A detailed explanation of private company peer-to-peer based financing. 

Private company peer-to-peer (P2P) financing, also known as peer-to-business (P2B) financing, is a type of debt financing that connects individual or institutional investors with small or medium-sized businesses that need funding. P2P financing allows investors to lend money to companies at a specified interest rate, with the loan usually being repaid over a fixed term.

Here are some features of private company P2P financing:

Online Platform: P2P financing typically takes place on an online platform that connects investors with borrowers. The platform acts as an intermediary, handling the loan application process, credit checks, and loan servicing.

Interest Rates: Borrowers typically pay a higher interest rate on P2P loans than they would on traditional bank loans, but the interest rate is typically lower than what they would pay on credit cards or other high-interest debt.

Credit Checks: P2P platforms typically assess the creditworthiness of borrowers and assign them a credit rating that determines the interest rate they pay on their loan. Borrowers with a higher credit rating may be able to obtain a lower interest rate.

Diversification: Investors can lend money to multiple borrowers, which can help spread their risk and diversify their portfolio.

Repayment: Borrowers typically make fixed monthly payments over the life of the loan, with the loan being fully repaid at the end of the term.

Here is an example of private company P2P financing:

ABC Corporation is a private company that needs to borrow $100,000 to finance a new project. ABC Corporation applies for a P2P loan on a lending platform that specializes in P2P financing for small businesses. The lending platform assigns ABC Corporation a credit rating based on its creditworthiness, and sets an interest rate of 8%.

Individual investors on the lending platform can view the loan listing and decide whether to lend money to ABC Corporation. Investors can lend as little as $25 to ABC Corporation, and can choose to spread their investment across multiple loans to diversify their portfolio.

ABC Corporation borrows $100,000 from the P2P lending platform and agrees to repay the loan over a three-year term. The company makes fixed monthly payments of $3,090, which includes principal and interest, for a total repayment amount of $111,240.

Overall, private company P2P financing can be an attractive form of debt financing for small businesses that are unable to obtain financing from traditional sources. P2P financing can provide access to funding at competitive interest rates, with a streamlined application process and a quick funding timeline. However, it is important for both borrowers and investors to carefully evaluate the costs and risks of P2P financing, and to understand that it may not be suitable for all companies or investors.