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The Best Peer-to-Peer Lending Companies in 2020

Traditional funding sources like banks and credit unions have been dominating the lending industry for decades. In the mid-2000s, the frustration of borrowers who couldn’t qualify for financing from traditional sources escalated. That’s when online peer-to-peer lending platforms were born.

In contrast to the more traditional lending practices, P2P lending (or social lending) introduced the potential for lower interest rates for borrowers, greater returns for investors, and overall more flexible loan terms. All of these features helped this alternative way of lending gain popularity very quickly. Nowadays, there are numerous funding platforms that offer this type of service.

Read on to explore the world of social funding and find the best peer-to-peer lending company to fund your personal or business project.

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Best Peer-to-Peer Lending Companies - Top 3 Picks

Top 3 Picks

LendingClub

Joint loan option

Available nationwide

No prepayment penalties

Apply Now READ REVIEW

Upstart

Options for borrowers with fair credit

Loan amounts as low as $1,000

Convenient user dashboard

Apply Now READ REVIEW

Funding Circle

High borrowing amounts

Helpful customer support

Few additional fees

Apply Now READ REVIEW

4 Best Peer-to-Peer Lending Companies

1. LendingClub

Operating since 2006, LendingClub is a California-based P2P lending company. It offers auto refinancing, personal, and business loans that come with affordable interest rates, and relaxed borrower qualifications.READ REVIEW

Joint loan option

Available nationwide

No prepayment penalties

Apply Now

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Funding types offered:

Term loans

Loan amounts:

$1,000-$40,000 (consumer loans); $5,000-$500,000 (business loans)

Term length:

12 to 60 months

Speed of approval:

Up to four business days

Estimated APR:

9.77%-35.98%

Credit score requirement:

600+

Minimum years in business (business loans only):

One year

Minimum annual revenue:

$50,000

Payment terms:

Monthly installments

Collateral and guarantees:

No collateral for loans under $100,000

2. Upstart

Upstart is an online lending marketplace that helps borrowers seeking good rates on personal loans find suitable investors. Operating since 2012, this AI-powered P2P lending platform has already funded more than $500,000 loan applications. READ REVIEW

Options for borrowers with fair credit

Loan amounts as low as $1,000

Convenient user dashboard

Apply Now

show more


Funding types offered:

Term loans

Loan amounts:

$1,000-$50,000

Term length:

Three- and five- year repayment terms

Speed of approval:

One business day

Estimated APR:

8.69%-35.99%

Credit score requirement:

620+

Minimum years in business (business loans only):

N/A

Minimum annual revenue:

N/A

Payment terms:

Monthly installments

Collateral and guarantees:

None

3. Funding Circle

Funding Circle is a UK-based peer-to-peer lending marketplace that also offers funding options to owners of established small businesses located in the United States. The company provides a good range of loan types, an easy application process, and competitive interest rates.READ REVIEW

High borrowing amounts

Helpful customer support

Few additional fees

Apply Now

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Funding types offered:

SBA loans, business term loans, merchant cash advances, business lines of credit, working capital loans, and invoice factoring

Loan amounts:

$25,000-$500,000

Term length:

Six months to five years

Speed of approval:

One to five business days

Estimated APR:

12%-36%

Credit score requirement:

660+

Minimum years in business (business loans only):

At least nine months

Minimum annual revenue:

Not specified

Payment terms:

Monthly payments

Collateral and guarantees:

Business lien and personal guarantee

4. Prosper

Founded in 2005, Prosper is a pioneer in online peer-to-peer lending in the United States. Commonly used for home improvements, new vehicles, large purchases, medical expenses, and debt consolidation, this San Francisco-based lending marketplace has already helped more than a million borrowers connect with the most suitable lenders. READ REVIEW

Flexible payment dates

No prepayment fees

No collateral

Apply Now

show more


Funding types offered:

Term loans

Loan amounts:

$2,000-$40,000

Term length:

Three- and five-year terms

Speed of approval:

Up to five business days

Estimated APR:

7.95%-35.99%

Credit score requirement:

630+

Minimum years in business (business loans only):

N/A

Minimum annual revenue:

N/A

Payment terms:

Monthly payments

Collateral and guarantees:

None

How We Review Peer-to-Peer Lending Companies

If you’ve been denied a loan from a brick-and-mortar bank or conventional online lender, there are still options for you to explore. Peer-to-peer funding is offered both to businesses and individual applicants alike. It works differently from the financing you may have received or applied for in the past.

So, how do person to person loans work? P2P lending sites connect prospective borrowers directly with suitable lenders. Instead of borrowing from a financial institution, applicants receive funding from an individual or group of investors willing to loan them the money. By removing the middleman, P2P lending platforms are able to offer better rates and terms than traditional lenders.

However, given that no two lending marketplaces are the same, it’s important to compare multiple options before choosing the best provider for your needs. To help you find the most suitable option, we broke down our methodology into two large sections. The first part is devoted to loan characteristics, while the second focuses on borrower requirements.

Loan Characteristics

Peer-to-peer loan companies have only been around for less than two decades, however, the number of competing online lending marketplaces is already considerable. Although most of them work in the same basic way, providers can vary quite a bit in their funding types, loan amounts, interest rates, repayment terms, and target clientele.

To help you structure your search, we’ve scoured the online P2P marketplace and made a list of the most important feature to take into account while searching for the best peer to peer lending site:

Loan types offered

First of all, it’s important to mention that some P2P loan websites focus on providing business loans, while others only serve individual consumers. There are also online lending marketplaces where both businesses and individuals can find suitable funding options. However, before checking any other loan characteristics and eligibility requirements, make sure that you are in the right place.

As far as funding types go, term loans (or installment loans) are among the most common options for both personal and business loans. Many peer-to-peer lenders also provide personal and business lines of credit, merchant cash advances, invoice factoring, and working capital loans. Note that some providers specialize in a single financial product, while others provide a wide range of financing types.

Speed of Approval

One of the most valuable features of online lending marketplaces is that borrowers don’t have to wait for months to find out whether they’ve qualified for the loan they’ve applied for. Not only do the best peer-to-peer lending sites process and approve personal and business loan applications at record speeds, but most of them even make the funds available to the applicant in less than a few days.

Term Length

Term length or loan term is essentially the amount of time you have to repay the money that you have borrowed. Depending on the loan type and the provider’s repayment policies, repayment periods can be as long as a few decades or as short as a few months. In addition to term lengths, we also suggest you take repayment term into account. To avoid late payment fees, make sure that you’ll be able to keep up with your monthly, weekly, or even daily repayment schedule.

APR and Fees

When applying for a loan through a loan marketplace, you should also make sure that you are aware of all the peer-to-peer lending rates. Annual percentage rate (APR) is there to give you an estimate of how much a loan will set you back in one year. Keep in mind that APR represents much more than just the interest rate. In fact, it also includes all the additional costs that come with a loan – such as origination fees or closing costs. Note that some providers also charge non-sufficient funds, late payment, and prepayment fees.

Guarantees and Collateral

While most personal loans are unsecured, business funding usually requires personal guarantees and collateral in the form of business assets (equipment, inventory, vehicles). Owners of established businesses usually opt for secured loans as they come with lower interest rates, while those who are just starting out go for unsecured funding options.

Borrower Qualifications

When comparing the best peer-to-peer loans, it’s also important to look at multiple providers’ eligibility requirements. Most lending platforms display the qualification they require on their websites. This way, prospective borrowers who can’t qualify don’t have to waste their time filling out applications.

Given that taking out a loan is a serious responsibility, P2P platforms make sure to consider multiple factors to evaluate an applicant’s overall financial situation before they extend an offer. The most important factors include credit score rating, time in business for business applicants or years of credit history for individual applicants, and annual revenue.

Credit Score Rating

It’s not a secret that it’s much easier to get a loan with strong credit. However, most P2P lenders believe that a turbulent credit history shouldn’t prevent anyone from fulfilling their goals in the future. We made sure to look at lending marketplaces that look beyond credit score when evaluating loan applications and managed to find some of the best peer-to-peer lending for bad credit.

Time in Business

Another advantage of peer-to-peer commercial loan options is that time-in-business requirements aren’t as strict as those a bank or a credit union may impose. While traditional funding sources are only available to established businesses that have been operational for more than a decade, peer-to-peer business loans are attainable even to those that are still at the beginning.

As far as personal loans go, the lender may look at the length and steadiness of your credit history. The good news is that there are companies that accept applications even from those consumers who are just starting to build credit.

Annual Revenue

If you’ve ever shopped around for business or personal loans, you’ll probably know that even the best loan companies won’t extend you an offer unless you prove that you already have a good income. Fortunately for prospective borrowers whose financial situation isn’t ideal, the best peer-to-peer lending organizations have options for young applicants and fledgling entrepreneurs.

4 Best P2P Lending Sites for 2020:

Launched in 2006, LendingClub has quickly established itself as an industry leader in P2P lending. Based in California, the company first started providing auto refinancing and consumer loans, but has since grown to also offer small business financing.

Thanks to its highly automated system that gathers and processes relevant financial data, LendingClub has managed to connect hundreds of thousands of borrowers with suitable investors and provide more than $28 billion in loans since its starting date.

Reasons to Choose LendingClub

LendingClub has some of the market’s loosest eligibility requirements, no matter which funding type you decide to apply for. For example, those looking for business financing will need to have been in business for a year with a minimum annual revenue of $50,000, and a personal credit score of at least 600.

Another good thing about this peer-to-peer funding provider is that it doesn’t make its clients go through a complicated application procedure. If you apply for a personal loan between $1,000 and $40,000 or a business loan of $5,000 to $500,000, you’ll receive your quote in less than five minutes.

Note that LendingClub will perform a soft credit check to assess your creditworthiness, however, this won’t affect your credit score.

Loan terms range from twelve to sixty months and, once you get approved for a loan through this peer-to-peer lending site, there are almost no restrictions to how you can use the funding.

More reasons to choose LendingClub include the option to request a loan with a co-applicant, competitive loan rates, automatic monthly payments, lack of prepayment penalties, and excellent customer support.

Reasons to Look Elsewhere

LendingClub is a popular lending marketplace that offers good deals on both personal and business loans, however, its funding options come with a few downsides. Although this peer-to-peer business lending site’s borrower requirements aren’t very strict, there are still no financing options for startups and companies that have been operational for less than a year.

Consumer loans are capped at $40,000, so if you need to borrow more, you’ll have to explore other options.

It’s also important to keep in mind that LendingClub charges origination fees (3.49%-7.99% of the total loan amount for business loans and 2%-6% for personal loans) and late fees.

The Bottom Line

LendingClub is a good option for personal and business borrowers with fair and good credit, relatively long credit histories and high incomes borrowers.

Given that its investors offer funding opportunities for loan purposes traditional lenders wouldn’t even consider, LendingClub is a great choice if you need a loan to pay for an excotic vacation, a wedding, or some home improvement. As one of the best peer-to-peer lending sites, LendingClub also offers debt consolidation and credit card refinancing options.

Reasons to Apply

Joint loan option

Available nationwide

No prepayment penalties

Upstart is a peer-to-peer lending marketplace that connects prospective borrowers and investors to originate personal loans. The company provides fixed-rate loans of up to $50,000 to applicants with fair to excellent credit scores.

Since its starting date in 2012, Upstart has already managed to help more than 500,000 customers get the funding they need. Thanks to its AI-powered platform, more than two-thirds of all decisions are automated which allow the company to process and fund loan applications in less than 24 hours.

Reasons to Choose Upstart

One of the best things about Upstart’s P2P loans is that you can use them for almost anything. Common loan purposes include home improvements, moving, travel, high education, medical bills, large purchases, debt consolidation, and business startup or expansion.

This loan marketplace takes great pride in its underwriting model, which uses non-traditional data (such as residence, joh history, and the level of education) and artificial intelligence to evaluate prospective borrowers.

Unlike traditional lenders that focus almost exclusively on an applicant’s credit report, income, assets, and debts, this peer-to-peer financing provider helps younger borrowers and those with thin credit histories qualify for funding they need.

With a minimum loan of $1,000, Upstart offers one of the market’s lowest starting amounts. However, note that applicants from the following states can only qualify for higher minimums: Massachusetts ($7,000), Ohio ($6,000), New Mexico ($5,100), and Georgia ($3,100).

Another great thing about this provider is that it offers an easy-to-use credit dashboard which allows the borrowers to modify payment dates and monitor the impact of loan repayments.

Reasons to Look Elsewhere

Upstart’s person to person lending also comes with a few potential drawbacks. First of all, if you are a resident of Iowa or West Virginia, you won’t be able to apply for funding through this lending marketplace. Also, if you don’t have proof of regular income, a Social Security number, and a US bank account, you won’t be eligible for a loan through Upstart.

Also note that Upstart loans come with origination fees of up to 8%, co-signers are not accepted, and there is no in-person support as the provider doesn’t have any branches.

The Bottom Line

If you have a short credit history and a low FICO score, but a strong earning potential we suggest you consider applying for funding through Upstart. As one of the best peer-to-peer lending sites for bad credit, this provider considers much more than just credit scores when assessing loan applications.

Thanks to this approach, you can get the funding you need without having to fix your credit. However, keep in mind that Upstart’s offer may not come with the most affordable rates or the most competitive terms.

Reasons to Apply

Options for borrowers with fair credit

Loan amounts as low as $1,000

Convenient user dashboard

Founded in 2010 in the UK, Funding Circle has quickly expanded to offer its services to clients located in the United States, Germany, and the Netherlands. As one of the best peer-to-peer lending companies, the provider connects both institutional and individual lenders with small-business owners in need of a quick capital boost.

Funding Circle is best known for its wide range of loan products, affordable rates, and simple application process.

Reasons to Choose Funding Circle

If you are looking to expand your company or refinance a costly debt as fast as possible, have a solid credit score, and run an established business, applying for a loan through Funding Circle may be an excellent option.

In comparison with other online loan organizations, this peer-to-peer loan provider offers quite competitive terms. Annual percentage rates start at 12% and include an origination fee that ranges between 3.49% and 6.99%. It’s also important to mention that Funding Circle doesn’t charge prepayment penalties, so borrowers can repay loans early and save on interest costs.

Another great thing about Funding Circle is that its investors provide a wide variety of loan options – from business term loans, to merchant cash advances, business lines of credit, working capital loans, invoice factoring, and SBA loans. With most loan options, the funding is available in just a few business days.

Reasons to Look Elsewhere

Funding Circle’s P2P business loans also have a few disadvantages. Given that the company requires at least two years of in-business time and a steady cash flow, its loan options aren’t available to startups. Even though there isn’t a specific minimum annual or monthly revenue requirement, other criteria may be hard to meet for businesses that are just starting out.

When applying for financing via Funding Circle, you should also keep in mind that this alternative lending site requires a personal guarantee and a lien on your business assets, which may include inventory, equipment, and vehicles.

Applying for small personal loans via Funding Circle means a much faster process than the one you’d need to go through with a traditional bank. However, in comparison with other online lenders, this provider’s funding times are somewhat slow.

The Bottom Line

Given its affordable rates and fees, wide variety of loan types, and relatively fast funding times, Funding Circle is one of the best P2P sites for established small business owners who can’t qualify for traditional funding sources.

Still, keep in mind that this lending marketplace has stricter eligibility criteria than its online competitors, and it requires a lien on business assets along with a personal guarantee.

Reasons to Apply

High borrowing amounts

Helpful customer support

Few additional fees

Launched in 2005, Prosper introduced peer-to-peer lending to the US market. Since its starting date, the company has managed to serve more than one million borrowers and facilitate over $17 billion in loans. Thanks to its long list of peer-to-peer lenders, prosper is able to provide competitive rates and fast funding time on personal loans with three- or five-year repayment terms.

Reasons to Choose Prosper

As one of the best personal loan providers, Prosper lets its customers use the funding for a variety of purposes such as home improvement, debt consolidation, purchasing a car or other vehicle, engagement ring financing, and small business financing. Through this lending marketplace, you can also take out a green loan or a military loan.

It’s the lightning-fast application process that makes Prosper really stand out from the competition. To join the platform as a prospective borrower, all you have to do is fill out a quick questionnaire.

Prosper also has relatively loose eligibility requirements – to qualify for peer-to-peer loans from this lending marketplace, you’ll need to be at least 18 years old and a US citizen or permanent resident. You’ll also need to have a minimum of two years of credit history, a credit score of at least 630, and have a debt-to-income ratio that exceeds 50%.

Other advantages include flexible payment dates, no prepayment penalties, and the option to request a loan with a co-applicant.

Reasons to Look Elsewhere

Although Prosper is one of the best peer-to-peer lending platforms when it comes to fast applications, relaxed borrower requirements, and high loan amounts without collateral, there are still a few downsides to it. Monthly payments are the only repayment option, applicants with credit scores below 630 can’t qualify, and the costs can add up.

Before proceeding with a loan application through Prosper, we suggest you make sure that you are fully aware of all the fees the platform may charge you. In addition to the interest rates, there’s also a 2.4%-5% origination fee, a $15 insufficient funds fee, and a late fee that can either be 5% of the unpaid amount or $15 (whichever is greater).

The Bottom Line

The industry of peer-to-peer investing and borrowing is highly competitive and ever-evolving. Even the players that have been a part of it since the very beginning have to step up to stay among the market’s favorites. Prosper may have started as a simple lending marketplace, but the platform has evolved to offer an excellent service both to borrowers and investors.

If you are shopping for a term loan to consolidate an existing debt, renovate your home, or buy a new car, you should give Prosper a second look.

Reasons to Apply

Flexible payment dates

No prepayment fees

No collateral

FAQ

Can you make money with peer-to-peer lending?

This is the question many investors ask themselves. The simple answer is – yes, you can make money through P2P lending. Alternative investments such as peer-to-peer lending can be a great way to diversify your portfolio and get solid returns.

Getting started with P2P lending investments is easy. All you have to do is choose an online lending marketplace, open an account, deposit funds, and begin reviewing prospective borrower’s applications.

Is peer-to-peer lending safe?

One of the best things about peer-to-peer lending is that, unlike traditional lending practices, it offers potential for lower interest rates for borrowers and greater returns for investors. Both of these aspects have helped this ale and, both have helped alternative investment websites gain popularity in recent years.

While regulations addressing consumer and investor concerns about P2P have gone a long way, it’s still crucial to minimize the risks associated with this type of investing by diversifying your investment mix.

Can I get a peer-to-peer loan with bad credit?

Yes, you can. Peer-to-peer or social lending comes with many upsides, both for borrowers and investors. Probably the biggest advantage of this alternative type of funding is that online lending marketplaces have much looser borrower requirements than those of a bank or another more traditional source of financing.

In other words, when deciding whether to fund an application, peer-to-peer lending platforms take a look at the prospective borrower’s overall financial situation (which may even include level of education and earning potential) rather than just focusing on credit score.

Which peer-to-peer lending is the best?

While evaluating top competitors among P2P lenders, we made sure to compare loan amounts different providers offer, along with their loan terms, interest rates and additional fees, repayment terms, and borrower requirements. Using this method, we narrowed our list down to four of the best peer-to-peer lending platforms:

  • LendingClub: Best for fair credit applicants
  • Upstart: Best for personal loans
  • Funding Circle: Best for small business funding solutions
  • Prosper: Best for borrowers with established credit history