It’s not about the rate.
P2P is not (yet) about beating the interest rate you would pay if you went to the bank. If you bank has agreed to your loan request, snap their hand off – you’re lucky to have got an offer. Generally, the banks will always be cheaper, even if they have more onerous terms and take longer to agree and then pay out the loan. P2P is about availability of funding, speed of decision and flexibility of proposal.
Be prepared to give a personal guarantee.
This applies to most lending, including from banks. P2P is not about unsecured borrowing and you should expect to give a PG to cover your company’s borrowing. The only exceptions are when there is an exceptionally strong security package. There are some platforms that will look at lending without PGs, but the proposal has to be very strong.
Don’t try and play platforms against each other.
The investor base behind P2P comprises essentially of one large group of retail investors who will spread their investments over a number of platforms. If the same proposal appears on a platform after failing to attract investment on another, then investors will ask pointed questions, and if it looks as though you are hawking a deal around each platform, reputation quickly becomes tarnished. Best practice here is to change the terms of the deal before trying again.
Be prepared for full disclosure.
And make sure your company’s public image is right. Many retail investors see this as a hobby as well as a shrewd investment, and have lots of time to trawl the internet and other sources for background information. If you are a restaurant or hotel, pay attention to your TripAdvisor ratings; If you’re a manufacturer, make sure your Credit Agency rating is reasonable. If there are any issues that could be found by an interested observer, it’s best to deal with them upfront.
Finally, use an expert
Their fees will be worthwhile if it achieves the end result quickly and cleanly. (Disclosure: That’s what I do for a living). You wouldn’t build your own website, or do your own legal work – you’d employ an expert. Why should raising finance be any different? There are 30+ P2P platforms, each with a different flavour. Use someone who knows the market and can get you the best deal.