Here is Everything You Need to Know About Peer to Peer Lending

Peer-to-peer lending is slowly changing the financial landscape, giving alternatives to both borrowers and investors.  

What is peer-to-peer lending?

Peer-to-peer lending, also known as crowdfunding, or social lending, is a form of borrowing where instead of a bank, borrowers connect directly with individual lenders through platforms. As such, peer lending eliminates the middleman resulting in better loan terms and other benefits.

How does peer to peer lending work?

Borrowers

For borrowers, peer-to-peer lending eliminates the hassle of getting a loan. Unlike traditional financial institutions that demand mountains of paperwork and take forever to approve a loan, peer lending platforms require less documentation and approve loans faster.

For investors, attractive returns are among the major reasons they participate in peer to peer lending markets. It also helps them diversify into different asset classes while offering an opportunity to fund social causes.

Lenders / Investors

Top peer-to-peer lending sites

1) Prosper

Prosper is one of the oldest and most popular peer-to-peer lending platforms in the U.S. Founded in 2005, Prosper has facilitated more than $12B in loans to more than a million people, according to their website. 

2) LendKey

LendKey is the premier peer-to-peer lending marketplace for student loans. Founded in 2009, LendKey connects people interested in private student loans and those refinancing student loans to credit unions and community banks.

3) SoFi

SoFi, short for Social Finance, is a San Francisco based peer to peer lending platform. The company launched in 2011, founded by four Stanford Graduate School of Business students.

4) StreetShares

StreetShares is a Reston, Virginia-based crowdfunding platform and community with a particular focus on veterans. Furthermore, unlike most platforms that focus on consumer loans, StreetShares lends to small and medium-sized businesses for operations and growth.

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