The Peer-to-peer solution

Peer-to-peer lending is a form of lending that takes place directly between individuals or companies without the involvement of traditional financial institutions. It uses online platforms that connect borrowers and lenders, enabling them to engage in loan transactions.

Individuals or small businesses seeking a loan apply on a P2P lending platform by providing information about the loan purpose, desired loan amount, and other details. On its side the platform conducts credit assessments or assign credit scores to borrowers to evaluate their creditworthiness. And finally, individuals or investors interested in lending money, register on the P2P lending platform, creating an account and depositing funds they intend to lend. Investors can choose to fund specific loans based on their risk appetite and investment preferences.

It allows borrowers to access financing that may be more flexible and potentially at lower interest rates compared to traditional lenders. And investors could earn returns by lending directly to borrowers and diversifying their investment portfolios. Peer to peer loans provide access to credit while boosting investors’ savings.

Banks are often cautious when it comes to financing new companies or hiring new staff. It’s hard to get credit without guarantees. Crowdlending is an effective solution. More and more investors are convinced to use this process for a large variety of reasons. Some of them decide to invest in a project built on their territory, because it will benefit their business sector, or because the borrower’s profile is particularly attractive.

It’s an innovative and effective SME financing tool that has emerged with the development of Fintech. In just a short space of time, the P2P lending market has grown from an embryonic solution to one of the most popular forms of financing. By 2023, the global alternative finance market could even reach the 500 billion dollars.

Given the explosion in interest rates, the reluctance of banks and the high level of individuals savings since covid, this system appears to be the ideal solution.