Peer to Peer lending

Peer to Peer lending also known as P2P lending or debt crowdfunding. It is the method of raising funds through an online platform where borrowers put their funding needs. The platform assesses the company on basic minimum criteria like financial performance, track record and lists them on their platform. The interested lenders can offer to invest in small chunks as it may deem fit. 

Advantages of peer-to-peer lending: 

• Faster mode to raise funds.
• Lenient qualification criteria.
• Lower interest rates than banks.

Disadvantages of peer-to-peer lending: 

• Servicing fees charged by online platforms can increase the borrowing cost.
• Limited loan amount as the platforms has certain caps on fund raising for each company.
• May impact the credit rating, making it more challenging to obtain financing in the future.