Some small businesses can go back again to family and friends, while others may get additional help from their outside investors. Businesses are also getting creative regarding financing by acquiring loans from vendors, employees, customers, communities, etc.

But one place for getting a small business loan that many smaller businesses are not aware of is Peer-to-Peer Lending—obtaining a loan from your peers. Peer-to-peer lending brings anonymous people together…lenders and borrowers…electronically in a double-blind auction through technology similar to the type eBay uses.

All indications are that this type of lending is growing in popularity and has helped many businesses cope with the shortage of money from banks.

Peer-to-peer loans are usually small in size—currently around $25,000 maximum—but they have been much higher in the past and will likely increase again as the economy improves.

It is also necessary to have a fairly good credit rating to get an acceptable interest rate, which can run from 6% to 35%. Some lenders have minimum credit scores, while others apparently do not.

Here are some of the more popular peer-to-peer lending sites;

Prosper.com

Peer-lend.com

Lending Club.com

Us.zopa.com (UK headquartered)

If you’re looking for a small business loan to finance the acquisition of a piece of equipment. or a special project, peer-to-peer lending might just work for you.

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Each of these customers have fewer than 20 employees, so this is a highly representative statistical sample of small business employment…probably better than the federal government’s numbers.

The Index was developed and is overseen by Dr. Susan Woodward, a nationally recognized economist. Here is what the Small Business Employment Index presents for May 2010:

• Small business employment grew by 0.1 percent, translating into approximately 25,000 new jobs in May. This compares to new jobs in February of 40,000; March of 50,000; and April of 66,000.

• Monthly hours worked declined in May to 101.6 per employee. This translates into an average workweek of 23.5 hours for hourly employees.

• Compensation in May grew by 0.3 percent to $2,566 per month. This translates to about $30,800 per year for all hourly employees.

The good news is that employment is still growing in the small business sector, although May shows a sharp decline in the rate of growth. Let’s hope that May was simply an anomaly and that June will continue to show a more robust growth in employment.

Remember, the Intuit Small Business Employment Index is based on a 50,000 small-business sample of all U.S. businesses with fewer than 20 employees. Also, that this sector makes up 87 percent of all businesses in the U.S.

At the same time, there are general traits that every entrepreneur must have, as well as a few activities you must perform in order to have a successful business. Basically, here is what you need to become an entrepreneur:

Passion. Some go so far as to say you must be “obsessed” if you want to build a successful business. Do you lie awake at night thinking about your business? Do you put money into your business startup fund instead of buying that Latte every morning? Are you frequently making notes and plans for your business? Do you know why you are passionate about this business? If you are not possessed by your passion, don’t start a business until you are. If you are still looking for the perfect business idea, keep searching until you find the idea that stirs your passions—you’ll know it when you see it.

People Skills. Last week I wrote about a person on TV who was doing everything wrong while trying to become an entrepreneur. It primarily had to do with this person’s interpersonal relationships…although she had an MBA, she had no core knowledge of her business and could not lead her employees—they were like a ship without a rudder. She did not understand her customers, and therefore built no loyalty…and on and on. It doesn’t matter whether your business is brick and mortar, or online, you will have to deal with customers, and hopefully, employees at some point. So, people skills are mandatory if you want to become an entrepreneur—at least a successful entrepreneur.

Be a Copycat. Don’t reinvent the wheel…look at people who have the same passion, for the same type of business, as you do. Then, copy what the successful ones are doing. Don’t be afraid to ask them how they do it—they will often share their passion, knowledge, and methods with you. This simple activity can save you the time, money, and aggravation you might expend making all the same mistakes others have already resolved.

Plan, Plan, Plan. By “plan,” I don’t mean writing a typical business plan. Except for presentations to investors—formal business plans are useless. I’m talking here about plans written on whiteboards and cocktail napkins. The writing down of thoughts, innovations, and ideas as they occur to you. It is important that you visualize starting and running your business, and then capture in writing, every idea and thought you have during this process. Five million (yes, million) businesses will fail this year, and most of them because they didn’t plan out their business thoroughly. But remember that Business Plans are made for banks and investors—“planning” is for you and your successful business.

Gather Knowledge. It is important that you have core knowledge about whatever your business produces in the way of products or services. For instance: If you open a tax consultation service, you had better know something about taxes. You also should have a basic knowledge of business, e.g., requirements of the law, accounting, marketing, sales, customer service, and the like. Basic business knowledge can be learned through classes and adult education, as well as books and online courses. So, continue to learn while you do your planning.

Start! There are thousands of drawers and shelves around the world that hold the remnants of people’s business dreams. There are simply too many people who dream, and plan, and wish…but never suck it up and actually start a business. Dreams made—dreams lost. Develop your planning and gather your knowledge—then commit. All the planning and knowledge in the world won’t help if you never get started. Yes, it’s scary, but if you have the passion, you will start in spite of your fear, and become a better entrepreneur for it. So, START!

That is a pretty basic set of guidelines on how to become an entrepreneur, but if you follow them, you will substantially increase your chances of making your new business a success.

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What is really needed is more work! When small business owners have more work for their workforce, don’t think for a minute that they won’t hire the people they need to do that work—whether there are any tax incentives or not. That’s why they are called “business” owners.

All this haranguing and carping in Washington simply proves even further just how far out of touch with the real world our politicians actually are. Until demand for small business products and services increases, small business owners will NOT hire more people. It’s as simple as that.

Here is a CNN edited clip of President Obama’s speech to the business gathering.

(email subscribers–view on the blog)

This is what small business people have been waiting to hear. It is definitely a start to get small businesses back on track. There is still much to do about healthcare and taxes as they relate to small business, but it is encouraging to see the government taking steps to improve the current situation.

“There’s very little, if any, money in the stimulus package for small business, and what is there is really sort of a trickle-down from the benefits that go to consumers…and it’s a slow trickle, perhaps one you won’t see until sometime in 2010, and small businesses need help now. Less than 1 percent of every stimulus dollar will go to small business, despite that operations with fewer than 100 workers created 94 percent of all net job growth in America over the last 20 years.”
–Michael Alter, President of SurePayroll

SurePayroll surveyed more than 200 small-business owners nationwide to find out how the government could help them the most. 44 percent said they need immediate access to capital more than anything else. 29 percent said money invested in innovation and product development would really boost small business.

There seems to be very little disagreement by anyone that small business will be in the lead of our economic recovery–by putting people back to work first. That is why it is incomprehensible that Congress provided such a little bit of stimulus to small business–especially when the feds are also forcing banks to withhold loans.

Giving tax breaks and small checks to unemployed people, or people who are afraid they may become unemployed, might be a welcome gesture, but I believe people want jobs and job assurance, more than they want tax cuts.

I have some choice words for Congress, but I had better not print them here!