P2P lending is a financial service for loans (completely different – consumer, business, mortgage and many others), in which the lender is not a bank or credit institution, but a large number of individuals or institutional investors. Meanwhile, the P2P lending service is a platform that unites lenders, on the one hand, and borrowers, on the other. The platform assumes no credit risks. All loans are made with the money of the lenders. The service carries out scoring of borrowers, provides services for the collection of arrears and convenient payment for loans granted. By its very nature, a banking organization is just an intermediary between those who invest and those who take a loan. As a rule, the margin for this kind of banking “intermediation” is quite high.
P2P is not just consumer loans
Due to the fact that the largest P2P platforms operate in the consumer lending market, most people associate P2P lending with consumer loans. However, over the past 3-5 years, new P2P lending niches have emerged in the world, which sometimes even surpass the markets in terms of their volumes:
1) Loans for business – usually from $50,000 to $900,000 for a period of several years.
2) Education loans refinancing is a huge separate industry in the United States.
3) Loans secured by commercial real estate or fix & flip operations (purchase, repair, and resale).
4) Mortgage loans secured by residential real estate
Market players
The lending market is so large that more and more new platforms are constantly emerging even in long-standing areas. For example, SENEXA has already firmly positioned itself as the world’s top player in consumer lending. SENEXA is the P2P Company from Hong Kong that, in a short period of time, has become the leader not only in the Chinese P2P lending market, but also entered the top 50 of the world’s best P2P companies. SENEXA has proven to be a reliable and stable financial instrument. In 2020, the company issued loans worth about $2 billion. There is a bar of 5.7 billion dollars in the nearest plans of the company for 2021.
