Is it Safe to Use P2P Lending as a Source of Business Capital?

For businessmen, especially those who sell offline, capital is the first issue they must have. Some need small capital because they sell online, but let's be realistic, there are still many Indonesians who prefer to sell offline, renting shophouses on the side of the road or malls.

The problem is that not all aspiring businessmen have capital. Without capital, it is difficult to start a business. Even for business owners who already have a business, it is difficult for them to expand their business if they have a limited budget. Therefore, many of them look for various ways to capitalize on their business, ranging from borrowing from family, friends, and banks.

In addition to these 3 options, business people can apply for business capital to peer-to-peer lending platforms. However, while P2P lending offers convenience, the question of "How safe is it to use P2P lending as a source of business capital?" keeps popping up in their minds.

P2P Lending Platform is Safe & Worthy as a Source of Business Capital

In this article, we will discuss several aspects to help you understand the risks and benefits of P2P lending so that you can also consider its level of safety.

1.    Advantages of Using P2P Lending Platform as a Source of Business Capital

One of the advantages of P2P lending is transparency. Through an online platform, borrowers and investors can see the loan conditions in real-time, including the interest rate, term, and purpose of use. This can help stakeholders make more informed decisions.

2.    Risks Businesses Should Know Before Applying for a Business Capital Loan on a P2P Lending Platform

However, the main risk in P2P lending is credit risk. Borrowers who default on their loans can be a serious challenge for investors. Therefore, before deciding to use P2P lending, it is important to conduct an in-depth credit analysis of potential borrowers. P2P lending platforms usually provide complete information on credit scores, loan history, and more.

Read Also : Understand this before utilizing P2P Lending as Business Capital

One strategy to manage risk in P2P lending is to diversify your portfolio. As an investor, you can spread your funds across multiple loans to help mitigate the negative impact of a possible default from one borrower. Diversification can be the key to maintaining a stable investment portfolio.

3.    P2P Lending Platform Regulation and Security

In addition, attention to regulation and security is also an important factor. Different countries have different approaches to P2P lending. Several regulations have been put in place to protect both borrowers and investors. Businesses need to ensure that the P2P lending platform they choose has complied with the regulatory standards that apply in their region, for example, the Ethis.co.id platform has been regulated and supervised by OJK so that its safety is guaranteed.

4.    Easier Business Capital Application Process

P2P lending also offers flexibility and speed. A simpler loan process can allow businesses to get quick access to capital. However, entrepreneurs need to consider the interest rate which may be higher. Thus, it requires careful consideration and calculation.

So, P2P lending can be a viable source of business capital, but safety should always be a priority. Before deciding to use P2P lending, you need to do your research on the platform you choose, understand the credit risk, and consider a diversification strategy.