A little money can go a long way for many small businesses, but in the midst of the current credit crunch, money is not always easy to come by.  Traditional credit channels like credit lines from banks have become suddenly much tighter, and many businesses have found their credit lines suddenly lowered in amount or increased in rate as banks become reluctant to lend.  There are other options though, including peer-to-peer lending with Lending Club.  To find out more about Lending Club, I spoke with Rob Garcia, their Director of Product Strategy.

In peer-to-peer lending borrowers and lenders connect without going through a bank.  There are several variations on this idea, one of which is found with Lending Club.  When a borrower seeks money, they can enter the amount they are looking for, between $1000 and $25,000 as unsecured loans which are repaid over a three year period.  The low operating costs of Lending Club helps them to keep their rates lower than what borrowers would generally pay to borrow money from banks or credit cards.   

Loans can be made for almost any purpose, including use for a small business.  Garcia confirmed that loans for a green purpose generally are well received in their system, attracting funding from lenders.  Small businesses often turn to their system for loans because of the many advantages such as ease of application, rapid process and low interest rates, particularly in today’s financial climate.

The on-line application process is easy and fast; it can be completed in minutes.  A credit check is performed, and borrowers must have good credit, with a FICO score higher than 660, and without excessive revolving debt or other indicators of credit problems.  Once this is completed, the loan will be priced according to the risk calculated for each borrower, assigned an interest rate, and lenders in their system can then fund a portion of the desired loan.  Verification of identities is also an important step, making sure people are who they say they are.  The calculation of the interest rate uses an advanced automated system, finding the right price for the risk.  If the full loan is funded, then the loan is initiated at the interest rate indicated. 

As you start and grow your own green business, getting a loan from Lending Club may provide the extra boost you need to be successful.