While shopping for small-business loans online, you’ve likely come across companies that specialize in peer-to-peer business lending.
What is peer-to-peer, or P2P, business lending? Peer-to-peer lenders underwrite borrowers but don’t fund the loans directly. Instead, they’re an intermediary between the borrower and the individual investor or an institutional investor such as a hedge fund or investment bank.
To help you decide if P2P is the best option for your business, we break down four popular options: Funding Circle, Lending Club and StreetShares. These P2P business lenders cater to established small-business owners with good credit. If your credit score falls below 600 and you need an influx of cash, check out our recommendations for bad-credit business loans.
Peer-to-peer business loans: Summary of options
| Funding options |  |  |  |
|---|---|---|---|
| Best for | Growth | Flexible financing | Working capital |
| Loan Details | |||
| Loan amount | $25,000 - $500,000 | $5,000 - $300,000 | $2,000 - $100,000 |
| APR | 7.4% - 36% | 9.8% - 35.7% | 9% - 40% |
| Minimum Qualifications | |||
| Personal credit score | 620 | 600 | 600 |
| Annual revenue | None | $50,000 | $25,000 |
| Time in business | 2 years | 1 year | 1 year |
For more details
For businesses looking to grow: Funding Circle
For businesses looking for flexibility: Lending Club
For businesses seeking working capital: StreetShares
For businesses looking to grow: Funding Circle
Funding Circle has no minimum revenue requirement, and with access to higher loan amounts, you can use the funding for growth-related expenses including equipment, renovations and refinancing debt.
- Pro: Funding Circle does not require a minimum annual revenue
- Con: The lender has the highest minimum personal credit score requirement at 620 among the four lenders compared here
- Loan amount: $25,000 to $500,000
- APR: 7.4% to 36%
- Loan term: Six months to five years
- Funding time: Average of 10 days
- Read our Funding Circle review
- 620+ personal credit score
- At least two years in business
- No minimum annual revenue required
- No bankruptcy in the past seven years
- Personal guarantee required
For businesses looking for flexibility: Lending Club
Lending Club offers term loans up to $300,000 that you can use for practically any business expense, including inventory, equipment and refinancing old debt.
- Pro: Competitive APRs
- Con: Compared with online lender StreetShares, Lending Club requires higher annual revenue of $50,000.
- Loan amount: $5,000 to $300,000
- APR: 9.8% to 35.7%
- Loan term: One to five years
- Funding time: As fast as two days but typically one to two weeks
- Read our Lending Club review.
- 600+ personal credit score.
- At least one year in business.
- $50,000+ in annual revenue.
- Own at least 20 percent of the business.
- No recent bankruptcies or tax liens.
- Provide collateral for loans of more than $100,000.
For businesses looking for working capital: StreetShares
StreetShares offers a personalized twist on P2P lending — it helps connect veterans seeking funding, for instance, with investors interested in helping veteran-owned businesses.
- Pro: You need only a year in business and $25,000 in annual revenue to qualify
- Con: Funding is capped at 20% of your revenue, up to $100,000
- Loan amount: $2,000 to $100,000
- APR: 9% to 40%
- Loan term: Three to 36 months
- Funding time: One to five days
- Read our StreetShares review
- 600+ personal credit score
- 1+ year in business
- $25,000+ in annual revenue
- No bankruptcies in the past three years
- No current tax liens or collections (unless you have proper documentation)
Want to compare other small-business loans?
NerdWallet has come up with a list of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Jackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: jzimmermann@nerdwallet.com. Twitter: @jackie_zm. NerdWallet writer Teddy Nykiel contributed to this report.
Updated Nov. 15, 2017.
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