Peer-to-Peer Business Lending: What It Is, Where to Find a Lender
Peer-to-peer business loans are funded by investors, not banks or online lenders, and administered by intermediaries.
Peer-to-peer (P2P) business lending connects borrowers to investors who make small-business loans
Each peer-to-peer business lending platform serves a different type of business, so look for one that lends to customers like you.
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Peer-to-Peer Business Lending: What It Is, Where to Find a Lender
| Loan | NerdWallet rating | Best For | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|---|
 iBusiness Funding - Online term loan with Fundera by NerdWallet | Best for P2P business loan | $500,000 | 660 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
Peer-to-Peer Business Lending: What It Is, Where to Find a Lender
Max loan amount
$500,000
Min. credit score
660
Min. annual revenue
$50,000
See Your Loan Optionswith Fundera by NerdWallet
Pros
- Cash can be available within two business days.
- Competitive rates among online lenders.
- Terms up to seven years.
- iBusiness Funding also offers SBA loans up to $5 million.
Cons
- Charges an origination fee.
- Must be in business for a minimum of 24 months.
- Minimum credit score is higher than some other lenders.
iBusiness Funding - Online term loan
Best for P2P business loan
Max loan amount
$500,000
Min. credit score
660
Min. annual revenue
$50,000
with Fundera by NerdWallet
Pros
- Cash can be available within two business days.
- Competitive rates among online lenders.
- Terms up to seven years.
- iBusiness Funding also offers SBA loans up to $5 million.
Cons
- Charges an origination fee.
- Must be in business for a minimum of 24 months.
- Minimum credit score is higher than some other lenders.
Best peer-to-peer business loan options
iBusiness Funding: Best for established businesses
But funding can be available in as little as three days, faster than most bank loans; and APRs range from 15.22% to 45%, lower than many online lenders. You may be able to borrow up to $500,000.
P2P loans from iBusiness Funding may be a good fit for highly qualified borrowers who don’t want to wait on bank funding. APRs from iBusiness Funding may be slightly higher than those from banks, but if you’re approved for funding, you’ll likely receive those funds much faster.
Kiva: Best for micro-businesses
Peer-to-peer business loans from Kiva are almost certainly more accessible to new businesses than are bank or online loans. If you have a spotty credit history, less than a year in business or uneven revenue, it’s possible a P2P lender like Kiva can help you get funding when a financial institution can’t.
Honeycomb Credit: Best for businesses with established customer bases
To apply, you’ll also need business financial statements, tax returns and a business plan, and everyone with more than a 20% stake in the business has to undergo a background check. Honeycomb sets borrowers’ loan terms based on their applications. Unlike Kiva, Honeycomb charges posting and origination fees, and you’ll have to pay interest on borrowed funds.
Prosper: Best for new businesses
Because these aren’t business loans, the platform will probably focus on your personal financial history when deciding whether you qualify — which could make it a good fit for startups or businesses with uneven revenue histories. However, Prosper’s maximum loan size is $50,000.
What is a peer-to-peer business loan?
Peer-to-peer business loans are business loans made by individual or private investors, not financial institutions like banks.
You’ll typically get P2P business loans via a third party that acts as an intermediary — handling application and disbursement for borrowers, and collecting funds from investors. In some cases, as with iBusiness Funding, those may be institutional investors such as a hedge fund or investment bank.
In other cases, peer-to-peer loans are similar to crowdfunding. For loans via platforms like Kiva, individual investors chip in small amounts toward a borrower’s total loan amount. The business owner pays investors back over time, but these individuals may be more focused on supporting a business than maximizing returns as an institutional investor might be.
Peer-to-peer lending is more common for personal loans compared with business loans. You can use a personal loan to fund your business idea
» MORE: Best peer-to-peer personal loans
P2P business loan pros and cons
Pros:
- Less stringent qualifications than banks. If you have fair credit or less than two years in business, you may have an easier time qualifying for a P2P loan than a bank loan — particularly from a lender like Kiva or Honeycomb Credit, which operate more like crowdfunding platforms.
- On crowdfunding platforms, lenders are invested in your success. In order for the people who support your business to recoup their investments — perhaps of their own money — your business needs to last. That may be enough to spur your funders to talk about your company locally or on social media to help grow your customer base.
Cons:
- Higher APRs than banks. If you have good credit and a history of consistent revenue to qualify for a P2P business loan from an institutional investor or crowdfunding platform, you may be able to find a more affordable business loan at a bank or credit union.
- Potentially small loan amounts. While iBusiness Funding offers six-figure loans, it may be more difficult for small businesses to qualify for large loans from other P2P lenders. Honeycomb Credit ultimately determines borrowers’ loan terms, Prosper’s maximum loan amount is $50,000 and Kiva’s is just $15,000.
Alternatives to P2P business loans
If peer-to-peer business loans aren’t the right fit for you, consider the following:
- If you need fast funding:
Online business loans no documentation to apply - If you’re a very small business:
Microloans community development financial institutions (CDFIs) - If you don’t qualify for traditional financing:
Crowdfunding Invoice financing - If you’re looking for the least expensive option: Another way to avoid taking on debt is by finding
small-business grants startups
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices. We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans editorial guidelines