Peer to peer lending (P2P) to all intents and purposes is a fairly new form of alternative finance, with the purpose being in offering a new route to finance so as to enable many UK businesses to get much-needed access to finance.
Such funding via peer to peer lending is made available via online applications whereby the access to finance which a business seeks has the ability to be matched with suitable investors and savers who are looking to invest their own funds for the longer term, and for a good return.
Peer to peer lending investors and savers do not seek any equity of the business which they may choose to invest in. They purely wish to obtain a better monetary percentage return on their investment than they otherwise would by leaving their money in the bank or building society
Do you wish to access peer to peer lending?
Such peer to peer lending is not available through traditional routes to finance such as banks or building societies – which is where the term “peer to peer lending” comes from.
By cutting out the ‘middleman’ via the peer to peer lending models such as the banks or building societies, borrowers will benefit from lower interest rates on their business loans, than they otherwise would from a traditional loan provider.
Business borrowers who seek access to finance via the peer to peer lending model, are approved by being credit checked and subsequently rated according to the risk which they may pose.
Peer to peer lending should not be confused with crowdfunding, the difference here being that when directly related to a business raising funding via crowdfunding involves investment(s) for an equity stake in the business.
P2P lending is a direct alternative to a bank or building society loan and in a majority of cases can often be arranged more quickly.