Through peer-to-peer lending, you may be able to obtain funding for your startup. Generally speaking, it is hard to obtain start up loans from banks.

At Triumph Business Services, we highly recommend forming a corporation or LLC prior to starting a business or seeking financing for a business. Such a legal structure for a business makes it far more likely that you will obtain financing, because the segregation of personal and business funds means cleaner accounting. Lending to you for business purposes then becomes more safe.

As previously stated, banks are unlikely to provide funding for startup businesses. The risk is too great to justify it. U.S. Small Business Administration (SBA) loans are not nearly as easy to obtain as advertised. The documentation that must accompany the loan application is a heavy requirement, and normally includes a detailed business plan (however, planning software is available).

Peer-to-peer lending, commonly known as P2P may offer an alternative. You can obtain a personal loan via P2P sites such as Prosper.com to consolidate debt that you may have incurred while building your business.

If you anticipate receiving money in the future but need funds now, you can apply for a bridge loan, or short term loan. This may be suitable if you may be able to repay the loan within three to five years with no prepayment penalties.

P2P loans are unsecured. You can apply for a personal unsecured loan for business purposes. If you are employed, be prepared to provide W-2 employment income documentation. If you are self-employed, be prepared to provide a 1099, along with bank statements. There is no business plan required.

Generally, the loan amounts range from $2,000 to $35,000. While you are not expected to have perfect credit, it is unlikely that you can obtain one with poor credit.

P2P loans are between investors and borrowers, with Prosper.com or whomever providing an online community to connect them. Investors can look at a loan application which will include a credit score, financial data, and other information provided such as personal statements, statements from friends or others, or statements regarding the use of any money that is lent.

Individuals can participate as investors or borrowers. P2P lending offers investors excellent yields and the opportunity to lend money based on personal values. Borrowers are able to obtain loans based on more “human” considerations at competitive rates. There is no participation from banks or other financial institutions, which means lower overhead, which means lower costs for borrowers and higher yields for investors who lend through P2P.

There are many ways to find money to start a business, and the right option depends on your needs, your background, your credit, and your progress in forming your business. We recommend researching this option thoroughly.