Money For Starting a Business

Peer-to-Peer Financing

Although similar to crowdfunding, the main difference between crowdfunding and Peer-to-Peer Lending is that peer-to-peer lending is for "loans," not "contributions." Typically the maximum loan amount for each project is around $25,000, and the interest rate is scaled in accordance with your credit score. Please approach this concept with considerable caution—there are many pitfalls with peer-to-peer lending.

Here are the more popular sites that sponsor peer-to-peer lending (Links open in new window):

• Prosper
  Prosper claims to be the largest peer-to-peer lender in the world, with 1,120,000 people involved in their program. The process is straightforward and easy for anyone to do—just make sure your pitch (custom loan listing) follows their guidelines and is the best you can provide.
• Peer Lending Network
  The Peer Lending Network directs potential borrowers to the peer-to-peer lending company best suited for their needs. The loans are all unsecured, which means they don't require collateral. People looking for a loan posts a listing for a peer loan with the amount they need at a rate they can afford, and lenders bid on the listings by bidding the amount and rate they are willing to lend the borrower. This resource also provides consumer financial education. Click here for more information.
• Lending Club
  Lending Club has about 32,000 borrowers and around 50,000 individual investors in their program. They have surpassed $325 million in loan originations with an average loan size of about $10,000. For more information on the Lending Club, click here.
• GoBig Network
  This lender operates similarly to the other peer-to-peer lenders, except they deal in much larger investment amounts, and appeal to larger investment firms. That also mean you will need a very professional "Business Plan," because you are asking for larger investments from professional investors. For more information on this company, click here.
• Zopa
  Zopa was the world's first peer-to-peer lending company when it launched in the UK in 2005. Most p2p companies since then have emulated Zopa's platform.

  Unfortunately, Zopa does not currently operate in the U.S. and can only be used by those who are residents of the United Kingdom. To find out more about the UK service, click here.

• Incubators
  If you are starting up a technology business, a good place to start is with a business Incubator. To find one in your area, click here.
• Angel Network.
  A network of angel investors is a group of accredited investors who get together to review companies and make either individual or group investments in high potential proposals. For a list of active Angel Investor GROUPS in North America, click here.
• Angel Capital Association
  This is another Directory of angel investors, and is quite extensive. For more information on this source of information, click here.
• Lendio
  This platform was formerly Funding Universe, but has expanded and taken on a new name—Lendio. I included it here, because it was ranked the 34th fastest-growing company in the U.S. in 2010 on the Inc. 500 list. They provide a service of matching up your financing needs with specific investor interests. For more information on this company, click here.

There are also a number of companies that will assist you in finding a suitable Angel Investor. However, these companies do charge a fee—usually fairly modest, but I have not heard much about very high success rates. However, you may want to take a look at the following links that offer this service:

• Funding Post
  This is a service where you pay to list your company and what you need in the way of investment. Investors then periodically review the listings and contact the entrepreneur to discuss potential mutual interests. For more information, click here.
• Central Investment Network
  This is a platform that connects entrepreneurs in the central U.S. (Colorado, Kansas, Missouri, Montana, Utah, & Wyoming) with investors around the world. They have a menu of costs to entrepreneurs, depending on the level of service and the amount of time you want to be listed in their database. For more information about this organization, click here.
• vFinance
  This platform is a repository of wealthy people—investors, customers and clients. After you submit your requirements, you will need to pay for selected records of appropriate investors. The cost varies by just how wealthy you want your investor to be. For more information, click here.

• MoneyTree Report
  The most up-to-date information available on Venture Capital comes from the PriceWaterhouseCoopers MoneyTree report. This report tells which VC is currently making investments, and in which industries. It gives the most up to date information on VC activity. To access this report, clickhere.
• National Venture Capital Association
  This is another excellent source of information regarding equity funding. It provides extensive information on the Venture Capital industry. To visit their website, click here.

There are other forms of obtaining money for starting a business, and these are discussed in the Small Business Financing section of this website. I strongly encourage you to read the reports in that section thoroughly before you strike out seeking investor loans or investments.

Good luck!