p2p (peer-to-peer) lending: what is it?

It’s been all over the news lately: P-2-P lending

what exactly is p2p lending?

p2p (peer-to-peer) lending, like p2p file-sharing is all about many users directly helping one user, without a middleman. In p2p lending, a borrower submits a loan application, and instead of one bank lending the money, a pool of investors (peers) fund the loan.

Here’s a visual representation of the peer lending system with lenders in green on the right, and borrowers in blue on the left (credit: lending club)

Media Coverage of P2P Lending

CBS Evening News piece on P2P Lending

Time Magazine: Hey, Buddy, Can You Spare $10,000
Lending Club CEO on CNBC – “Kind of like a dating service….involving money”

Is P2P Lending here to stay?

While the P2P lending industry still has a long way to go, it’s prospect are looking brighter each day. The industry is thriving in the current credit crises and traditional loan sources have tightened dramatically.

Take a look at Lending Club’s stats of funded loans since they launched last summer…it’s a good trend. Looks like P2P lending is here to stay.