Peer-to-peer lending (P2P) is the practice of lending money to business or individuals through online services that match burrowers with lenders. Since the peer-to-peer lending companies providing these services operate online, they usually operate with lower overhead and offer the service more cheaply than banks. Consequently, lenders earn higher returns compared to products offered by a traditional bank, while borrowers receive money at lower interest rates.
Peer-to-peer lending brings much-needed competition and choice to the banking industry, providing funds to creditworthy businesses and individuals. With peer-to-peer lending platforms, consumers and businesses can ‘depend on each other’ for borrowing and lending. According to Harriett Baldwin, the former UK Economic Secretary to the Treasury,“P2P platforms and fintech provide ideas, technology, ideas– making lives of people better and the markets more effective”.
If you want to move away from traditional lenders, where will you find the best deals? Here are some of the top lenders in fintech.
- SoFi (US)
SoFi is an online peer-to-peer loan platform that links recent graduates and students with institutional investors and alumni through school-specific student loan funds. The company has made great impacts by solving the issue of high interest rates on education/student loans. Investors for the platform include Lakestar, Institutional Venture Partners, Ron Suber and Marco Rossi.
- Avant (US)
By using latest statistical methods and technology which helps the firm meet unique financial needs of customers and also provide lower interest rates compared to competitors, Avant has made impacts in the personal lending space. Last year, Avant acquired ReadyForZero, a tool that creates online financial software for managing personal debt and credit. Chief investors for the company are Victory Park Capital, Jefferies & Company, RRE Ventures and DFJ Growth.
- Zopa ( UK )
Zopa is not only an industry pioneer but also the very first P2P lending platform to be launched in the world. Since its launch, the company has helped people lend over £1.54 billion to over 110,000 people. In the 2016 Moneywise Customer Awards, Zopa was voted ‘Most Trusted Personal Loan Provider’. Main investors for this company are Arrowgrass Capital, Bessemer Venture Partners, Orange Growth Capital (OGC) and Forward Partner.
- LendKey (US)
LendKey runs on the model of connecting credit unions and banks with borrowers via online channels. The firm offers an end-to-end lending platform, enabling financial institutions to make online lending programs and provide low-cost loans directly to consumers
- Funding Circle (US & UK)
Funding Circle matches businesses that want to borrow with investors. Founded in 2010, the company has helped fund more than £1.3 billion worth of loans to medium-sized enterprises based in the UK. The company has more than 50,000 investors from the UK. Funding Circle acquired three competitors: Zencap, Lending Network, and LeapPay. Major investors are BlackRock , Sands Capital Ventures, and Temasek Holdings.
- Common Bond (US)
Common Bond started its operations in 2012. The operations of the company bring along a strong focus on education refinancing and allows the loans disbursement at annual percentage rates(APRs) as low as 1.93%. The company has refinanced over $500 million in student loans since its launch.
- OnDeck (US)
Established in 2007, OnDeck has processed loans worth over $3 billion. The key investors in the company are Tiger Global Management, Industry Ventures, Google Ventures and Institutional Venture Partners (IVP).
- RateSetter (UK)
RateSetter is the2nd largest peer-to-peer lending platforms in the UK. Known for introducing the “provision fund” concept into P2P lending, the company originated more than £595 billion worth of customer loans in 2015. RateSetter has over 240,000 registered borrowers and 40,000 registered lenders. Since its launch in Australia in 2014, the company has raised over US$46 million in funding.
- MarketInvoice (UK)
Established in 2011, MarketInvoice is a disruptor of traditional bank finance that allows businesses to borrow against unpaid invoices. Launched 2011, the company allows businesses who have unpaid invoices to trade these with investors online. Investors advance money against these future payments for a fee. As of September 2015, the firm had facilitated more than £500 million in funding for high-growth businesses in the UK.
- i-lend (India)
i-lend is the first and leading online peer-to-peer platform in India to connect lenders who are ready to invest to borrowers who are in need of money . Launched as a Dipamkara Web Ventures Private Limited’s initiative, the company helps lenders get better returns and borrowers get loans at low rates from mutually beneficial transactions between them.