4 leading Peer-to-Peer lending providers in the United States

By Pavithra R

Peer-to-Peer lending (P2P lending) is a form of direct lending of money between two entities without the involvement of an official financial institution participating as an intermediary. The transaction is conducted through a P2P lending platform and leverages technology to bring together borrowers who are underserved by traditional lending institutions with loan investors seeking attractive yield-generating investments. 

The advent of P2P lending service providers has been described as a tectonic shift in the financial services industry by experts. Each day more firms are entering into this space, and global regulators are scrambling to keep up the pace with the innovative offerings and business models being concocted by these firms. Here is a list of 4 promising U.S. companies in the Peer-to-Peer lending landscape.

Peerform

Founded in 2010 by Wall Street executives with extensive backgrounds in Finance and Technology, the Peerform marketplace lending platform is dedicated to helping dependable borrowers. The firm was built with two objectives at heart. First, to provide borrowers with a positive experience when obtaining personal loans with a process that is clear, fast and fair. And second to offer a well-vetted choice of investment opportunities that provide the chance to achieve favourable risk-adjusted returns.

Peerform is considered ideal for borrowers with credit scores greater than 600, but the maximum loan amount is restricted to $25000 with 3 or 5 years terms. Borrowers should also have a debt-to-income ratio under 40% in addition to a few other credit history requirements. Its lending platform does not incur the overhead costs associated with formal brick-and-mortar lending institutions. Peerform is an affiliate company of Versara Lending who acquired Peerform on November 7, 2016.

Upstart

Upstart is the leading AI lending platform designed to improve access to affordable credit while reducing the risk and costs of lending for bank partners. By leveraging Upstart’s AI platform, Upstart-powered banks can have higher approval rates and lower loss rates.

Traditional lenders use simple FICO-based models to decide who is approved for credit and at what interest rate. Upstart touts to go beyond the FICO score, using non-conventional variables at scale to provide superior loan performance and improve consumers’ access to credit. Personal loan borrowers who qualify may access $1,000 to $50,000 in funding. It offers 3 or 5-year loan terms with an APR range from 8.41% – 35.99%.

Prosper

Founded in 2005, Prosper is a Peer-to-Peer lending company that connects borrowers and investors. Its mission is to advance financial well-being. Its online lending platform connects people who want to borrow money with individuals and institutions that want to invest in consumer credit.

Borrowers can apply online for a fixed-rate, fixed-term loan between $2,000 and $40,000 with 3 or 5 years terms and charges no pre-payment penalties. Individuals and institutions can invest in loans and earn returns. Since its launch, the firm has facilitated more than $18 bn in loans to more than 1,050,000 people. Prosper Marketplace is backed by leading investors, including Sequoia Capital, Francisco Partners, Institutional Venture Partners, and Credit Suisse NEXT Fund.

StreetShares

Founded in 2014, StreetShares provides FinTech solutions for financial institutions and America’s Heroes. It takes a different spin on the Peer-to-Peer lending model, which connects borrowers with investors. The firm uses its “affinity-based lending” strategy to match borrowers with investors who share similar characteristics, such as military veterans.

The company started as a low-cost, digital lender to veteran-owned small businesses and has built SMB underwriting technology. The FinTech launched Lending-as-a-Service (LaaS) platform to allow community banks and credit unions to make small business loans with a 100% digital, omnichannel experience, with one-day underwriting.

Also read:  Lending Systems and Suppliers Report 2020