How marketplace lending can jump-start your business

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One of the most important aspects of starting a business is the ability to fund it.

There are already a multitude of factors to consider when creating your first budget sheet and it can be daunting trying to figure out how much you need before you open your doors. Rent is a significant expense that will eat up a large chunk of the budget. Insurance is a necessary investment to safeguard against any potential issues that may come up. Competitive salaries are vital to hire the best talent out there to represent your brand.

So how do businesses get the money they need to run their business?

Many business owners apply for a business loan. However, getting approved for a loan is another endeavour altogether. In the spring of 2020, 65% of companies who applied for additional finances were successful in September, 61% in October and 71% in November, according to a survey by Australian marketing company Sensis. Those who may not have been as successful may be scratching their heads. How else can a business get capital?

Marketplace lending may be just the solution that you’re looking for.

What is marketplace lending?

Instead of obtaining loans from an institution like a bank, marketplace lending allows individuals to directly invest in your business.

Marketplace lending is often facilitated by a third-party website or company that works as an intermediary between the individual investor and your business.

This third-party site is often responsible for performing credit checks on the borrower to make sure to protect the investor. They are also there to assess the risk of the investment and repayment capacity of a company, which can ease investors’ worries about what they’re investing the money in.

Due to the rise of the internet, the growth of marketplace lending as a form of funding has also followed suit. The marketplace lending market size is projected to reach $558.91 billion by 2027 compared to its $67.93 billion size back in 2019, a study by Allied Market Research found. Thanks to its ability to connect people and businesses from all across the world, marketplace lending can help your business find an investor from near or far.

The same can be said for the reverse as well. If you’re looking to invest in a foreign business you believe in — say, the United States, the United Arab Emirates or Indonesia — doing so through a marketplace lending platform can help you ease that process.

Is marketplace lending right for you?

Outside of traditional lending methods like bank loans, marketplace lending can offer a number of benefits that make it an extremely viable alternative.

For borrowers, this could mean an alternative form of outside investment into their company. More sources of funding can lead to more potential to grow a business.

For investors, marketplace lending can offer them better investment rates than they could otherwise get through traditional means. High rates of return for investors can be especially enticing. Investors also aren’t tied down to investing in local businesses, allowing them more opportunities to invest in companies of all different types worldwide.

What to look for in a marketplace lending site

Want to start getting into the marketplace lending scene? You can get started by heading to an intermediary site like Marketlend and signing up.

To find a good marketplace lending site, look for a few key factors.

Verify that the site that you are using has an Australian financial services licence as well as an Australian credit licence. These licences, which are issued by the Australian Securities and Investments Commission (ASIC), help ensure that the site that you are using is legitimate. Figure out if the marketplace lending platform is also part of an external dispute resolution scheme approved by ASIC as well.

Marketlend can help you meet your investment goals

Whether you’re a business owner looking for some more sources of funding or an individual investor looking to diversify your portfolio, Marketlend is the best place for you to do so. Get in contact with us today!

1 July 2021