Unless you have been actively seeking a loan or financial help in the past few years, you may not have come across the term ‘peer to peer lending.’ However, after receiving quite a few years of global success, peer to peer funding has took the financial market by storm. There was once a time when banks were the only option for businesses, property investors and individuals – but now there is a safe and fast way to secure funding for any project.
What is Peer to Peer Lending (P2P)?
If you take out a loan from a bank, you are lending money from that financial institution. If you us apeer to peer scheme, you are lending money from people instead. That is the vital difference between peer to peer lending and traditional bank lending. The people involved in the transaction are unknown, and borrowers have to go through peer to peer lending companies such as Genie Lending.
Why is it Popular?
As banks in the past years have been cracking down on lending, many businesses simply don’t bother applying for loans anymore. Now there have a legitimate alternative in peer to peer funding, which actually offers many more benefits than a bank loan. Both lenders and borrowers stand to benefit from peer to peer lending, which is why it is an attractive solution for the market itself.
Here are some of the main advantages of peer to peer funding:
- You are much more likely to get accepted for credit
- You don’t have to go through a bank and deal with a difficult application
- Much faster access to the cash than with a bank application and approve process
- It offers more competitive rates, due to less infrastructure and administration
- It is protected by government legislation since 2014
Growth of P2P Lending
The peer to peer lending sector has recorded huge growth over the past five years – and with Brexit putting even more uncertainty on the economy and the high street banks, it looks set to continue growing. P2P is becoming a mainstream funding solution, with the market providing over £5bn in loans in the second quarter of 2016 alone, according to data from the peer to peer finance association. With so many individuals and businesses benefiting from this fresh way of lending, there is no need to despair at your declined bank loan letter.
If you’d like to find out more about peer to peer lending, speaking to our alternative finance experts.