In the conventional lending market borrowers face various stringent conditions that they may not be able to fulfill. Commercial banks and other conventional lenders will typically reject loan applications with high loan amounts requested by borrowers lacking income-producing assets for collateral. However, P2P lending companies and peer lending platforms qualify borrowers with a broader perspective, facilitating mutual conditions between the lender and the borrower. While you may lack the preferred asset to secure the loan, this may not limit your chances in acquiring a loan. You and your P2P investor may strike mutual conditions for either a secured or an unsecured loan.
P2P platforms like Blackhawkcorp.com engaged in real estate peer to peer investments have taken this marketplace a notch higher by incorporating several benefits for the borrower. Through strategic partnerships, they have expanded customer value to encompass all the professional services required for commercial private mortgages. Additionally, the services are quite affordable for borrowers as the cost savings from technology has been passed on to the borrowers. P2P companies and platforms are reducing the minimum loan amount they can process while increasing the maximum limit as well. If you opt for a P2P loan now, you may obtain a loan between $100,000 and $50,000,000.
The process for funding a P2P loan is generally much shorter then that of the conventional bank loan. The P2P lender or platform processes the loan and provides funding faster thereby meeting a borrower’s needs in real time. Another beneficial aspect of peer lending for borrowers has been the introduction of equity crowd source funding and new investor capital using self-directed IRAs. (These are great for generating interest income in a tax-sheltered environment).
The sum of all these advantages makes P2P lending a convenient capital source for many borrowers turned away by banks. The marketplace is open and borrowers can choose to have secured or unsecured loans now. Secured P2P loans use real property as collateral providing the lender with the assurance that the loan is backed by a hard asset. Unsecured P2P loans do not require collateral, and therefore the borrower’s credit score greatly impacts their chance of getting a loan.
It is important to note that P2P lending provides better interest rates for borrowers in almost all categories. Additionally, both peer borrowers and peer investors are assured of getting the best rates for their respective benefit. (Bank savings rates are still below 1%). However, the exception to this rule would be for a real estate loan with a stabilized commercial property. The commercial bank or life insurance company rates will generally be significantly lower than private and hard money. And peer loans rates should be somewhere in the middle.