Daily Loan Tips Peer-to-Peer Lending

Welcome to the Daily Loan Tips Peer-to-Peer Lending page! Here consumers and small business owners can learn about peer-to-peer lending- how it works and who are the best candidates for such a form of financing.

What is Peer-to-Peer Lending?

As the name implies, peer-to-peer (or P2P) lending involves the exchange of funds between peers. These "peers" can be friends, family members, or other people looking for a good investment opportunity. Typically, these loans are relatively small- ranging from a few hundred dollars to about $25,000 dollars. The rates are also pretty decent compared to the rest of the market and borrowers can avoid the strict requirements of a bank or commercial loan.

There is downside, however, and that is in order to protect investors' money, only borrows with good credit can be approved.

Currently, there are different lending models, such as where lenders and borrowers don't know each other, where borrowers and lenders are friends or family, and even crowd funding models, where the "investors" commit small amounts of money and do not receive a financial return. There are also microlending sites for those looking for small business loans. In this case, lenders offer small amounts of money to help poor or disadvantaged small business owners get their operations off the ground and in return receive a small payback.