At some point, you might get an understanding of finances enough to realize that few truly wealthy entrepreneurs make their money solely by starting and running their own businesses. Rather, they start to look at the ways that they can lend money to other businesses, collecting on the profits that they then make. But what are the best ways to get into business lending?

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Playing the markets

Alongside investing in metal, forex, bonds, and the like, you can get directly involved in buying stock as part of your investment portfolio. Stock movements can be very hard to predict. However, if you’re good at reading business trends and keep up to date with developments across the industries that you are investing in, then your insights can help you make them profitable. Just bear in mind that it’s a good idea to diversify your portfolio so you’re not relying on stocks alone or stocks within one industry to make your money.

Go P2P

One of the most recent developments that have changed lending and borrowing in the business world is that of peer-to-peer lending platforms such as Peerform. Effectively, these platforms allow business owners to look for small loans online. Different lenders like you, or groups of lenders, then will offer their terms, such as interest and fees, allowing the borrower to choose which loans best fit their needs. You can offer loans with as much or as little risk as you want, meaning you have more control over how much profit and loss you’re likely to deal with.

Could you start a bank?

While it might seem like an opportunity of a long-gone age, the truth is that community banks and credit unions have seen something of a surge as of late. With the help of software like FISCAL that can help get to grips with processes such as underwriting, it could be easier to start a small lending platform or business for local businesses to tap into. This doesn’t mean that it’s easy, of course, and a lot of legal advice is needed to start a bank, but if you have the funds, it’s far from impossible.

The traditional route

The oldest form of business owners lender to business owners, and at the heart of the modern capitalist system as we know it, is angel investing. Effectively, this means finding business owners who are looking for funds to set up their business and buying a certain stake of their business in exchange for providing the funds that they need. In doing this, you may also be asked to provide your experience and insight to help improve their business, but some angel investors take a much more hands-off approach if they don’t want the job of running another business, too.

There are a lot of different ways to get into business lending, and none is decisively more advantageous than the other. It’s all about looking at how much you want to get involved in either running a lending business or in helping to run the businesses you lend to.

By Erica Buteau

Change Agent. Daydream Believer. Maker. Creative. Likes love, peace and Jeeping. Dislikes winter, paper cuts and war. She/Her/Hers.

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