Understanding the fees and unique features on each p2p lending platform will help you take full advantage of the boom in peer to peer lending sites for online loans.
Are you locked out of bank loans because of bad credit? Are the only loans you can get at interest rates so high you can’t afford the payments?
Yep, I was there about five years ago after destroying my credit score. I couldn’t get a loan for a stick of gum!
But I learned how to use peer to peer lending to get out from the payday loan nightmare and boost my credit score. I’ve now got a score of almost 800 FICO and can get any loan I want at those ‘advertised’ interest rates.
It’s never been easier to get a peer to peer loan, even on bad credit. I’ve updated the post with new peer to peer lending sites and new ways to get a peer loan. I’ve also provided a quick classification at the end of the post to help you find the best peer lending site for personal loans, business, student loans, bad credit loans and other uses.
How can you actually use this?
Below is a list of 22 peer to peer lending and online loans sites that offer personal loans, bad credit loans, business loans and debt consolidation loans. Whether you are looking for a short-term loan, a small business loan to get off the ground or a loan on bad credit, you will find some good options at the sites below.
Finding the right p2p lending site for your needs will help you get a cheaper loan. It will help you save on fees and pay off your loan without falling back into the bad credit trap.
Before applying for a peer to peer loan, make sure you can keep up with the payments. Peer to peer loans on bad credit can get expensive if you don’t budget your money and find yourself defaulting on the debt.
Peer to Peer Lending Sites I’ve Used
I’ve used four p2p lending sites in the past, two for bad credit loans and two for improving my credit. The loan application process works about the same on all but there are some unique features on a few that you don’t want to miss.
While it’s not a peer to peer network in itself, Personalloans.com deserves a mention on its network referral system. It’s kind of like LendingTree for personal loans, matching borrowers up with a lender. You fill out your loan request just as you would any of the other sites and lenders compete for your loan.
With the lending network idea, you’ll generally get more options like how long to repay your loan and different interest rates.
The site is a strong contender in its ability to provide you with different options including traditional bank loans with lower rates as well as personal loans from peer lenders. Loans are available to bad credit borrowers as well with credit scores as low as 580 accepted. Fees and rates will depend on the lender you select.
Click to make lenders compete for Personal Loans up to $35,000
Lending Club grabbed the peer lending spotlight last year when it was the first p2p platform to sell shares publicly. The platform is one of only two that allows non-accredited investors to make marketplace loans. The site offers personal and business loans as well as opportunities for medical procedures, educational loans, and even for people with poor credit.
Lending Club is quickly separating itself from the rest of the peer to peer lending space on its size and ability to provide loans at lower rates.
Loans are made on fixed rates for up to five years with no prepayment penalties. Borrowers are charged a $15 fee if a payment is rejected and a 5% late payment fee, both standard among peer lending platforms. Interest rates range from 5.99% for good credit borrowers to 32.99% for loans on bad credit.
Lending Club investors have booked solid returns of between 4.9% for the safest loans to 8.3% for loans in the riskiest categories. Interest rates have come down over the last few years, along with rates across all debt, but are still well above the alternative in corporate or government bonds.
Rates and Fees:
Each personal loan offer given has an assigned grade with corresponding interest rate, origination fee and annual percentage rate (APR). Actual monthly payments depend on the APR, the loan amount and the term selected.
- Unsuccessful Payment Fee – $15 charged if an automatic payment is rejected.
- Late Payment Fee – The amount is the greater of 5.00% of the unpaid installment amount, or $15, charged after the 15-day payment grace period per month.
- Check Processing Fee – $15 charged for loan payments made via checks
One of the biggest complaints I hear about the p2p lending sites is the strict credit score requirement. You’ll need a credit score of around 640 or higher to get a loan on many of the peer to peer sites. Avant has grown its business on servicing those with less than perfect credit scores and can accept borrowers with credit scores of 580, making it a great tool for bad credit loans.
More than $1 billion has been borrowed on the site, making it one of the larger p2p networks.
Avant charges no origination fees on personal loans though rates generally start a little higher, around 9% for personal loans. Rates on lower credit score loans are more comparable with the other peer lenders and may be the only option for some borrowers.
Upstart claims to use a unique underwriting model to base peer to peer lending rates on more than just your credit score including work history, school attended and academic performance. The minimum credit score for loans is 640 and borrowers are not able to apply if they have a bankruptcy or loan in collection currently. This may make it harder to get bad credit peer loans but may match rates better for other borrowers.
Investors must have a U.S. bank account and an accredited investor status by having net worth that exceeds $1 million, excluding the value of their primary residence, or income that exceeds 200,000 in each of the last two years.
- Origination Fee – 1% – 6% of the target amount.
- Late Payment Fee – The greater of 5% past due amount or $15. Charged after 10 calendar days of payment due date.
- Check Processing Fee – $15 charged per check received as payment.
- ACH Return or Check Refund Fee – $15 charged if bank transfers or checks are returned or fail.
|Peer to Peer Lending Site||P2P Borrower Fees||Minimum Credit Score||Loan Rates||Notes|
|Lending Club||1% to 6%||640||5.3% to 31.0%||Lowest rates for good credit peer loans.||Click to Apply for a Loan up to $35,000|
|SoFi Loans||No Fees||N/A but probably around 680 FICO||5.95% to 14.2% but rates vary on special discounts||Low student loan refinancing rates and $100 cash back offer.||Click for Student Loans and Home Loans|
|Upstart||1% to 6%||620||6.25% to 30.0%||Best for graduates and no credit peer loans.||Click for Student Loan Refinancing|
|Personal Loans||5%||580||9.95% to 36.0%||Three options including P2P Loans, Bank Loans and Personal Loans.||Click for Personal Loans Rates|
|Avant Credit||0.95% to 3.75%||580||9.95% to 36.0%||Best for bad credit borrowers and low origination fee.||Click to Check Your Rate Today|
Prosper is smaller than Lending Club but still made more than $1 billion in loans for the year to September 2014. The peer lending platform does not offer business loans but personal loans are available for up to $35,000 for any purpose. Borrowers list their request for between $2,000 and $35,000 on the p2p platform for a 14-day listing period. Prosper is an excellent resource for peer loans on bad credit.
Check out this article on how to get a bad credit peer loan.
Loan rates range from 6.1% for good credit borrowers to 26% for bad credit borrowers with investor returns of between 4.6% and 10.2% across the rating categories. Along with Lending Club, Prosper is the only peer lending website to allow non-accredited investors access to loans.
Rates and Fees:
- Origination Fee – A percentage of the amount borrowed and varies by the Prosper rating.
- Special circumstances
- Failed payment fee – $15 for instances such as failed automated withdrawal, returned check or bank draft
- Late payment fee – Charged if a monthly payment is 15 days late
Peer to Peer Lending Sites for Social Lending
Besides getting personal loans and peer loans, there’s a whole group of p2p lending websites that specialize in social lending. These sites can help you get a loan for a social cause or businesses in impoverished areas.
The world’s first and largest micro-lending website, KIVA works with 290 microfinance institutions called field partners on 5 continents to provide affordable working capital loans to underbanked or low-income and poor credit borrowers.
The site is easy to use for borrowers and lenders with updates available through a messaging system. The borrower lending platform runs on Kiva Campaigns, which are personalized campaigns created to raise money for a specific project, kind of like crowdfunding. The site also offers Lending Teams, which are self-organized groups that still lend as individuals but offer advice and creates a sense of community.
While Peerform does not get the attention that Prosper or Lending Club get from the media, it is one of the most active peer to peer lending sites with rates ranging from 7% to 28% depending on your credit grade. A borrower verification system helps to limit losses through the site’s fraud prevention system and the platform offers a tool for investors to customize their portfolio.
As with most peer lending platforms, investors must have accredited status to invest in loans.
Rates and Fees:
- Interest Rate – Dependent on the Peerform grade assigned to each loan request
- Origination Fee – Determined by the Peerform grade of the loan and is included in the calculation of the Annual Percentage Rate
- Unsuccessful Payment Fee – Either $15 per unsuccessful attempt or a lesser amount as determined by applicable state laws.
- Late Payment Fee – Charged after 15 days of payment due date. This fee is 5.00% of the monthly payment amount, subject to a minimum fee of $15
- Check Processing Fee – $15 per check payment received
- Collection Fee – Charged in the event that Peerform needs to use a third-party service to collect any outstanding payments. This amount varies.
- Service Fee – Fee paid by the investor to have Peerform service and maintain a loan. This is 1.00% of the total monthly amount paid by the borrower.
Peer to Peer Loans for Small Business
There’s also a group of p2p lending platforms that specialize in small business and even franchise loans. Even if you aren’t able to get a peer loan on one of the larger websites, you might be able to qualify for a loan from one of these sites.
StreetShares is a small business peer to peer lending website that offers loan amounts up to $50,000. The company has a strong focus to businesses run by veterans and some unique features. The company invests in 5% of every loan on the platform and offers a reverse-auction style bidding process for loans.
Borrowers fill out their loan application with financials and owner information. Investors search for loans and then bid on the rate at which they are willing to make the loan. The loan is funded by the lowest rate offered that will meet the funding needs. I talked with CEO Mark Rockefeller in a February interview about the peer lending model and how the company was helping to fund small businesses around the country.
ApplePie Capital is a unique twist on small business peer lending, offering loans for franchise businesses. The peer lending platform partners with individual franchise brands to offer loans to franchisees. This allows for less risk on the loans since the platform verifies the brand as well as the individual borrower. Borrowers pay a 5% origination fee on the loan but may be able to reduce the fee to 3% if they fund the loan through their own social network.
Targeted returns for investors are between 8% and 12% for five-year loans. Investors benefit from lower defaults on franchise businesses and geographic diversification. There is a 1% service fee to investors which is applied to the amount of the loan.
I talked to CEO Denise Thomas in a December interview on the company’s unique peer lending model for franchise businesses.
P2P Lending for Students
Students usually have bad credit…or no credit at all. Fortunately, there is another group of peer to peer websites that specialize in loans to students. Most of these mean reaching out to friends and family but there are a few that will provide lending from a traditional peer network.
Wikiloan is an interesting twist on the crowdfunding model but applied to peer to peer loans. Borrowers build their loan listing with personal and financial information for lenders to review. The p2p platform offers a Wikinvite tool to share your loan on Facebook, MySpace and Twitter.
Borrowers and lenders agree on the terms that work best so loan terms may improve depending on how many investors you get for your loan. The social aspect of Wikiloan may make it the best peer to peer bad credit lender since your ability to get people to invest may be more important than your credit score and history.
Loans are for $500 to $25,000 and up to five years. Borrowers and lenders negotiate the interest rate themselves so poor credit borrowers may be able to get lower rates compared to other peer lending sites.
Pricing and other fees:
- Borrowers pay a Borrower Application Fee of $24.95.
- Lenders pay an annual Lender Administration Fee of $9 per loan for which they are a lender.
- Website users pay a $0.99 “EFT/ACH Transfer Fee” for all ACH transactions
GreenNote helps students secure college funds by using its online platform to connect with their social networks to obtain donations from family, friends and their community. This is similar to the model used by WikiLoan by sourcing your loan from your personal network. Since students generally have bad credit or no credit history at all, the peer lending site is designed to work despite a low credit score.
Prospective students fill out their online profile outlining their academic and career goals. Then they ask potential donors to pledge any amount. GreenNote helps facilitate this process and does not collect any fees or commission from each donation.
Non-U.S. citizens can borrow and loan on the site with donations delivered directly to a borrower’s PayPal account. The site charges a one-time membership fee that allows a borrower to collect donations for up to one year. Since the support is considered a donation, it doesn’t have to be repaid and there is no investor return.
Funding Circle is exclusively focused on small businesses – more than $1 billion has already been lent to 10,000 businesses. Since its launch, Funding Circle has raised $273M in equity capital from the same investors that backed Facebook, Twitter, Skype and Betfair and recently raised $150 million in another round that is sure to boost the platform’s capabilities. The peer lending platform got started in the United Kingdom but has launched a site for U.S. businesses as well.
Business loans are available for up to $500,000 with rates from 6% to 15% for one-year loans and 12.5% to 21% for five-year loans. The p2p platform charges an origination fee of 3% with no prepayment fee and a 10% charge for late payments.
Investing is open to accredited investors with direct investment in separate loans or investment in a diversified income fund managed by Funding Circle. The fund purchases individual loans and bundles them into one easy investment.
Rates & Fees:
- Interest Rates – View their interest rate table for rates for terms of 12 months to 60 months.
- Origination Fee – 2.99% of loan (Applicants choosing to employ a referral partner may be subject to an origination fee up to 4.5%
- Prepayment Fee – None
- Late Payment Fee – 10% of missed payment
BitLendingClub is another interesting twist on p2p lending as a Peer-to-Peer BitCoin Lending Network. Borrowers create a loan listing much like they would other peer lending platforms but the loan request is valued in bitcoins. Lenders review listings and make offers for the rate and size of the loan. Borrowers receive their loan and make payments in bitcoins. The peer platform collects a fee on each loan payment.
- Interest rate – varies on the loan amount
- Loans with amounts up to 9.99999999 BTC are charged 2% BitLendingClub fee.
- Loans with amounts greater than or equal to 10 BTC are charged 1% BitLendingClub fee.
SoFi focuses on student loan debt but has expanded into mortgage loans and personal loans as well. The peer lending platform is one of the larger with more than $4 billion in loans issued and on track to reach $6 billion by the end of the year. This puts it in the top three sites along with Lending Club and Prosper. The SoFi peer lending site hasn’t gotten as much public attention as Lending Club or Prosper but offers a wider range of peer loan types and is definitely worth a look.
Rates on personal loans range from 5.5% to 9%, well under the rate at many other p2p lending sites, while fixed rates on student loans are as low as 3.5% or lower with direct withdrawal. The site also offers variable rates on its loans.
SoFi Parent Loan Rates and Terms
- Variable Rate – Loans starting from 3.16% to 5.16% APR (with AutoPay)
- Fixed Rate – Loans available from 4.13% to 7.13% APR (with AutoPay)
Ratesetter is the United Kingdom’s largest p2p lending platform and only available to people 21 years or older that have been a U.K. resident for at least three years. The lending site offers some of the lowest rates but fairly strict credit requirements and may not be available for bad credit borrowers.
- Low APRs – over 50% of borrowers get 7.0%
- Amount: Between £500 and £25,000
- Terms: 6 months to 5 years
- Pay off loan anytime with no penalty
In addition to the loan and the interest, borrowers will be charged the Administration fee and the Credit Rate fee. These fees are dependent on the loan amount, the repayment term, and the borrower’s personal credit profile. There are no up-front payment fees.
LoanBack allows borrowers to set their own rate in their loan request and is built on the crowdfunding model where you share your loan request with your personal network. The p2p platform does not charge a fee but makes its money on products that facilitate the process like its LoanBuilder software or Loan Forms. The platform is basically a do-it-yourself loan system that helps you put together a loan before you present it to your own personal network. If you have poor credit, you may want to try some of the social network peer lending sites before others for a better chance at getting a decent rate on a loan with bad credit.
- LoanBuilder – $29.95
- One-time fee
- Build your personalized Loan Agreement with the fast & easy 4-step online process.
- Unlimited edits for your Loan Agreement for 30 days after purchase.
- LoanBack automatically does all the math.
- Loan Forms – $14.95
- Choose this option if you only need a simple, downloadable template.
- These are Word documents you download, fill out, print and sign.
- Loan Forms do not calculate payments
- One-time fee
United Prosperity is an impact lender where people loan money to entrepreneurs, usually in underdeveloped regions. The loans do not have an interest rate associated with them so there is no return for investors but is built on the social lending concept. Since 2009, more than 1,300 families have received more than $280,000 in loans.
Lend – Investors choose the entrepreneur to support and lend any amount they want through PayPal. United Prosperity consolidates the loan amounts from all online lenders and through a locally present Microfinance Institution (MFI).
Guarantee – Investors select the entrepreneur to support and each $1 contributed acts as collateral or a loan guarantee to a bank. Based on the guarantee, the bank makes a loan of nearly $2 to the entrepreneur through an MFI.
Zidisha is a microlending community that directly connects lenders and entrepreneurs. It offers a person-to-person platform that lets lenders and entrepreneurs communicate openly and instantly. Their main focus is on developing countries, allowing them to access needed resources for their businesses and other goals.
New members can borrow up to $50 for their first loan and higher amounts for subsequent loans. Entrepreneurs pay a 5% fee on each loan and a one-time new member registration fee after their first loan is funded. Since there is no interest rate there is no investor return for loans on Zidisha.
LendKey offers private student loans and student loan refinancing from private lenders. It is not a peer lending platform since it doesn’t offer the opportunity to invest but is a loan facilitator that helps match loan requests with lenders.
Services for Lenders:
- LendPortal – helps lenders promote their loan products through a personal website, dynamic marketing collateral, and network support services.
- LendEducate – Expert syndicated content that provides consumers advice and tips in lender related asset classes, and general financial literacy and guidance through the borrowing process.
ZOPA is another of the large peer lending platforms in the United Kingdom with more than £756 million in peer-to-peer loans since 2005. Loan amounts are available between £1,000 and £25,000 for one to five year terms.
Loans are available to U.K. residents with an income of at least £12,000 per year, that are at least 20 years old and have a good track record of repaying debt. The peer platform offers a rate estimator on loans but does not disclose actual average rates.
Investor returns are estimated at 4% for three-year loans and 5.1% on five-year loans, including the 1% fee and expected defaults.
P2Binvestor is focused on crowdfunded receivables financing. They have applied the crowdfunding model to commercial lending that helps small businesses get over the cash flow gap that comes with selling products on short-term payment plans to customers.
If a company qualifies, the peer lending site determines a rate and issues a term sheet on the loan. The site advances up to 90% of the company’s receivables balance upon approval of the loan request. Businesses must be operating for more than a year and generally must have annual sales over $500,000.
- Borrowing range: $25,000 – $5,000,000+
- Term: 12+ months
- Rate: 1-2% per month
- Industry: Nearly all industries considered
- Security: Receivables, future contractual revenue, personal guarantee
FinanceIt USA is not a peer lending platform but an interesting tool for small businesses that want to offer customer loan options on their sales. The website offers a web-enabled loan platform that works with multiple lending partners to originate loans.
Customers or the business owner fills out a loan request which is sourced to one of the site’s lending partners. A credit check is run on the request and a decision is given immediately. The business owner is paid for the sale and the customer pays the loan to the lending partner.
Money 360 is an online marketplace that offers loans to purchase or refinance commercial and non-owner-occupied residential real estate. The site also offers short-term bridge financing for borrowers needing to close quickly. All loans are interest-only with maturities ranging from 6 months to 5 years or more with no prepayment penalties. Money360 does not offer loans to finance construction of new properties. Accredited investors can buy whole loans or invest in pieces of loans offered on the site.
Bridge Loans or Permanent Financing
- Property types: Commercial and non-owner-occupied residential
- Property location: Nationwide
- Loan size: $1 Million to $20+ Million
- Maximum loan-to-value: 80%
- Security interest: First lien position
- Loan term: 6 months to 5+ years
ZimpleMoney is another peer lending platform that works on the friends & family p2p model. The site does not offer a platform where investors search and fund loans. Instead, borrowers fill out a loan request and pay to become members on the site. The borrower then invites friends and family to review and fund the loan.
The site offers several subscription plans that cost upwards of $35 per month along with a one-time fee on the payment loan tracker. There are also fees for contract support and to add lenders to the loan.
- Pro – For the active individual or business user who want to “automate” and manage a growing loan portfolio. ZimpleMoney system sends bills, collects and processes payments, post accounting ledgers, and remits cleared funds directly into the lender’s or beneficiary’s bank accounts. Manage an unlimited number of manual entry loans for FREE, and buy Premium Loan Tracker as needed.
- Plus – For the active lender or private investor who want to manage a growing note portfolio, send bills, print reports and provide customers with 24/7 access to their account. With the Plus plan, you can manage an unlimited number of loans using ZimpleMoney’s Basic Loan Tracker manual only entry system.
Which Peer to Peer Loan Site is Right for You?
While some sites may serve multiple types of borrowers and loans, I’ve tried to offer some kind of a classification below. This is only as a guide to finding the peer lending site best suited to your needs but is no way absolute.
List of Best Peer to Peer Lending Sites
- Lending Club is the largest p2p lender in the world
- SoFi specializes in student loan refinancing and mortgages
- PersonalLoans specializes in peer loans to bad credit borrowers
- Upstart lends to recent graduates and people with no credit history
- StreetShares specializes in peer loans to veteran-owned small business
- Kiva is a social lender for social and non-profit programs
Read through the descriptions of the peer lending websites and consider checking out multiple sites for your online loan. Most sites will do a soft-check of your credit to offer an interest rate. The inquiry won’t affect your credit score and doesn’t go on your report until you actually accept the loan terms and a hard inquiry is done.
Peer Lending sites for Personal Loans
Prosper and Lending Club are the most well-known peer lending sites and your personal loan is likely to get funded on either. They offer attractive rates though it may be difficult for bad credit borrowers to qualify for a loan. Lending Club has also built a strong name in business loans though only 1% of its total loans have been to business owners.
Peerform and Upstart are the other U.S. peer lending sites focused on personal loans though Peerform is by far the more popular. If you are in the U.K., you will want to check out Zopa and Ratesetter for peer loan personal loans.
Peer Lending sites for Business Loans
Funding Circle and StreetShares are peer lending sites exclusively for small business loans. Funding Circle has a higher loan limit of $500,000 but StreetShares offers a unique bidding process that might help lower your rate. StreetShares has a strong veteran community and should be your first stop for veteran-owned business loans.
FinanceIt USA and P2B Investor both offer a form of receivables securitization for business owners. This is an interesting concept where you take a loan against the sales you have made on credit. You are still responsible for collecting on your receivables but it’s a good way to get cash for working capital.
ApplePie Capital is a great choice for those looking to open a franchise. The franchise peer lending site has expanded its partner brands since I interviewed management last year and there are lots of opportunities available.
Peer Lending sites for Peer to Peer Bad Credit Loans
Peer lending sites perfect for bad credit peer loans are usually those that use a social network model for finding investors. Since you reach out to your personal network for funding, you might be able to get a lower rate even if you’ve got a poor credit history. The downside to this model for peer to peer lending on bad credit is that it makes the loan more personal. It’s bad enough to default on a peer loan but you risk alienating your friends and family if you default on a loan they funded.
If you cannot get a loan through Prosper or Lending Club because of bad credit, you might try ZimpleMoney, LoanBack or WikiLoan to fund your personal loan.
Peer Lending sites for Student Loans
Since student and bad credit usually go hand-in-hand, students might consider applying for a loan on one of the ‘bad credit loan’ sites above but they’ve got a few other options as well.
GreenNote, SoFi and Lendkey all offer student loans as a primary focus. SoFi also offers mortgage, medical and personal loan options.
Peer Lending sites for Everything Else
A couple of the peer lending sites in our list defied classification in the other categories but still may be solid options for your loan. Zidisha, United Prosperity and Kiva are both micro-lending sites where you may not receive an interest return on your money but get the satisfaction that you are helping to make someone’s dream possible.
BitLending Club is a lot like the other personal loan sites but your loan is funded in bitcoins. I haven’t heard much about this platform, especially since bitcoins have gotten less media attention. I would love to hear from anyone that has used the platform.
Money360 is a peer lending site for real estate loans, open to properties in the United States. Loans start at $1 million and are for commercial or non-owner residential.
Peer to peer lending sites have really stepped up, especially for peer to peer lending to bad credit loans. The banks just are not making loans anymore after the financial crisis and credit card rates have jumped. A lot of borrowers were shut out of the loan market in 2008 with loan defaults and predatory interest rates. Peer to peer loans are opening the market back up to get the cash people need.