Peer-to-peer lending allows you to earn an income and make money by helping other individuals or businesses to acquire loans for various reasons such as to purchase raw materials, to fulfill contract orders or even expand their business/ services etc.
You open an online account with a peer-to-peer lending company such as “MY BUSINESS PEER TO PEER TO PEER LENDING TECHNOLOGY” (also known in the online space as “BizTech p2p” or “BizTechp2p.com”), and then you can lend money to individuals or businesses.
By cutting out the Traditional Financial Institutions in this way, you receive more interest than you’ll get in savings accounts and borrowers pay lower interest rates than the Traditional Financial Institutions will charge them.
This is an innovative, social, emerging form of investment. That’s why it’s also called “social lending”, “people to people lending” and “crowdlending”.
Every year since peer-to-peer lending started in 2005, the amount of money being lent through P2P has been growing rapidly. Globally, more than USD 3 billion was lent in 2017 alone and Hundreds of thousands of people have already lent through P2P worldwide.
Since peer-to-peer lending is usually far less risky than investing in start-up companies (so-called “Crowd funding”) and less volatile than the stock market, it's emerging as an alternative investment option alongside buying your own home and investing in the stock market.
You might consider peer-to-peer lending:
In a typical year, after deducting fees and bad debts, you can do far better than savings accounts. Roughly speaking, higher interest rates can mean higher risk.
If you lend $100,000 today and make an average of at least 7% (after accounting for all the costs and any losses), after five years, you could have made at least well over $35,000 or more before tax, considerably more than a traditional savings account paying less than 1% interest for five years.
You can lend to both individuals and businesses, you can also lend to low-risk borrowers or high-risk borrowers for the potential of earning higher interest rates, and anything in between. The types of loans varies:
With BizTech the minimum recommended amount is $100,000 in order to spread your risk across multiple borrowers and increase your chances of earning higher returns, however you can invest with less than that amount and they will share and spread your risk along with other lenders across all the outstanding borrowers, hugely reducing the risk that you lose money due to having just one or two unlucky borrowers. You can lend as much as you want, provided there are enough borrowers available.
Peer-to-peer lending companies are responsible for collecting payments on your behalf as well as chasing any bad debts. Like the Traditional Financial Institutions, P2P companies will send letters to the borrowers when they are late on payments, discuss with the borrower how they can help them through their difficult times and, if necessary, take the borrowers to court. With secured loans – loans that have collateral and assets involved – the peer-to-peer lending company can look to repossess and sell such collateral or assets.
With unsecured loans, the peer-to-peer lending company can still sometimes turn those into secured loans as a last resort through the courts, but the first resort with these loans is to have excellent processes to select better borrowers that aren't likely to go bad.
The interest rates should also be set high enough to cover the risk level of each different borrower.
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