Marketplace lending is a popular alternative for businesses looking to secure funding. However, it’s essential to understand what actions can help or harm your chances of approving your business loan and getting the best terms.
Below, we outline the dos and don’ts of marketplace lending for businesses to help maximise your chances of success.
- Research different platforms
With numerous platforms available, each presenting distinct requirements, loan terms, and interest rates, conducting thorough research is essential. By exploring various marketplaces and comparing their offerings, you can pinpoint the best offer for your business. It’s crucial to compare not only loan terms and interest rates but also repayment options and other significant factors that keep you informed about which lender is the right fit for you. Acredius provided you with the best guide to do that: 7 tips for choosing the best crowdlending platform.
- Check your financial history
You must check your financial history before looking for a loan for your next project or expansion plans. That said, your financial statements, balance sheets, and cash flow statements are essential in determining your loan eligibility and the terms you’ll receive.
Many marketplace lenders use your financial data to determine your interest rate and loan amount. Consequently, having a structured and organized financial history can significantly enhance your chances of securing better terms. As an illustration, Acredius employs alternative data as an additional factor to assess your creditworthiness. That’s why paying more attention to your digital presence and reviews might be prudent.
- Pay your bills on time
Every business needs various services and products to stay competitive in its market. Consequently, paying for everything on time and organizing your expenses is imperative. Your payment history is one of the key factors that marketplace lenders use to assess your creditworthiness. However, it’s important to note that late or missed payments can adversely impact your credit score, subsequently reducing your chances of obtaining loan approval. Therefore, the prudent approach is to make all payments on time and consistently stay current on your bills to maintain a good credit standing.
- Use the loan for personal expenses
When you apply for a company loan, please remember that the loan is specifically intended for business purposes. Using the funds for personal expenses can violate the loan terms and result in penalties or legal actions. Make sure to use the loan only for business expenses and keep clear records of how you use the funds.
- Lie about your financials
Misrepresenting your business’s financials or personal information can lead to serious consequences, such as loan denial or legal actions. Therefore, it is crucial to be honest and transparent about your financials, providing accurate and complete information to the platform. As the intermediary between your business and its pool of investors, it is imperative to meet all the requirements of the platform you’re using for a business loan.
- Ignore the fine print
Furthermore, before signing a loan agreement, review the terms and conditions carefully. Pay close attention to the interest rate, repayment terms and deadlines, and any fees or penalties associated with the loan. Ignoring the fine print can result in unexpected costs and make it more difficult to repay the loan.
Conclusion: Key factors include being prepared, transparent, and responsible.
Start today by applying for a business loan with Acredius!
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