Entrepreneurial

Are peer-to-peer loans a good small business Idea?

– Cynthia Hsu is a contributor to FindLaw’s Free Enterprise blog. FindLaw is a Thomson Reuters publication. This article originally appeared here. –

Have you tried to get funding for your small business, only to get met with denials from banks and other big lenders? Peer-to-peer loans, or person-to-person loans, are a new and rapidly growing area where businesses can get some starter funding.

If you’ve heard of microfinance, the idea behind peer-to-peer loans is fairly similar. A large network of “lenders” come together to help borrowers raise money for various purposes.

Hundreds of lenders can ban together to help raise money. Lenders can put up between $25 to $1,000, reports The Wall Street Journal.

Popular sites for peer-to-peer lending include Prosper Marketplace and Lending Club. While most of the peer-to-peer loans on the site are for lenders who are looking to reduce their credit card debt, there is a growing contingent of small business owners, frustrated with the loan process with banks, who are also turning to the site, reports The Wall Street Journal.

from PopTech:

The future of microfinance?

The way Ben Lyon sees it, the finance world is in the middle of a revolution, and the simple text message is at the heart of it.

Lyon created a system to bring formal financial services to microfinance institutions and poor entrepreneurs via a mobile phone. He believes the new software, to be launched by the organization he founded, FrontlineSMS:Credit, could change the world of microfinance by changing the way the poor interact with the institutions.

The self-described “ideas man” will be among the first speakers at this week’s annual PopTech conference, held in Camden, Maine.

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