The Economist recently had an article about peer-to-peer lending, and The Credit Union Times predicts growth in the P2P lending market.  The Economic Times covers P2P lending from the investor perspective, while Lendio covers P2P loans from the applicant side.

In this post, we also provide an overview of peer-to-peer loans.

Major Types of Peer-to-Peer Loans

The following are the major types of peer-to-peer loans available.

Peer-to-peer loans for business

Peer business loans provide the funding for a business, whether for a start-up, a small business expansion, or improvements in process. Peer-to-peer loans for businesses may have a more detailed application process since they may be seen as higher risk by investors who want to know why the business will be successful after this capital infusion. P2P loans for business may sometimes also involve some equity transactions and may look a little like crowdfunding. Sometimes, investors are asked for a new round of funding after the first round proves successful.

Peer-to-peer loans for personal reasons

Peer personal loans are perhaps the best-known and most popular form of this type of transaction. In this case, an individual applies for money from peer investors, and just like a more traditional personal loan, she or he must give information about her or his financial history, the reason for the loan, employment history, etc. Credit scores and other relevant financial information are provided to potential investors.

Many investors in peer-to-peer loans for personal reasons choose to spread their investments over many loan requests. However, some platforms are also designed to be a go-between when family or friends want to make a loan to someone but do not want to have to get into enforcing the terms. These loans might be used for anything from debt consolidation to important events to specific needs (home repair, adoption, etc.)

P2P loans for students

Peer loans for education are also increasingly popular. As the name suggests, they help a student afford higher education costs, including college and graduate school. A subset of peer-to-peer loans for education are made to help someone afford job training or learn a trade. Peer-to-peer student loans often cover expenses after traditional loan options are exhausted or when traditional loans are not favorable after a certain point. This type of peer-to-peer loan may sometimes be mission motivated, where an investor has a particular type of student she or he likes to support, or it might merely be a choice of how the lender feels they will get the best payback.

Peer-to-Peer Loans for Bad Credit

Peer-to-peer loans for bad credit applicants may be your only choice if the bank or other traditional lender decides not to extend you a loan.  The P2P loan marketplace may be more forgiving of past financial challenges and more willing to extend a loan.  The reasons for this include the fact that many people investing in P2P loans are willing to take a deeper and less formulaic view of each application, and individual investors may be more tolerant of risk.  That said, peer-to-peer loans for bad credit come with significantly higher interest rates, as you might expect. Then again, P2P loans for bad credit may be the only viable option for many.

As an investor, you might put your money into peer-to-peer loans for bad credit for several reasons.  First, you may be willing to take the risk because of the higher return.  Second, you may have a mission-driven reason for being willing to invest in a certain group, such as military members or people with a similar background.  And finally, you may also have a mission-driven reason to pursue a certain reason why the applicant is looking for a peer-to-peer loan for bad credit, such as their desire to install green energy systems or their hope to start a small business.

Peer-to-Peer Loans: Advantages

There are some obvious advantages to peer-to-peer loans.  Of course, a lower interest rate than you would pay from a bank is the most important in many cases.  In some, it would be almost impossible to get these kinds of peer-to-peer loans from a bank in the first place.   But even if the interest rate is approximately the same as one you would get for a bank on similar person-to-person loans, there are other reasons as well, such as:

Relationship Building

Peer-to-peer loans form a relationship with the investors in many cases.  Sometimes this relationship can lead to either similar investments in the future or increased investments for the same project.  In other words, the crowd will be more likely to invest in you in the future if you show that your purpose is worthwhile and that you keep to the terms that you agreed to.

Flexibility of Peer-to-peer Loans

Peer-to-peer loans can have more flexible terms than traditional loans.  For example, peer-to-peer loans may have flexible or specially tailored repayment schedules.  They may have terms such as gradual repayment that make the initial payments less.  You and the crowd can tailor the terms in a way that makes the most sense.

Better Terms

Peer to Peer loans can sometimes include some reduced rate or even free money if the project is charitable or in exchange for certain perks.  You may be adopting a child, rebuilding an area hit by a natural disaster, or part of a group facing a challenge the investors want to help.

Other advantages may be more specific to your situation, purpose, or background.

Peer-to-Peer Loans: Disadvantages

Of course, this peer-to-peer lending review will also cover drawbacks as well.  For example, a bank will guarantee that they will pay any installments on time and with the original terms throughout your project, while peer-to-peer loans may depend on how long the crowd can afford to continue to fund you.  Also, P2P lending, for personal reasons, will still have higher rates than other types of crowdfunding.  You still will have to afford to pay back what could be a large payment.  And finally, there could be something of an intrusiveness factor involved with peer-to-peer lending.  The investors may require more ongoing information – they might want to provide feedback along the way.

Summary and Conclusion

Peer-to-peer loans are a strong and growing subset of crowdfunding.  We believe it may grow in popularity through word of mouth and increasing advertisement and promotion.  The advantages of these peer-to-peer loans may outweigh the drawbacks in many cases.  The number of investors may grow as people try it and see how fruitful it can be.  Best of luck if you do pursue investing in or applying.  We do not usually take much of a role with these instruments when the loans are relatively small. However, if you are an entrepreneur looking for a combination of loans and equity for your project and are interested in turning to a crowdfunding platform for a significant raise, we can help.

The post Peer-to-Peer Loans first appeared on Performance Psychology Group, LLC.

On this page, we will go over how to choose among P2P lending websites and then how to make your pitch. We will also discuss the possible terms of your peer-to-peer loans and how to negotiate that part. We will use some of the best peer-to-peer lending websites as examples you can check out, but we are not an affiliate site, so we are not promoting any product or website and have no stake in what you choose. We also cover the risks, rates, and returns of peer-to-peer lending elsewhere.

Choosing the Best Peer-to-Peer Lending Sites

There are many potential best peer-to-peer lending websites, and narrowing things down can be challenging. That said, there are four main qualifiers you might want to use to check your initial choices, including:

1. Look for a website that has been around for a while and has successfully offered peer-to-peer loans for some time. See if there are similar purposes to yours and whether people seem to be getting funded. A peer-to-peer lending site should be well-established and able to generate a volume of successful business to keep people coming back.

2. Notice the quality of the website and the seeming degree of customer service and attention. Whether you are an investor or looking for peer-to-peer loans, you will find that the best P2P lending sites offer responsiveness and awareness to help you get what you need. Peer-to-peer loans should come with exceptional customer service.

3. Find independent forums for advice and guidance about the best peer-to-peer lending websites. Look out for posters using affiliate links to get paid when someone clicks, but otherwise, forums can be a great way to get advice from others about potential peer-to-peer lending websites that they like.

4. Watch a few of the best peer-to-peer lending websites. See whether there seems to be a lot of action at each one. Does there seem to be a lot of traffic and projects being funded, or does the site, despite looking good, seem to fail to attract visitors? Notice not just whether projects are being supported but whether they are being funded 100%

Best Peer-to-Peer Lending Sites Examples

We try to remain fully unbiased and independent here, but at the same time, we know that our visitors would like practical information. Since a limited number of peer-to-peer lending sites are available, we do not provide a matching service, and therefore, we are comfortable giving you some examples. Here are some of the best peer-to-peer lending sites – those websites that you may want to check out first in your quest for peer-to-peer loans:

Prosper Site was one of the first peer-to-peer lending websites and continues to do well. Prosper has an exciting feature for investors that is an automated option that can benefit those looking for an investment and investors. Proper has tended to receive high ratings from those sites that give reviews. You might want to check out the blog at Prosper, which has beneficial information and advice whether you are a potential investor or looking for peer-to-peer loans.

Prosper was first to the market and has stayed strong, with over 2 million members and over $1,000,000,000 in loans that have been funded. Prosper does an excellent job ensuring that the investor is rewarded financially and socially – emphasizing the good they are doing in a person-to-person way by investing in other people. With a minimum loan of $2,000, a maximum of $35,000, and a minimum of $25 per listing for investors, Prosper has many opportunities on both sides of the equation. You can research everything from borrowers’ credit scores and histories to personal loan descriptions and endorsements from friends.   All of these features make Prosper one of the best peer-to-peer lending sites.

Lending Club is probably the largest peer-to-peer lending website out there, for good reason. Many people have found success with this website which is easy to use and has excellent traffic. If you want to start with the biggest of all your choices with the hope that volume is critical to getting your promising pitch funded, this is a great place to start. The blog at the Lending Club is also worth looking at and searching. There is much helpful information; many wise investors are willing to share their experiences.

Lending Club opened in 2007 and has been one of the top interfaces since then with an efficient and customer-friendly interface. They have successfully leveraged technology to make the user experience smooth and easy, whether you are looking for a loan or a potential investor. As a borrower, you can get a fast response to your request for a loan. However, Lending Club is no longer signing up individual investors. For a borrower, the choice between Lending Club and Prosper often comes down to their slightly different features, but they are both easily among the best peer-to-peer lending sites available.

Other Potential Peer-to-Peer Lending Sites

While these two sites are probably the best-known and most established person-to-person lending sites, others exist. You may find another one that fits your style or tends to have the types of requests you want to fund if you are an investor or the types of requests like yours get financed if you are looking for a loan. Make sure you do your homework and choose a site that has been around long enough to give expected returns and results. Business Insider also has an article on selecting the best P2P Lending sites.

Best Peer-to-Peer Lending Websites for Investors

If you have come to this page because you are a potential investor looking for the best peer-to-peer lending sites, we have some specific advice (hint to those looking for peer-to-peer loans, it may be worth reading this section, too!). You will have some choices with your person to personal loans investment, and here is our guidance:

1. Decide, first of all, whether you are looking to fund one or only a handful of peer-to-peer loans or whether you are looking for an aggregation site that will pull together a lot of requests so that you can spread the risk. The former may seem more personal and allow you to fund projects or purposes close to your mission, while the latter allows for less risk and a more guaranteed return.

2. They decide your risk level. Most peer-to-peer lending websites structure things so you can choose the risk level you are willing to take. Take on more risk, and you can get a higher return but lower your risk profile if you want a higher return guarantee. In this process, ensure you understand how your chosen peer-to-peer lending websites measure risk – are they using credit score, other aspects of the person’s credit history, etc?

3. Next, decide how you will invest – will you put smaller amounts of money across various risk levels and even peer-to-peer lending websites, or will you choose the best site and best level and put all your money there? Maybe you’ll fund one particular loan request with some of your investment and a heavily pooled request with the rest.

4. Finally, make your initial investment and learn how to keep track of how it is doing – make sure you check back to your chosen site and, if possible, sign up for automated statements. Maybe you have decided to invest only a portion of what you will eventually put in, so you’ll need to determine when you are satisfied and ready to reinvest.

Peer-to-Peer Lending Websites: Summary

There have been many P2P sites that have recently opened, and over time some may more fully enter the market while others may not. You may want to take a chance on a newer website where your pitch may be more likely to get noticed, but you also take the possibility that the site may not last. We offer a listing the best peer-to-peer lending websites above that includes more established choices that will likely last. We wish you the best of luck whether you are an investor or looking into peer-to-peer loans for your purposes.

See also: Peer-to-peer business lending and Charitable peer-to-peer lending.

We hope that this information about the best peer-to-peer lending sites proves helpful! Once again, we do not provide peer-to-peer lending consultation services, but we cover it in our blog with the hope that you get helpful information.

The post Best Peer-to-Peer Lending Sites first appeared on Performance Psychology Group, LLC.

Peer-to-Peer Lending – Getting Notice

Sometimes peer-to-peer lending investors will jump in based on your past – have you been successful in prior projects, and would loans at that time have been paid off?  But they will also want to know that the project they are funding will likely succeed, even if they don’t need it to be a blockbuster to get their money back. As opposed to crowdfunding, peer-to-peer investors aren’t willing to take a significant risk for a substantial potential reward; instead, they want the project to have an excellent chance of being good enough to succeed to a degree that gets them their promised return.

Peer-to-Peer lending, Initial Steps

The steps toward getting peer-to-peer loans for your project are often relatively straightforward and include information about you, your project, and your company’s current financial standing.  All of this can help the potential P2P loans lenders decide whether to invest in you (keep in mind that investors have often provided the P2P lending platform with criteria ahead of time as far as what types of projects they want to invest in and what financial background they will accept – how much risk they will take on.)

P2P Loans vs. Bank Loans

The underlying question for all of the above is whether you should pursue a P2P loan or a bank loan.  Now in some cases, this choice is relatively easy, given that banks can be particular about what they will fund and many purposes, especially those without clear equity in something that the bank can own if you fail to pay (a house, car, business, etc.), are not fundable with traditional loans.  But for those cases where the bank might fund your project or purpose, how do you choose between P2P funding and a bank loan?   There are only three things to consider, and the first one may be the only central decision point:

1. The loan rate is a significant piece of decision-making when you actually have a choice between peer-to-peer loans and bank loans.  You may be able to get a significantly lower rate from the crowd.
2. the rates may be similar in other cases, but the terms may differ.  In crowdfunding, you may get longer-term, more variable payments or other unique terms that better fit you or your project.
3. Finally, there may be added advantages in getting P2P lending, like the crowdfunding perks we list elsewhere, including having investors provide a little PR and excitement about your project.

Disadvantages of Peer-to-Peer Lending

For some, P2P Lending is not the best choice.  This may have to do with the project you are proposing or the crowdfunding of your project.  Before you choose peer-to-peer loans, you need to make sure that you know all your potential funding options, including traditional bank loans.  Here are some of the possible disadvantages you might discover:

• You may find that the crowd who wants to find your project will be more demanding as far as details they will want to know along the way.  The reporting requirements may be daunting, and you may find that you will have added stress when you have been unable to work on the project, yet the lenders want an update.
• The terms of your peer-to-peer lending contract may not be as favorable as you expect, again often depending on the project.  In areas where you cannot find investors that are deeply committed to a particular size or type of project, you may find that the terms are not that different from the loans you can get from traditional banks.
• P2P lending may not even be available for your project, even after you put a lot of time and effort into finding investors.  Again, this may be especially true if you choose a project that few investors are interested in.  P2P loans may seem easy to get, but unlike traditional loans, there is actual competition to get them.

Conclusions Regarding P2P Lending

P2P loans are attractive for many entrepreneurs who otherwise have to give up too much equity or take high-interest bank loans.  Yet it is difficult to convince the crowd that you are a good bet for peer-to-peer lending because crowdfunding investors often want a higher or more secure payback. You’ll need to be quite compelling about the chances that investors will get a return that outpaces other options. We are quite familiar with the various peer-to-peer lending platforms and how to create a compelling P2P lending pitch. Please feel free to contact us for more information. And remember that our services are fully guaranteed. If you are an investor reading this, Forbes put together some helpful guidance regarding peer-to-peer lending.

The post Peer-to-Peer Lending first appeared on Performance Psychology Group, LLC.

Best Peer-to-Peer Lending for Investors: Returns

The best peer-to-peer lending for investors,  in terms of a percentage return, is easy. Instead of figuring out where you hope to be with your portfolio and hoping an external market leads you there, peer-to-peer lending returns are what they are – the percentage the borrower is being charged minus any rate the best peer-to-peer lending for investors. This allows you to figure out with some certainty, based on previous default histories, a range in which best peer-to-peer lending for investors strategy is best.

This relative certainty opens up peer-to-peer loans to a group of investors who trade, waiting until they are paid back to have some confidence about their returns. Those who have extra money now but need to know it will be free whenever they need it might choose another option, such as stocks.

Best Peer-to-Peer Lending for Investors: Platforms

The best source of information about peer-to-peer lending returns will be the website you choose to do your lending. They should be able to accurately tell you the recovery history in your selected risk category. They may even be able to tell you the history of returns within even more specific categories, such as why the person took out the loan, aspects of their financial background or the loan length. Of course, this does not guarantee a certain exact return on any loan you choose to fund. Still, it can help a lot, especially if you have decided to fund a lot of loans, each with a little money – this spreads the risk and factors out the possibility that one or two people might default.

Best Peer-to-Peer Lending for Investors: Time Frame

The usual length of peer-to-peer loans is between three and five years. Often, the shorter the period until maturity, the higher the risk because this puts pressure on the borrower in the form of higher payments (though they also usually get a lower rate). Projects that take longer often have a higher overall payback because a higher rate is charged, and the chances of default may be lower.

Best Peer-to-Peer Lending for Investors: Strategy

While external factors such as the state of the economy may also affect the best peer-to-peer lending for investors strategy, those factors will likely affect almost any investment. Thus, the most important steps to focus on are using historical data to research your best peer-to-peer lending for investors strategy over time and making decisions about the length of the investments that balance interest rates with financial flexibility.

As an investor, you want the highest return on your investment in P2P lending. As with any other investment, the higher the risk, the higher the potential return. In this case, you will get two lines of information.

Information About the Investor

You will get information about the investor. What is their credit score? How long have they been at their current job, do they own their home, how much revolving credit they have out, etc.? This information can help you decide whether to invest in the person or group.   And, of course, the higher their risk profile, the more interest they will have to pay, so the higher the potential return. Then again, the higher their risk profile, the more likely they will default, and your returns may be lessened or stopped.

Purpose of the Loan

You will also get information about the purpose of the loan. They may be consolidating higher-interest debt, using the money for home improvement, using it for a family celebration such as a wedding, or starting a business. Whatever the purpose, you will need to consider the inherent risk, and again, you may get higher peer-to-peer lending rates for higher risk purposes and a higher risk of default. The best peer-to-peer lending for investors strategy will vary depending on the borrower and purpose.

Best Peer-to-Peer Lending for Investors: Rates

Of course, the first question that any potential investor might ask is the interest rate of return. This is not a question we can specifically answer here, given that all person-to-person loans are unique, and the overall interest rate environment changes all the time. However, we can go over a few factors in the peer-to-peer loan interest rate calculation:

1. Of course, prevailing rates are the most critical factor. As with other types of lending, peer-to-peer loans fluctuate about the rates offered depending on prevailing interest rates.

2. What is the risk involved in the project itself? If the project is risky and carries a higher-than-usual likelihood of default, the investor must hedge by charging a higher rate. In these P2P lending situations, the project may define the rate, though often, the person’s creditworthiness for funding may trump that factor.

3. What is the overall risk in the economic environment? In a poor economy for business, a small business loan may have a higher rate because of the increased risk of default, especially when the nature of the project is risky to the economy.

4. How much is the loan as compared to other financing? A loan that has to cover an entire project may have a higher rate than a loan that subsidizes existing stable money since the latter carries more likelihood of the project being completed.

Caveats with Peer-to-Peer Lending for Investors

One aspect of peer-to-peer lending returns that you need to be aware of is that there is a specified length in any person-to-person loan agreement. In other words, you’ll get your return over time, and then you can decide what to do. With other investments, such as stocks or bonds, you can cash out at any time – these investments do not “mature” and have an end date like peer-to-peer loans do.

Then, some investments mature, including CDs and commodity contracts, but most people invest their money in non-fixed-time investments so they can withdraw at any time. This is an essential factor in determining your best peer-to-peer lending strategy for investors.

Best Peer-to-Peer Lending for Investors: Time Horizons

Of course, the fact that you cannot immediately get your money out does not in any way affect your peer-to-peer lending returns – as people are paying back their loans, you are making the return that equals the interest rate they were changed, minus any defaults, minus any fees the website charges. If you do not reinvest the money, you can take it out as you go, making a return and then deciding what to do with it. Of course, many people reinvest those returns in new peer-to-peer loans, and many websites allow for that to be done automatically – a convenience because otherwise, you will have money frequently freed up, and you’ll have to remember to go back to the site.

Bottom line: You need to carefully assess when you will need any significant portion of the money you have invested in peer-to-peer lending and ensure you do not reinvest for a certain period so that that money is freed up when you need it.

These two factors will determine how high the rate will be. At that point, you have to balance the risk/reward of this type of investment.

Conclusions and Our Services

Best of luck if you are turning to P2P loans to round out your portfolio. we specifically cover crowdfunding for real estate, which can include peer-to-peer investing elsewhere. We hope this exploration of the best peer-to-peer lending for investors was helpful. Our services can help connect you to the best platform for your investment goals, so feel free to contact us any time.

The post Best Peer-to-Peer Lending for Investors first appeared on Performance Psychology Group, LLC.

For the person receiving the investment, this method allows for much more flexible repayment terms, a more personal relationship with the investor, and greater flexibility about how the investment is spent and when. It may allow disbursement at more favorable intervals, and a greater amount is available in the first place. And, of course, the bottom line is that peer-to-peer investing may allow the person to receive money for a project that a traditional source would not give.

We expect peer-to-peer investing to expand as investors see a return to be had that helps diversify their portfolio, and those receiving the money find an advantage over traditional funding. We provide our services for both groups, but first, we wanted to provide this overview.

Peer-to-Peer Investing Overview

Peer-to-peer investing and crowdfunding are often confused, which is understandable because each definition often overlaps. Sometimes, the crowd is providing a loan, and in that case, you could accurately describe the transaction as both p2p investing and crowdfunding. For our purposes, however, we would call that transaction only “peer-to-peer investing.” We reserve the term “crowdfunding” for transactions that involve equity or lead to certain rewards and perks. In this section, we attempt to provide even more detail about this difference and more information to help you decide which one is for you.

Peer-to-Peer Investing vs. Crowdfunding Payoffs

One of the best ways to determine whether your opportunity fits under peer-to-peer lending or crowdfunding is to look at the expected payoff. Peer-to-peer investing involves a website platform cutting out a traditional bank and instead inserting peers as lenders. The borrower pays a certain interest rate, while the lender collects interest + principal payments minus some fee that the peer-to-peer lending website charges.

Conversely, crowdfunding aggregates funds, but the investor is expecting either equity in the project or some reward. Examples of the latter might include meet-and-greets with the entrepreneur, getting a new prototype before the general public, receiving inside information about the project, attending early shows by the artist, etc.

Risk Profiles of Peer-to-Peer Investments

Of course, there are major differences in p2p investing and crowdfunding risk profiles. Equity crowdfunding may be the most risky but likely has the highest reward profile. You could literally lose all of your investment as an investor, and on the entrepreneur side, you could give away too much equity for too little money. Peer-to-peer investing also carries risk, but the entire investment is less likely to be lost. You must do your homework as an investor to see whether the peer-to-peer investing you are considering will likely meet your financial goals. For example, you should look at the history of investments made at the platform you are considering.

There is less risk on the side of the person getting the loan, but you should still compare interest rates, terms, and other factors before arriving at a decision about which platform to use.

Of course, our connection services can help on both sides of the equation!

P2P Investing Example

Green environmental peer-to-peer investing is an increasingly popular form of P2P lending and often comes with incentives for the person receiving the loan that can make it cheaper than other options.  There are many reasons why investors might choose to enter a green person-to-person lending agreement.

Some investors want to make sure they will get a return that makes sense in their portfolio, and they realize that many people are trying to go green but do not have the financial resources to do so.

Others turn to peer-to-peer investing because they want to do something that fulfills a personal interest or mission, and renewable and alternative energy would accomplish just that.

Finally, some investors want to choose specific projects that have a guarantee of paying off for the person completing them. In other words, they like that a renewable energy project will likely bring some economic advantage to a homeowner or small business owner and that that saved money could be used to pay off the P2P loan.

Given these three reasons, it is no surprise that green peer-to-peer investing is so popular. There are investors interested in helping homeowners make their homes more green, small business owners build renewable and alternative energy into their businesses, and groups to build green co-ops.

Advantages of Green P2P Investing

The advantages of Green P2P loans are as follows:

High Chance for Return

There is a high chance for a return given that these projects have a high completion rate, and those undertaking them have a high rate of paying back the investment.  History is on the side of this kind of peer-to-peer lending investment, making confidence high in the chances of repayment.

MIssion-Based P2P Investing

Many investors facing peer-to-peer investing choices are drawn to funding renewable and alternative energy projects that will help save energy, reduce oil dependence, and reduce the harmful effects of burning fossil fuel.  Some offer a discount because this area taps into a personal mission, while others do not but are still offering a helpful service.

Means of Payback

Most homeowners and small business owners save money quickly after installing a renewable energy system, so the project somewhat directly generates their means of paying for the peer-to-peer loan.  This is not always the case with other types of peer-to-peer investing.

Availability of Green P2P Investing

For these reasons, peer-to-peer investing that helps a person or small business go green is increasing in popularity and availability.  These loans also point out investors’ decision-making process when considering their choices.

Drawbacks of Green P2P Investing

Of course, there are potential drawbacks as well.  Green peer-to-peer investing is not as secure as other types of p2p investing for the investor, such as those based almost solely on creditworthiness (though, of course, the investor can fund only those green peer-to-peer lending pitches made by those with high credit scores).  Also, the fact that some investors are willing to take a lower rate because green investing is part of their mission means that the overall rate may be deflated.  Finally, some types of renewable and alternative energy take a while to pay back the initial investment, so the idea that a project will pay off quickly may be unfounded.

Even with these disadvantages, green peer-to-peer investing is increasingly available and popular, and it may grow as green technologies come down in price and go up in efficiency and the speed of payback.

Peer-to-Peer Investing, Our Work

Peer-to-peer investing can be a win-win, allowing a person to get the funding they need for a meaningful project while allowing investors to feel good about investing in a person whose project they connect with. There are many types of peer-to-peer investing, so your choices will be significant. Choosing the right path is important, and we can help, usually for free.

We can help connect investors to the best peer-to-peer investing platform for their goals and connect those looking for funding to the p2p investing website that best matches them. Feel free to contact us to discuss this further.

The post Peer-to-Peer Investing first appeared on Performance Psychology Group, LLC.

We can help you build a peer-to-peer marketplace, but we want to be sure you know what is involved, including the pros and cons.

What is a Peer-to-Peer Marketplace?

The easiest way to describe a peer-to-peer marketplace is to focus on the word “marketplace.”  At its core, a peer-to-peer marketplace brings together people offering the same product or service to offer their goods or services to people who will browse the forum.  Examples might include:

• People offering external charging for electric cars
• Cleaning services for offices or homes
• Mobile car detailing services or other cleaning companies
• Bicycle share programs in cities
• Used clothing or furniture listings

Basically, your peer-to-peer marketplace can be used for one of three general categories, all involving bringing many people together who want to either give or get a product or service:

1. Buying a product
2. Renting or sharing a product
3. Providing a service

This is an exciting and growing field, and we want to provide the information and advice you need, whether you are thinking of building a peer-to-peer marketplace, using one to purchase or rent a product, or finding a service.  The first piece of important information is to look at the advantages and disadvantages of using a peer-to-peer marketplace forum.

Peer-to-Peer Marketplace Pros

The pros of building your peer-to-peer marketplace start with the fact that you do not need to accomplish this task from scratch. Some platforms allow people to build their own P2P marketplace with little or no coding experience and expertise. These platforms come with everything from payment processing, marketing tools, reports, social network linking, etc. The fees are reasonable for those who will put the time in to be successful.

Of course, people would build their peer-to-peer marketplace forum mainly because of the money that can be made and the mission-driven goal of helping connect people in mutually beneficial ways.  You can collect success fees or an ongoing percentage of any interest rate while at the same time feeling good about giving people an option to get money that does not exist with traditional options.  And you can give investors a chance to invest in their peers simultaneously.  There are many choices for your peer-to-peer marketplace, from selling and renting products to facilitating financial transactions to selling certain goods and services.

Peer-to-Peer Marketplace Cons

Of course, the major challenge when setting up your peer-to-peer marketplace is that it will take a significant amount of time and effort to keep your platform going and to use search engine optimization to attract traffic and interest initially.  There are, of course, many competitors in the market, and some have significant resources.  You need to be sure that the products or services your marketplace will cover are not already being covered by well-established and well-run sites with a head start.

\You will also need to be sure that what you plan to offer is actually needed.  Should any of this not work well, you could find yourself without the traffic you need and the business you want from that traffic.  The other potential drawback to creating a peer-to-peer marketplace is that you may be better off just being an affiliate of one particular product or service.  In other words, perhaps one provider, brand, or product really rises to the top.  Instead of creating an entire marketplace, perhaps you could work as a paid affiliate for that company or person.

Peer-to-peer Marketplace Choices

There are, of course, many roles you can take when it comes to peer-to-peer marketplace forums.

Your Own Listings

You can list your product or service and hope to get business this way.  In fact, you may even be able to make a trade – peer-to-peer marketplace forums are ripe for bartering and trading transactions.  Perhaps your business needs a marketing expert, and the marketing expert on the forum needs your product or service.  One way or another, a major way to use a peer-to-peer marketplace forum is to list your product or service and hope your peers want it.

Your Business Needs

You can visit the peer-to-peer marketplace forum to get a product or service you or your business needs.  This direct transaction cuts out various middlemen as it directly links those with something to offer with the people or companies who need it.  This type of crowd-sourcing can be very fruitful for certain services or types of products.

Building Your Own Peer-to-Peer Marketplace

You can also run the forum itself.  Suppose you have experience setting up and maintaining websites, and perhaps in particular, forum-type websites. In that case, you can set up and run the forum, charging people a fixed rate or a percentage of each transaction.  While this can become a fruitful business, the challenges should not be overlooked. Time and effort will need to go into marketing and maintaining your site.

Conclusions and Our Services

Regardless of the role you choose – and maybe you will end up playing different roles over time – it may be worthwhile to check out a peer-to-peer marketplace forum in an area of interest of yours or an area related to your business.  This unique and exciting form of crowdsourcing can provide value and expertise to any business.  This may be an area that grows significantly as more people discover the potential of these types of online business communities.

We can help! Our services can be particularly helpful for those who want to set up their own peer-to-peer marketplace. Contact us today if you want to discuss the possibilities.

The post Building a Peer to Peer Marketplace first appeared on Performance Psychology Group, LLC.

Peer-to-Peer Lending: Perspectives

Here are the two main perspectives on peer-to-peer lending:

Peer-to-peer lending investors

Let’s start by answering the question, “What is peer-to-peer lending?” from the perspectives of the investor and the person looking for a loan. For the investor, the answer is that peer-to-peer lending is a way to broaden an investment portfolio and potentially make a greater return than other investment possibilities. There can be a good feeling attached to providing people with the money they need for a particular project or financial needs, knowing that they may face higher rates or more difficult terms with more traditional methods of getting personal loans.

The bottom line answer to the question “What is peer-to-peer lending” for the investor is that it provides a steady and proven return that can round out the investment portfolio for someone with extra income or savings.

P2P lending applicants

Regarding the person receiving a peer-to-peer loan, the answer to our question is that it provides a way to get needed money for a rate and under terms that may be more favorable than other choices. In some cases, other choices are not even available. And for the receiver, there can also be a good feeling that a peer is providing the funding. One way or another, the person receiving P2P lending has analyzed their options and found that there is no comparable option or the peer-to-peer lending option is the best one. They may have looked into rates, terms, and flexibility. Perhaps when they narrow the field to two options, they decide on a P2P loan because of the good feeling that a peer is interested in helping.

What is P2P Lenidng: Overall

Perhaps those who ask “what is peer-to-peer lending are looking for the overall, general answer. This is sometimes called an “elevator speech” or “elevator pitch” to denote the fact that you must be clear and concise with your answer or statement. So here is what we suggest are several answers to the question “what is peer-to-peer lending”:

1. Peer-to-peer lending involves matching individual community investors with other community members who need to finance a project or purpose”. This is perhaps the most clear and concise answer, and it would suffice to get someone to look into the details no matter what side they are on.

2. Peer-to-peer lending involves matching members of the community who are looking to improve their existing return on their investment portfolio with people who want to fund a specific project, such as starting a small business or purpose, such as credit consolidation. These extra details can help provide even more context.

3. Peer-to-peer lending cuts out the traditional middleman in the lending process. Instead of a bank holding money from individuals and lending it to others with interest, peer-to-peer lending involves people directly lending to others.

Peer-to-peer Lending Risks

Peer to peer lending risks exist for both the borrower and the lender. Of course, they are most pronounced for the lender, where the most significant risk of peer-to-peer lending is the possibility that the borrower will default. No matter which side you are on, it is vital that you are aware of the risks of peer-to-peer lending and you compare them with what you would face with a more traditional loan.

P2P Lending Risks for the Investor

Of course, the most obvious risk of peer-to-peer lending if you are an investor is that the person borrowing the money will default. You can often minimize this risk by spreading your investments out over a larger group – giving a smaller amount to many people. You can also cut your risk by choosing who to lend to carefully – most peer-to-peer lending sites give you substantial information such as credit scores, home ownership, years of work, years at current job, amount of revolving credit, etc. Keep in mind, however, that as you cut the risk of any individual investment by narrowing your choices, you will likely receive a lower return—interest rates, at least to some degree, factor in risk.

Other risks

Other peer-to-peer lending risks may not be so obvious, including the risk that you need your money right away, but with this type of investing, you have to wait until it is paid off. While not technically a “risk,” you may find that other investment opportunities become available while your money is tied up in P2P loans. One final risk of peer-to-peer lending is that you may lose out on tax advantages you would find with different types of investments.

Peer-to-Peer Lending Risks for the Borrower

There are peer-to-peer lending risks to the borrower if you choose a large and established site for your loan. In most cases, the investors have already committed the total amount of your loan by the time you pay anything back, so you do not have to worry about a lender default. Also, given the widespread acceptance of peer-to-peer loans, even potential changes in regulations and laws should not affect your loan. The main peer-to-peer lending risks, then, are your own: The risk of not being able to pay the loan back within the terms that it was lent to you, the possibility that the interest rate will be too high after your characteristics are figured in, or the chances that whatever project or purpose you have borrowed the money for will not go through.

Non-platform investments

Of course, the above assumes that you are using an established platform, and there are peer-to-peer lending risks for the borrower if you do not – risks that the site will not stay in business or that something will get confused along the way. If you received all of your loans upfront, this may not be too much of an issue, but if you receive the loan in some installments, that could be a different story.

ReducPeer-to-PeerPeer Lending Risks

There are three easy ways for both the investor and the borrower to reduce the risks of peer-to-peer lending:

Do your homework about your partner

Of course, this is much easier for the lender, who can pick and choose who to lend to using various filters. As a lender, make sure you know which ones are important to you, and remember that if you are too picky, you may not get as high a return on your investment – safer investments will come at lower rates. Most of the time, even with defaults factored in, you will do better, taking at least some risk. The way for borrowers to do that homework is to look into the site itself and make sure that loans do, in fact, get funded for people with your history. Your only real risk is that you cannot do your project without funding.

Do your homework about the peer-to-peer lending website and platform.

Is it easy to use? Does it have good customer service? Do loans get funded? For investors, choosing the right platform can be as big as choosing who to lend to. You will have at least a three and often five or longer year relationship with that website, and you want to be sure it’s a good fit, and you will get the service you need. Look for independent reviews online, and make sure they are truly independent – for example, while affiliate links are okay if a site has many of them to many platforms (and therefore does not care which one you choose), they are not okay, or at least no unbiased, if they seem to favor just one site.

Do your homework about P2P lending alternatives.

Make sure you have scouted out other options for borrowing or investing. Peer-to-peer peer lending is not for everyone. For example, as an investor, you only get your payoff gradually – you do not get all your principal back with interest until the entire loan length has passed. As a borrower y, you may get a favorable rate and a much shorter term s, so you need to be sure you can pay things off that quickly. Even if peer-to-peer lending is outstanding, compare it to your other options first.

P2P Lending Conclusions and Our Work

As you can see, the peer-to-peer lending risks are not pronounced in most cases, and the central one lies on the lender side and is related to defaults. Careful research and homework by both sides before the loan is originated can mitigate many of the risks listed above, and if the lender spreads their investments out among many different investments and the borrower does their homework about where to borrow from, the chances of occurrence of any of these peer to peer lending risks will drop.

Peer-to-peer lending returns are reasonably easy to assess, but there can be complexity when it comes to when you can get your money back out. This post goes over peer-to-peer lending returns with a focus on the returns and the complexity involved in getting your money out.

We’re here to help! Whether you are an investor or an applicant in P2P lending, we can help connect you and help you find success. Contact us any time.

The post Peer to Peer Lending: Rates, Risks, and Returns first appeared on Performance Psychology Group, LLC.