Peer-To-Peer Lending A Brief Synopsis In our professional life there always comes a time when we need some money either for some emergency or in business circles it is known as “Cash Rolling”. What we all do is make a Project Report ready and run from one financial institution to the other. Have you ever borrowed some money from your friend or your brother or any other relative? If yes, there you are. You have followed a very simple approach “Peer-To-Peer lending”, also termed as P2P Lending, and you were not even aware of it. This is a very simple, assured stream of a financial business deal where the two persons, the Lender and the Borrower, come face to face and complete the deal. What sets apart the Peer-To-Peer Lending from other financial transactions is that it is used purely with a profit making motive benefitting both the peers. Though peer to peer lending concept is there since time immemorial, It made its mark spectacularly during the economic downtime, especially termed as “Recession” in the year 2007 – 2010 when the other financial organizations were also having a tough time. Starting with concept of borrowing or lending through friends and relatives, Peer-To-Peer Lending has now become a multi-million dollar industry, making it easier for consumers to obtain personal unsecured loans without going to a bank. ZOPA, United Kingdom, formed in Feb 2005, was the pioneer Peer-To-Peer Lending Company followed by Prosper, United States, formed exactly after 1 year in Feb 2006 Varied Combinations Any finance organization like a bank has its own specific set of schemes which considers the factors or rather the probability of returns on investment. Giving to a Peer known personally is direct Lending whereas giving to peer who is known through some other individual is termed Indirect Lending. Other variations are Acquaintance with any of the Peer and Other Loan related Services. Parameters of Legality What Peer-To-Peer Lending Companies do is borrow money from an individual lender and then lend it to an individual borrower. There arises a question, with respect to the financial security, who is the rightful Owner of the Loan. Such kind of a financial deal is technically termed as “Sale of Security”. This transaction will be considered illegal by the governing authorities. Hence it is mandatory to have a Broker-Dealer License along with the Registered Peer – To – Peer Investment Contract for the similar kind of deal to be treated as Legal. There are different Regulatory Authorities in different countries like the Securities and Exchange Commission in the United States and the Financial Services Authority in the United Kingdom from whom the Lending Companies have to avail the License and the Contract Registration. The Pros & Cons The first and foremost advantage of peer-to-peer lending is to the borrowers who get the funds at a cheaper interest rates then the other financial institutions. The lenders too are at an advantage as they get a better Return on Investment compared to a Bank’s Savings Account or other schemes. There are no other Professional Charges or Procedures, which cause much of the delay, making it faster for the lender to transfer the funds and also the borrower to start rolling their money. With this we can conclude that if the both the peers know each other very well and are trustworthy then the Peer-To-Peer Lending is the best loan scheme for both the businesses.

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dmarks Covering the financial markets to help borrowers find the best deals on signature loans and payday advance loans at the lowest possible rates

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