The rise of peer-to-peer lending
Traditional banks make money by issuing loans to borrowers. Now ordinary people have the opportunity to do the same. Currently, one of the fastest-growing industries is peer-to-peer lending, which involves offering personal and business loans to strangers over the Internet at agreed interest rates and repayment terms.
The peer-to-peer lending space is currently exploding globally at an exponential growth rate with over $1 billion in venture capital poured into various peer-to-peer start-ups.
Lending Club in the USA is the largest of them all. Founded in 2007, and has issued more than $4 billion in personal loans since 2007. In August, the company filed for an IPO with a fundraising target of $692 million, valuing the company at around $4 billion.
Last week (1st December 2014), AvantCredit, an online personal loan lender based in Chicago, secured a $225 million Series D from a consortium of investors, while OnDeck Capital (USA), also filed for an IPO in November.
This shift to a peer-to-peer (P2P) lending strategy is not unique to the USA. In Britain for example, some peer-to-peer (P2P) networks are offering “mini-bonds” by lumping together lots of small, unsecured loans from retail investors such as superannuation funds, and lending them to established businesses in the form of debt funding.
The major UK P2P networks providing these investment options and small business loans include, Funding Circle, Zopa and RebuildingSociety. Funding Circle alone has facilitated over GBP400+ million in business loans in the UK over the four years since establishment
Here in Australia businesses are beginning to embrace non-bank peer-to-peer lending services and this will present a new and real threat to traditional banks’ business models.
Peer-to-peer (P2P) lending acts as an affordable and flexible alternative to expensive bank loans, where businesses can borrow funds and negotiate business loans directly with willing lenders at mutually acceptable rates and terms. Consequently, peer-to-peer loan matching is emerging as a viable and reliable source for business loans in Australia.
funding4business has recognised this shift and is the first and only peer-to-peer (P2P) marketplace in Australia, specifically established for providing business loans, and connecting Aussie business borrowers to Aussie lenders for mutual benefit.
The funding4business marketplace is open and transparent, offers potentially lower interest rates, faster settlement, online registration and algorithmic loan matching as the norm. P2P lending is a win/win situation for Aussie borrowers and Aussie lenders.
funding4business was launched in Australia on 1st August 2014