P2P v BBB: How a start up loan compares with P2P finance
The British Business Bank (BBB) has just approved its 75,000th start up loan – here’s how they compare with peer-to-peer finance.
The Start-Up Loans Company was formed by the state-backed British Business Bank in 2012 to provide personal loans for business purposes of up to £25,000 at interest rates of six per cent.
Borrowers also get free dedicated mentoring.
Lower value business loans are also the bread and butter of the P2P lending world as it is a gap left by the banks.
Here is how getting the funds from the public compares with getting it funded through the BBB.
Read more: Zopa Bank v P2P: How the rates compare
Read more: What CBILS deals are alternative lenders offering
Zopa offers personal loans for one to five years through its P2P lending platform with an annual borrower interest rate of approximately 17 per cent, although this could be lower once an application is made.
Borrowers can get loans of up to £25,000.
Similarly, RateSetter offers personal loans from £3,000 to £25,000 starting at 3.9 per cent for one to five years.
The minimum loan is typically higher if you want business P2P finance.
Funding Circle is currently only providing coronavirus business interruption loans so entrepreneurs will need to look elsewhere if they need finance for other purposes.
Rebuildingsociety advertises loans of £25,000 and upwards with an annual interest rate of five per cent.
The minimum rises to £50,000 if you want a business loan with Folk2Folk.
The rural peer-to-peer lender offers rates of 0.38 per cent to 0.75 per cent per month.
Read more: The P2P CBILS rates on offer to borrowers
Alternatively, ArchOver’s minimum borrowing starts at £100,000 with interest from 9.5 per cent per year.
Finance-seeking businesses could also try Assetz Capital, which prefers a minimum loan of £200,000 for its business finance and has rates from 6.9 per cent.
The rate will also depend on the applicant’s own personal situation and the platform’s credit criteria but this at least shows borrowers don’t only have to rely on the state and can look to their peers if they want to start a business.
