Online Peer to Peer lending, also known as P2P lending, is a new way to channel reserves from people who are in exceeds of funding to whoever in need for funding. It is the practice of lending money to unrelated individuals, or "peers", without going through a traditional financial intermediary such as a bank or traditional money lender.
This borrowing and lending activities take place online on peer-to-peer lending companies' websites using various different lending platforms and credit checking tools. P2P lending enterprises are those online middlemen who execute these peer to peer money lending and borrowing requests. P2P lending is a newly rising method of matching supply and demand of lenders and borrowers. It is growing at a fast rate per month in western society.
The basic criterion is that the borrowers seek money lenders from an effective internet platform. Meanwhile, the money lenders are capable and willing to lend out their reserves base on certain conditions. As middlemen, P2P online enterprises help lenders and borrowers to negotiate, thus match the needs and conditions.
P2P online enterprises also prepare agreements and distribute reserves. These online portals help money lenders diversify their risks by sharing a borrowing request with other money lenders. It also helps money lenders seek the best suitable risk and return.