Peer to Peer Lending

Peer to peer lending is a new means by which to lend and borrow without involving a traditional banking institution. When one person borrows, and one (or many) person lend, with no bank in the middle of the transaction, we have what is called a peer to peer lending. A number of P2P providers have been lately mentioned in the news, including Prosper, LendingClub, and Zopa.

P2P Lending

P2P Lending, which has undergone its own recent surge in news coverage, as well, is also a new way to both borrow and invest (lend out funds), though, it is not considered, rigorously (though it is clearly a variation), to be a “person to person lending” transaction (look here). P2P lending arrangements, are structured in a way where both the borrowing individual and lending individual(s) are/can be either individual people or individual corporate entities (”peers”, though perhaps not equivalent peers).

P2P (Peer to Peer) Loans

In both of the previously mentioned lending & loan situations, the resulting loan (promissory note) is known as a peer to peer loan. This type of instrument is referred to as a “P2P Loan”, and function similarly to any other traditional financial debt instrument which people might employ.