What do you do when you can't get a bank loan or raise equity capital from angels or VCs? You could turn to an online network of lenders. An article in The Wall Street Journal on March 12, 2008, told the stories of several small business owners who did exactly that. One, Jeff Walsh, borrowed $22,000 from Prosper.com. His interest rate was 10.25%. The article went on to list other online lending services, or person-to-person lenders: LendingClub.com and Zopa.com.
These lenders make small, unsecured loans. The field is growing, particularly during the credit crunch, which has dried up many traditional sources. Such companies made about $100 million in new P-to-P loans in the US last year. Even Richard Branson, owner of Virgin Group, has jumped into this market with Virgin Money USA.
To read more, go to the small business section of the online Wall Street Journal. www.wsj.com. The specific article is at: http://online.wsj.com/article/SB120526439925827991.html?mod=SmallBusinessMain_feature_articles#