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An excellent form of alternative funding for small businesses and one that is gaining in popularity is peer-to-peer lending. Also referred to as person-to-person or social lending, peer-to-peer lending is a form of lending that takes place between individuals ("peers"), such as family, friends or associates versus with a more traditional financial institution.

There are two types of peer-to-peer lending that have become popular via the Internet including the online marketplace where lenders and borrowers find each other in an auction-type exchange and the loan goes to the lender with the lowest interest rate; and the family and friends model where lenders and borrowers already know each other and where a lending service provider offers a platform to support collaboration, formalize loan arrangements and service the loan over the long term.

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Loaning money to a family, friend or associate to help fund the start-up of their business venture or support growth objectives can be compelling for several reasons:

• You care and want to help
• It is a good investment with a promising return
• It offers a future income stream and return on investment (ROI)

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Borrowing from peers instead of from a more traditional financial institution to fund your small business offers several significant benefits:

• Funding may not be available from traditional financial institutions
• Loan rates between friends and family are usually lower
• Payment terms are more flexible
• Borrowers and lenders are more collaborative
• Credit bureau reporting option can help credit scores
• Loans can be restructured over time

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Borrowing and lending informally can result in unforeseen problems and may put a strain on an otherwise valued relationship. To ensure that the benefits of a peer-to-peer lending arrangement are realized for all parties involved, it is highly recommended that you choose to work with a reputable lending service provider who delivers the following value-add services:

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In general terms, peer-to-peer lending involves a lender and a borrower who come together to exchange money with the understanding that it be repaid over time. To formalize that understanding in the interests of both parties; a loan management service provider is brought in to structure the Loan Agreement and service the repayment process over time.

For example, Virgin Money manages business, personal and student loans, as well as real estate mortgages between family and friends.

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Learn how much you can save, expect for payments and other financial benefits over time by structuring a peer-to-peer loan versus a loan with a traditional financial institution by selecting the following options:

• Savings Calculator
• Payment Calculator
• Applicable Federal Rates
• Interest Rate Limits per State
• Reference Library

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Below are 10 great reasons why using a lending service provider, like Virgin Money, to manage a peer-to-peer loan for your business makes sense:

1. Secure loan management services from people who manage loans
2. Preserve your relationship with your borrower with a value neutral 3rd party loan manager
3. Establish clear yet flexible loan terms
4. Construct a loan agreement that is legal
5. Select credit reporting to build your credit score as the loan is repaid
6. Keep money and share your success between family, friends or associates
7. Include promissory note for added peace of mind
8. Create security agreement and/or UCC agreement where applicable
9. Save money with low repayment interest
10. Fund your business growth and long-term success

> Small Business Loans > Request Loan Guide > Request Contact

With available expertise from a loan management service provider like Virgin Money, you may begin evaluating the benefits of a peer-to-peer lending relationship by choosing any one of the following options:

1. View Small Business Loans
2. Request a Peer-to-Peer Lending Guide
3. Request Contact

"Virgin Money USA is a financial services company committed to offering consumers alternatives to traditional and costlier forms of credit. The company focuses on providing loan creation and management services for business, personal, student and real estate loans where borrowers and lenders have an existing relationship, such as friends and family."

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