Top Peer-To-Peer Lending Platforms for Online Loans
Across the pond…
If you have ever approached a conventional bank for obtaining a loan to buy a property or raise finance for your business, you would have understood that it can be an inflexible and long drawn out process. After all that, your application may even be denied. It’s these challenges trying to acquire funds from conventional banks that have led to the rise of the peer-to-peer (P2P) industry. In just approximately ten years, this industry has recorded huge momentum and developed into what has become a feasible alternative for acquiring funds – alternative finance.
This industry is indeed proving to be a solid competitor to the traditional banking framework.
The P2P lending marketplace is the meeting space for borrowers and lenders to work together. The traditional banking protocols cannot be used here. These online platforms do not utilise their own assets for loaning purposes but help credit seekers and money lenders to link with each other.
This lending framework has made it simple for the motivated collective (lenders and borrowers) to help and lend/borrower funds. You do not need to go to a bank in person, apply for a loan and then wait for the approval to come through. Aside from the fact that you can acquire a loan promptly, a portion of the perspectives that have made the P2P lending framework a tremendous success is because of the simplified application process, competitive and fair interest rates on offer to all members, and the accelerated decision making process.
A PriceWaterhouseCoopers (PWC) report stated that while the P2P business is in its infancy, loans to the tune of $5.5 billion have been disbursed by the P2P websites in the U.S. in 2014 alone. According to PWC, P2P lending could be over $150 billion by 2025.
The increasing popularity of P2P lending sites and rivalry among them has prompted the accessibility of varied and sometimes boutique style and innovative products. Generally, the essential guidelines and operational terms and conditions within this sector are the same, but the area of focus, qualification criteria, loan rates, tenures, and amounts may differ from one P2P lender to another. While some aim on offering personal loans, others offer student loans, professionals loans, and support business needs.
Here are a handful of peer-to-peer lending sites that you may want to research and consider if you are looking to participate as a lender. They are U.S. based firms showing a little diversification of niche-based products and services and demonstrates the wider profile of a borrower and their requirements. You can find and search for plenty of U.K. examples too.
Note: This is not a personal recommendation (information purpose only) and that all readers should do they own due diligence and ask questions. Remember, your capital maybe at risk. Values are quoted as $US Dollars for consistency as most are U.S. based firms as illustrated here. Please check the UK sites where applicable for the latest data and up to date values in GBP.
1. Funding Circle
Funding Circle concentrates primarily on small business lending in the U.S., the U.K., Germany, and the Netherlands. The website’s co-founders began the platform in the U.S. to offer funds to small businesses. They established the platform because of their own experience with the traditional banking system which failed to help small businesses. Their loan application was denied 96 times. The originators at that point decided they would desert the customary banking system and created a viable borrowing alternative for owners of small businesses.
Funding Circle has disbursed over $4 billion in loans to more than 32,000 small businesses all over the world. Alongside the development in terms of the number of businesses borrowing from the company, Funding Circle has seen a significant growth in the number of investors too. Indeed, Funding Circle’s investor base includes banks, other financial institutions, and over 40,000 retail financial specialists. Even the U.K. government is an investor.
As an entrepreneur, you can obtain any sum beginning from $25,000 up to a maximum of $500,000. The maximum tenure permitted is five years and loans can be availed for business purposes like expansion, hiring more individuals, purchasing new equipment, or launching innovative campaigns.
2. Lending Club
In 2007, Renaud Laplanche founded Lending Club Corporation the organisation has turned into a key player in the P2P lending space throughout the years. As a principal online lending marketplace, the company has dispensed loans to the tune of $11,167,217,348 as of mid-2015. Lending Club offers loans for meeting various objectives such as personal needs which include debt consolidation, credit card payment, home improvement; starting or supporting businesses, patients’ needs such as dental treatment, fertility treatment, hair treatment, and bariatric surgery; and even for making investments.
The least amount that can be borrowed for meeting personal needs is $1,000 and $15,000 for businesses. The biggest amount that they lend to individuals is $35,000 and $300,000 to businesses. This is the first publicly traded online P2P lending marketplace in the U.S. The company finished its initial public offering (IPO) on NYSE successfully in December 2014 and has a market capitalization of nearly $5.14 billion.
Upstart was founded in 2012 by ex-Googlers Dave Giround, Anna M. Counselman, and Paul Gu. As stated by them, loan seekers are more than their credit score. On this site, rates are settled on the premise of the credit seeker’s education and experience. For deciding loan qualification, the online lender takes into consideration various factors other than the FICO score. These include the school you graduated from, your academic performance, your scholastic record, and your work history.
The least amount you can obtain is $3,000 and the biggest is $35,000. The annual percentage rate or APR starts at 4.7%. They provide loans for just about everything including repayment of a student loan, the fee to be paid for attending a boot camp, purchasing a car, paying medical bills, or running a business. Upstart is more prevalent among people in their 20’s and 30’s since they cannot avail a loan from a conventional bank because they do not have a credit history.
4. CircleBack Lending
Credits are offered by CircleBack Lending for tenures of three or five years and sums starting from $3,001 to $35,000. The APR starts from 6.63% to 36%. The actual rate at which a loan is given to a borrower relies on his/her credit usage, score and history; loan amount; and tenure. The platform is most appropriate for borrowers with a decent record of loan repayment that needs higher amounts than the average loan sum.
Individual advances can be availed from CircleBack Lending for a number of purposes such as credit card refinancing, home renovation, debt consolidation, medical expenses, purchasing automobiles, weddings, buying engagement rings, supporting a small business, relocation, vacation travel, and purchasing motorcycles or boats. Personal loans are extended to small business owners rather than the business itself.
5. Prosper Marketplace
The P2P marketplace was created for the very first time in the S.S. by Prosper Marketplace, Inc. The company has recorded huge development since its inauguration and presently has a client base of over 250,000. Prosper has disbursed loans worth more than $4 billion so far. It provides loans to individuals for addressing various needs such as debt consolidation, home renovation, and engagement ring financing, among others.
The company also provides short-term loans, bridge loans, vehicle loans, baby and adoption loans, small business loans, special occasion loans, military loans, and green loans. People can obtain amounts ranging from $2,000 to $35,000 for either three or five years. Interest rates or annual percentage rates (APR) start from 5.99% to 36%. Prosper also allows lenders to invest as much as $25 per note. These ventures yield competitive returns and even a monthly cash flow alternative.
Peerform was established by Wall Street administrators in 2010. This famous lending marketplace provides 3-year loans starting from $1,000 to $25,000 with an APR of 7.12% to 29.99%. Peerform does not consider the FICO score alone in order to gauge the risk of lending. The company’s Loan Analyser performs the assessment on a case to case basis. As indicated by Peerform, the Loan Analyser was created in consultation with leading economists and it follows a distinct method for deciding the creditworthiness of every borrower. Subsequently, even individuals whose credit scores are in the range of 600 may be able to secure loans. The purposes for which Peerform offers loans include debt consolidation, installation, wedding, home enhancement, moving and relocation, medical payments, and car purchase, among others.
SoFi was founded in 2011 and the company has earned an overwhelming popularity over the years. SoFi concentrates on supporting young professionals in advancing their success through student loan refinancing, mortgage financing, mortgage refinancing, and personal loans. As of now, SoFi has dispensed over $4 billion in loans. The company adheres to slightly stringent eligibility criteria when assessing borrowers. They investigate viewpoints such as present and potential employability, financial management, financial history, school credentials, and job experience.
SoFi’s provides loans ranging from $5,000 and to $100,000, which is greater compared to the standard amount of $35,000 offered by many other peer-to-peer lending companies. Funding is provided for needs such as student loan refinancing, mortgage financing, mortgage refinancing, parent loans, parent plus refinancing, MBA loans, and personal loans.
The online P2P lending marketplace has opened up to help more ‘unusual types‘ of borrowers who find it hard to acquire loans from traditional banks. The greatest convenience for borrowers is the ease of access to loans at competitive rates and generally a smoother and quicker process.
The beauty here is about the reason and types of potential borrowers here that require funding beyond the conventional lending requirements that banks continually fail to understand and support. The above examples demonstrates this as their motivation for lending has come from personal frustrations leading to creating a new sector like this to provide a ‘human’ and real-world connection between lenders and borrowers of similar synergies.
Yes, many experts caution the level of due diligence and checks to facilitate a market within this space and you should carefully ask the right questions before jumping in. Let’s be clear here though, the bank’s recent track record leaves a lot to be desired too and this has been bourne out of the lack of trust and frustration in the first place.