The benefits of P2P Lending

p2p

With all the recent focus on Fintech in general, this post focuses to narrow down on a specific category: Peer-to-Peer (P2P) Lending. P2P lending is a form of crowdfunding. For example, say a company requires S$200,000 for an important expansion.There are not many Singaporeans who would be willing (or can afford) to part with such a huge sum. But over the internet, if they can find 200 people willing to lend them S$1,000 each, they’ll already have the sum they need. In return, these lenders or investors receive repayments with interest from the company.

This has indirect benefits to our economy, such as boosting employment. Done right, P2P lending is helpful for all parties involved. It is quite possible that, in the next 20 to 30 years, P2P lending will replace one specific function of banks (that of giving out small business loans). In the featured article, a general explanation of P2P lending as well as some of the things to look out for as an investor are explained.

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