer to peer lending?
Besides the unwillingness of most banks to lend small businesses money. There are some other reasons you could consider Peer to peer lending.
The following are the reasons you should consider Peer to peer lending:
- They do not require collateral from you
- Most times you’ll have to pay lower interest rates, which depends on the loan amount and term
- You can repay the loan earlier than they expect it without paying a penalty
- Most peer-to-peer lending now occurs online. And because of this, its approval will be faster.
How can I maximise the use of the Peer to peer lending?
Having seen the reasons to consider peer-to-peer lending. It would be really cool to see how you could maximise it.
The following is how you can maximise the use of peer-to-peer lending:
- Know the peer-to-peer lender that suits you best. You can read reviews and probably get some recommendations regarding their experience in the lending business.
- Verify the peer-to-peer lending option that offers you the best deal.
- Plan how you’re going to use the money you will borrow. Don’t borrow the money without a sound approach to how you’re going to use it.
What are the pros and cons of Peer to peer lending in Ghana?
Peer to peer lending has pros and cons, just like every other form of lending. After seeing the pros and cons, you will now decide whether to get the loan.
The following are the pros of Peer to peer lending:
- If you get a personalised quote, it will not affect your credit score. This quote will show the rate they will offer you and your possibility of getting a loan in the future.
- The loan you access through the peer-to-peer lending usually comes with lower interest rates. Usually lower than what traditional banks will offer you.
- Many peer-to-peer lenders are online. And because of this application process is usually faster.
The following are the cons of Peer to peer lending:
Besides all the pros of peer-to-peer lending, there are cons that come with it. They are:
- They could require you to pay an application fee. And this is like the loan arrangement fee you have to pay should you borrow from other lenders.
- Before they grant you the loan, you must pass the credit check. And your credit score will determine whether you’ll qualify for the loan.
Conclusion
Peer to peer lending is the lifeline startup and small businesses have to grow. Credit score determines whether you could get any kind of loan. Be it personal loans to meet your personal needs or business loans to expand your business and other types of loans. Therefore, keep a good credit score to always have better chances of qualifying for the loan. However, the pros and cons of peer-to-peer lending clearly reveal to you what it entails. And because of this, you will easily conclude whether it’s best for you.
Read also:
How to get loans in Ghana without collateral