Marketplace lenders, one of the newest types of lenders, use online platforms to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan. Generally, these platforms handle all underwriting and customer service interactions with the borrower. Once a loan is originated, a marketplace lender will typically service the loan while arranging to transfer ownership to investors. Marketplace lending platforms often market both new loans and loans to refinance or consolidate existing debt.
Marketplace lenders can provide loans even if you don’t have perfect credit. But these loans may have very high interest rates and expensive fees (learn more about loan types). While marketplace lenders are required to follow federal and state consumer financial protection laws, it is important to keep in mind that they generally are not regulated by the government in the way banks are.
Most marketplace lenders allow you to use your loan funds for any business purpose. Check your loan terms for more information on how you can use your funds.