Signals Fintech

Peer-to-Peer, Human to Human: How P2P Lending Platforms Changed the Finance Industry

2005 became the year when the first online P2P lending platform saw the world, a harbinger of accessible finance as we know it now. Learn what’s behind the current popularity of these systems and who are the top market players in the U.S., the UK, and Canada.

What are peer-to-peer platforms, and how did they appear?

Peer-to-peer lending (P2P lending) platforms are alternatives to traditional financial institutions in lending and borrowing funds. You might have heard the word “crowdlending”—it stands for P2P lending too and means a marketplace where borrowers and lenders can interact without an intermediary, through a platform. 

Fifteen years ago, UK’s Zopa became the first online P2P lending platform. At the time, it was based on a pre-banking past rather than visions of the yet-to-come Fintech. The market looked at the new niche with suspicion. The Great Recession of 2008 changed it all, having sown distrust in traditional financial institutions. Now, the P2P lending boom sees companies mushrooming around the globe.

Why P2P lending wins over bank loans

  • Bank-independent loans are accessible to a broader range of potential loan applicants. 
  • For startups in the middle of fledging, attractive interest rates and direct interaction with lenders increase their chances of making it to the sweet spot in the market. 
  • Finally, the holistic experience a leading P2P platform provides often means an easier and faster process of getting a loan.

Why only customers have to get the best experience?

Get one yourself with excellent solution development!

Meet the team 

How do you give or receive a P2P loan?

If you’re an investor, you first deposit the funds you’re willing to invest on a P2P platform. Then the site will match you with potential borrowers.

If you’re a borrower, you start with creating a profile with the necessary financial information. Using this data, the platform will determine your risk category and a corresponding interest rate. After that, the system will show you the investors you’re most compatible with.

Top three P2P lending companies  

The three companies below have climbed to the top in their national markets and are reaping the best reviews on Fortunly.

goPeer (Canada)

Min. credit score: 600+

Interest rate: 8.00%–33.92%

On a mission to turn a borrower into an investor, goPeer is serving Canadians who want to make money work. A leader in the Canadian market, the company makes unsecured loans “accessible to everyone.” Quick application, competitive interest rates, and prepayments are alluring, but your credit score has to be fair to good.

What borrowers love about the service is that in case something unexpected cuts in, they get additional fifteen days to their loan term.

Happy Money (USA)

Formerly Payoff

Min. credit score: 640

Interest rate: 5.99%–24.99%

One of the most reputable P2P platforms in the U.S., Happy Money’s superpower is financial structuring. Also, it can help you improve your credit score. 

Offering lower interest rates and a bigger loan amount range than goPeer ($5,000 - $40,000 instead of $1,000 – $25,000), Happy Money needs you to have an inch-better credit score. Also, the platform doesn’t provide late or prepayment fees.

Funding Circle (UK)

Min. credit score: 660+

Interest rate: 11.29%–30.12%

Funding Circle provides a marketplace for institutional and individual lenders, specializing in loans for small business owners. The company offers expected benefits such as a quick and easy application process and competitive interest rates coupled with an impressive array of loan products. No prepayment penalties also sound great, but to be loan-eligible, you must spend at least two years in business and demonstrate steady money flow.

Looking for a skilled team to build or enhance a P2P platform?
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How to create a winning P2P platform

It takes building a state-of-the-art system, among other things, to get to the top. A reliable tech stack, seamless integrations, masterful management, and an experienced team to make it all work for you are the secret ingredients. Get in touch with us to discuss tailored, Fintech-specific solution development for your business.

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