Marketplace Lending: A Viable Option For Business Capital

In
today’s world of commercial finance, we live the new standard in terms
of business financing and how businesses acquire capital for growth and
expansion.


I
consider myself very much an advocate for traditional loans through the
use of banks and commercial finance companies due to lower cost of
capital.


However,
because of bilateral trade is conducted in the world today with the use
of technology and market fluidity due to increased accessibility
provided by the Internet, the need for capital are compatible sources
came through the Fintech ( “financial technology”) boom. enterprising
entrepreneurs have recognized an important opportunity for most small
businesses lack access to capital necessary to develop and maintain
their businesses that provide jobs and resources to communities
throughout the United States ..


I laughed wholeheartedly a decade if approached with the business model of most market lending sources now offering small businesses.

However,
I make mockery of these entrepreneurial businesses, because thanks to
the creative destruction exacerbated mainly by the great recession, fill
an important need in the market now and in the foreseeable future.


I
think it is safe to assume that we’re not in Kansas in terms of the
traditional way to provide capital to the small business market by banks
and commercial finance companies.


I
do not think that this model will become obsolete, but I think it will
start to decrease in the scope and the loan market implies a market
increasingly important because of the way the business is not today
the same as there ten years.
The loans in the loan market as a viable source of business
ROI
has to do with business strategies and decisions a business owner and
his / her team to optimize operating profits for the benefit of the
company and its stakeholders.


These
methods are exacerbated when business loans are obtained because it is a
requirement not only pay the interest, but also the loan principal.


The key element of this risk of depreciation for the owner of the business is the level and the amount of interest charged. traditional
sources of credit were able to provide relatively cheap loans business,
but there were some major drawbacks:

(1) proposed mainly blue chip
clients with personal credit and business ideals and time

(2) unusually long subscription now and make great prospects.

What happens with entrepreneurs who are classified as personal credit profiles first half outlook and semi-ideal business? Most
of these potential borrowers are left to find other ways to meet the
challenges of business assets mainly credit cards and consumer loans
which are not ideal in terms of cost, loan term, and
the repayment structure.


Financial
technology companies have come in the current market to provide
commercial loans to healthy companies that do not correspond to
traditional sources of financing “credit union”.
In other words, there is a flexibility in the structure of the ready product.


A
drawback of the loan market is the high cost of capital due to the Peer
2 Peer model, which basically means no intermediary between investors
and borrowers.


Instead
of benefits that employers receive from a source of the loan market
(underwriting and intervention funds and access that are flexible
structures, platforms and rapid presentation applications, immediate,
etc.
), the high cost capital is logical.


To
minimize the default risk, business owners should evaluate the impact
will increase and maintain free cash flow, both for the growth of return
and operating loan.


Therefore,
the business risk and the effective technical use of the loan market
with the employer in which he / she must obtain a higher price than the
cost of loan interest ROI, and other
operating costs and capital of the company. Welcome to the new normal.


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Marketplace Lending: A Viable Option For Business Capital

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