Category: P2P Lending

Shawn Fanning is the godfather of  P2P lending. He began developing an idea in early 1999 that would enable him and his pals to look up MP3 music tracks online. Napster had over 21 million users a few months later. The student, who was 18 then, could not have predicted how his invention would alter the way we interact with multimedia applications and communicate in general. The fundamental concept behind Napster was to develop a protocol for an application that would include a search engine, a file-sharing software based on the Windows and UNIX file-sharing protocols, and an IRC program to allow online users to communicate with one another. The app’s name is a play on Fanning’s nick moniker at school due to his peculiar hairdo. Fanning’s app became #1 on download.com and paved the way for the Peer-to-Peer networking revolution that continues to this day.

P2P lending platforms link lenders and borrowers directly. Every website controls the prices, the terms, and the transaction. The majority of websites offer a wide range of interest rates depending on the applicant’s creditworthiness. An investor first creates an account on the website and deposits money that will be used to fund loans. The risk category that is allocated to the loan applicant’s financial profile influences the interest rate that applies will be required to pay.

The loan applicant may examine offers and choose one to accept. (Some candidates segment their requests and take numerous concessions.) The software handles both the monthly payments and the money transfers. Lenders and borrowers can engage in negotiations or have the entire process automated. Some websites concentrate on specific borrowers. For instance, StreetShares is geared toward small enterprises. Additionally, Lending Club provides a category called “Patient Solutions” that connects medical professionals offering financing plans with potential patients.