P2P Lending

P2P Lending is a novel way for lending and borrowing money online, directly from person to person. One person lends and one person borrows, and, in the middle of the transaction, we have what is called a P2P lending provider. Though, in actuality, as with many of the providers of personal loans, such as Prosper.com, that have been covered in the news recently, such a personal loan is often structured between a number of people. This is referred to as a “people to people” scenario. Such arrangements have existed historically for a “long time” – as the roots of the “collective capital” concept are essentially infinite, in both directions of time.

Peer to Peer Lending

Peer to Peer Lending has also been in the news recently many times, as well, and is also a new way of lending (and borrowing) online, though, it is not strictly considered to be “person to person lending” (see here) either. Peer to peer lending transactions, on the other hand, are arranged in such a way that both the lenders and borrowers can be either individuals or corporate entities (both “peers”, within the networked marketplace).

Peer to Peer Loans

(P2P Loans)

In either case above, whether through a one-to-many lending model or through the individual to individual lending model, the resulting loan is known as a peer to peer loan. These loans are also called simply P2P loans, and function mostly in the same way as any other type of similar financial promissory instrument.

See also: Social Loans