Social networking has revolutionized the way we market our business and connect with clients. Using LinkedIn, Twitter and Facebook has allowed businesses to acquire a tremendous amount of social capital that they may not have otherwise acquired. Now social networking is moving beyond social capital to the generation of financial capital. These avenues are called Peer to Peer lending sites, or social lending networks.
HOW DOES IT WORK?
- Borrowers can post a business or project for which they need financing
- Lenders review all projects and can choose to invest based on their own personal assessment of the terms of the loan and the credibility of the borrower.
- Once a borrower begins receiving capital from investors, they will begin making payments back through the website at the agreed upon interest rate and timeline.
BENEFITS
- Eliminates the “middle man” and you can correspond with investors directly
- Projects can have multiple investors
- Provides an additional source of capital to get your business going
- No pre-payment penalties
- Investors are not entitled to ownership of your business
ITEMS TO KEEP IN MIND
- Before lending, be sure that the borrower appears to be credible and capable of paying the terms of the loan
- Before borrowing, ensure that the loan rates and payment timelines are conducive to your current financial capability and you can pay it back. The bible says that the wicked borrows and does not pay back, but the righteous is gracious and gives. (Proverbs 37:21)
- Pray that God would give you wisdom to make the right decision (James 1:5)
If you are looking for additional capital for your business, it may be time to connect to this other dimension in the social networking space. Who knows… You may find the start up money you have been waiting for.
If you decide to lend or borrow through one of these peer-to-peer lending sites, or already have, please share your experience with us! Are they useful? Are there additional biblical principles to consider?
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