Understand This Before Utilizing P2P Lending as a Source of Business Capital

Rapidly growing technological advances are making it easier for people to get easy access to finance. Including in terms of financing the distribution of money funding for business capital.

This online funding method is commonly referred to as P2P lending or peer-to-peer lending. It involves lenders and fund recipients, namely business owners who communicate online with the principle of cooperation contracts.

P2P lending has become a popular alternative for obtaining business capital, especially for entrepreneurs and Micro, Small and Medium Enterprise owners. Not too many documents are required, but the funding process can be managed quickly.

5 Things to Consider Before Using P2P Lending for Business Capital

But before you decide to use P2P Lending services, you should pay attention to the following 5 things.

1. How P2P Lending Works

The way P2P lending works is quite simple. A business owner applies for funding by providing information about the purpose of funding, the amount needed, the period, and so on.

Then the Funders can choose the funding project that they want to fund based on the risk, projected return, and profile of the fund recipient. If the application is accepted, the fund recipient, in this case, the Project Partner, receives the required funding, and then at some point in time, the fund recipient must repay the funding along with the potential Return within a set period.

2. Understanding the Risks involved

The main risk of P2P lending is credit risk, which is the possibility that the recipient of funds faces workmanship problems resulting in delays or even unable to repay the funding they receive. Other risks that you must face are liquidity risk and default risk.

Not only that, but you should also be aware of potential scams and illegal platforms. So make sure you choose ETHIS as a Sharia and trusted P2P lending platform in Indonesia that has many financiers to borrowers.

3. Complete Profile Carefully

If you want to register yourself as a Fund Recipient, then you must create the best possible profile. Starting from photos, company identity, intended use of funds, and others so that investors believe and are ready to fund your business.
Also, make sure that you determine funding with a reasonable and calculated value. The goal is that you will have no trouble returning the funds according to the deadline that has been set.

4. Pay Attention to Fees and Yield Ratios

Generally, P2P lenders have different fees and yield ratios, depending on the platform and funding type.

However, you should understand that these P2P lending fees can affect your return on investment. You should also pay attention to whether the return on your funding is fixed or fluctuates during the funding period.

5. Fast and Transparent Access

As a business owner, you want to get capital quickly and transparently. If the capital drops quickly, then you can immediately carry out production so that the business can take place faster.

Transparency is also needed so that you know how much the fees offered are. This is so that you can predict the funds that must be returned based on a predetermined deadline.

Conclusion

Well, those are the 5 things you should consider before utilizing P2P lending as a source of business capital. However, you must be good at choosing a good P2P lending platform to support your business.

It is recommended to apply for funding at ETHIS, which is a sharia P2P lending platform that has been trusted by hundreds of entrepreneurs in Indonesia. Until now, many entrepreneurs have been helped by their businesses because ETHIS opens access to capital that applies the Sharia system.