A quarter of small businesses in the US were funded by alternative lenders: what does it talk about loan apps?

Not to miss a profitable deal or to get initial investment for a microenterprise – causes can differ. But you won’t deny there can be a bunch of situations when people need to borrow money immediately. Apart from the long and often bureaucratic process of lending funds in banks, credit unions, and other similar institutions, the specific app can offer fast and convenient services for borrowers as well as for lenders. More than 25% of small American enterprises received financial support from alternative sources, the survey states. 

The platforms can be honed for diverse needs. Ones specialize in financial support for entrepreneurs and offer business loans. Others are addressed to the car amateurs, and they promote funds for purchasing a vehicle. Real estate also can be “sponsored” in this way. Differing by the purpose of money lending, the apps can vary in the addressees: loans can be requested by organizations or individuals. As a rival of bank services, the segment of peer-to-peer lending apps is growing by leaps and bounds. The reason is obvious: here, lenders can find more attractive conditions for investment: a higher percentage. As for borrowers, they don’t have to agree on a pile of paperwork to get funded. The experts forecast the consumer segment of lending apps will reach more than $32bn in transaction value in the current year.

As you see, technological progress has changed the landscape in the industry. And if you’re planning to contribute to the invention of sought-after and convenient tools, research the nuances of loan app development. The Purrweb team sorted out the pivotal points related to the issue, explored their practical experience cases, and took the insights onboard! 

A quarter of small businesses in the US were funded by alternative lenders: what does it talk about loan apps?

Advantages of the p2p money lending apps:

If the platform is tailored properly, both sides of interaction are interested in it: borrowers receive money automatically, and lenders increase their revenue tangibly. Why do customers prefer the specific programs to visit bank offices or any other financial companies? 

The opportunity to receive financial support from the comfort of your place is a teasing factor for people who look for charity donations or funds for their personal/commercial purposes. Of course, they have to confirm their solvency. Thanks to technology, it can be done distantly. 

As for lenders, they are invited to participate in a wide spectrum of activities since platforms open opportunities to invest in businesses in diverse niches and boost their financial indicators, respectively. Lenders are equipped with the bank’s principles: know your customer. Such an approach helps not only to avoid fraud in this kind of activity but to select the most reliable ways for multiplying savings. Since the operating costs of the service are minimal, a loan app traditionally tempts users with increased interest tariffs. By implementing artificial intelligence, the participants of interaction can receive even more benefits: flexible and highly personalized search, cheap and fast confirmation of documents, etc.

Let’s explore the picture in detail: how the service works and which functionality should be presented in it.

Functionality that is irreplaceable for a loan app:

Planning to construct a service approved by customers, learn how similar products work, which features are especially beneficial, and which can be substantially improved.

Like a book needs an inviting cover to be read, the loan app needs an onboarding page: briefly articulate why your service is unique and which pros are there to use it. 

As the customer decided to register, switch him to a sign-up page. By typing the keyboard username and password, a new personal account is successfully created. Here all the data related to the person, including finances, will be kept. 

The catalog of loans facilitates fast and accurate exposure/finding of the appropriate opportunities due to filtering. After defining a credit sum and repayment terms and applying, the borrower can expect transactions to his bank account. When the application in the loan app is approved, the deal is made. 

A quarter of small businesses in the US were funded by alternative lenders: what does it talk about loan apps?

When we are talking about features rewarding for a loan app, we should keep attention to the aspects like these:

User-friendly interface:

Let your customers feel at home when they are dealing with a service. Equip it with a trendy, eye-delighting look and simple, easy-to- catch-from-the-first-glance navigation. Users will be grateful if you provide hints in the unambiguous parts of their route. The loan app should seem fresh and stylish to be tempting to customers, but at the same time, all the elements should be comfortably disposed of in the habitual places. 

Secure authentication:

Since the loan app deals with sensitive data, solid and reliable protection against fraud is a mandatory part of the product. Face ID, fingerprint ID, additional paroles, and  SMS codes – think about how to prevent undesirable access to personal data. Purrweb implements such software as two-factor authentication to make sure that all the confidential information is under robust protection. 

Data encryption:

This is what makes money transfers safe in the app. The team should care that there’s no way for leaking when people keep their savings in the app or transfer money to each other. Both processes require the data to be encrypted, so people feel calm that their money will reach the aim of staying safe in the account where they replaced them. 

Real-time loan tracking:

To avoid anxiety and feel confident, the user of a loan app wants to be aware of the current application status. Such features as a real-time loan tracker will empower one to know about all changes and updates related to the issue. Emails, SMS, push notifications, and other ways to inform customers are available. Knowing about every milestone, the customer will trust the service with no doubt.

Challenges and solutions:

If you’re targeting to construct a loan app, you should be conscious of the consequences of a sloppy approach. Don’t set your users at risk. The first point concerns private data. And we considered the variations of how to avoid undesirable intervention from scams or well-trained hackers. The data should be encrypted on the server side when it comes to keeping funds or transactions. The other point concerns the protection of access to the individual account with the help of various barriers, as we considered above.

The other side of the coin is the legislation of the app’s work in the locations where people use it. If you don’t care about the issue, there can be problems for you and your customers. Make sure that all the necessary certificates and licenses are received before you start doing business. Pay attention: each country has its legal particularities and restrictions. And if you’re planning an international loan app, each location with demand permission for such kind of activity. To illustrate this: some countries allow people to borrow money and make purchases in cryptocurrencies, while others prosecute such actions. Learn about all underwater rocks before starting your entrepreneurial journey.

The future of this business niche seems to be encouraging: analysts predict growth. 

The transaction value of p2p lending apps can result in a projected total amount of US$34.70 bn by 2027. Looks like the right time to get on board.

Nirmal Sarkar
Nirmal Sarkar

Nirmal Sarkar is a Biotechnologist from the city of Joy, Kolkata. He is the founder of this blog and covers a wide range of topics from Gadgets to Software to Latest Offers. You can get in touch with him via nirmal@hitricks.com

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