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 getting your business approved for a 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
There are many platforms, each with different requirements, loan terms, and interest rates. Researching other marketplaces and comparing their offerings can help you find the best offer for your business. Compare loan terms, interest rates, repayment options, and other important factors to determine which lender is right for you. Acredius provided you with the best guide to do that; 7 tips for choosing the best crowdlending platform.
- Check your financial history
Before you even start looking for a loan for your next project or expansion plans, you must check your financial history. Your financial statements, balance sheets, and cash flow statement 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, so having a structured and organised financial history can help you get better terms. Acredius, for example, uses alternative data as an additional factor to assess your creditworthiness; perhaps you should pay more attention to your digital presence and reviews.
- Pay your bills on time
Every business needs many services and products to stay competitive in its market. Paying for everything on time and organising your expenses is a must. Your payment history is one of the key factors marketplace lenders use to determine your creditworthiness. Late or missed payments can hurt your credit score and reduce your chances of getting loan approval. Make all payments on time and stay current on your bills to maintain a good credit standing.
- Use the loan for personal expenses
As you are applying for a loan as a company, please keep in mind 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 only to use the loan for approved business expenses, and keep clear records of how the funds are being used.
- Lie about your financials
Lying about your business’s financials or personal information can have serious consequences, including loan denial or legal actions. Be honest and transparent about your financials, and provide accurate and complete information to the platform. Being the intermediary between your business and its pool of investors, you should meet all the requirements of the platform you’re using for a business loan.
- Ignore the fine print
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.
In conclusion, being prepared, transparent, and responsible are key factors.
Get started today and apply for a business loan with Acredius!
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