Peer-to-peer lending ("P2P") is a type of business loan where a large number of private investors lend to a business, usually through an online platform. The idea is that both the lenders and the borrowers get a better rate than they would through a bank.
P2P loans are slightly different to loans issued by banks or other lenders. Using P2P means that you’re borrowing from a collection of individuals, and the P2P lending company facilitates the arrangement. The application for loan is made to the P2P provider, who then bring then syndicate the loan among their underlying investors, where the money is actually borrowed from.
The process that the P2P provider goes through in processing the application will be similar to other lenders. Once the loan is made, again, the servicing of the loan will be similar to a loan from a bank.
P2P lenders are available for:
- Unsecured business loans;
- Secured business loans;
- Invoice finance;
- Asset finance;
- Commercial mortgages;
- Bridging loans; and
- Development finance.