Top 5 financial platforms for the sharing economy

Here are the 5 famous and reputable lending services based on sharing economy

P2P lending

Top 5 financial platforms for the sharing economy. Source: shutterstock.com

In the financial sphere, sharing-economy companies are represented in two main ways. Firstly, there are peer-to-peer lending platforms that facilitate lending money to individuals or businesses through online services that match lenders with borrowers. Secondly, there are crowdfunding platforms designed for public money-raising campaigns.

The top online crowdfunding platforms have already been described by our team. Therefore, we proceed to P2P lending as a particular type of financial “sharing”.

Top 5 P2P lending platforms

Here are the 5 famous and reputable services in this sector.

Lending Club. Lending Club is the largest online credit marketplace. Their system allows you to invest in other people’s loans and earn returns in the form of the interest they pay. The platform has over 3 million customers that have already borrowed $50 billion. Lending Club caters to loans for various purposes like personal finance (consolidate debt, pay off credit cards, home improvement, and pool loans), business loans, medical care financing, as well as for investing. The process begins with the borrower. They apply for a loan and if they meet certain criteria (such as a minimum 660 FICO score) their loan is added to the platform. The minimum personal loan amount offered is $1,000 ($15,000 for businesses), going to a maximum of $40,000 ($300,000 for business). Investors can browse the loans on the platform and build a portfolio of loans. The minimum investment an investor can make is just $25 per loan.

Prosper aka Prosper Marketplace. The company enables borrowers to list loan requests and individual lenders may invest in those loans based on credit scores, ratings, histories, personal loan descriptions, endorsements, and community affiliations. This year, Prosper has reported a 13% growth in loan originations through the platform. It has recently launched an end-to-end digital Home Equity Line of Credit (HELOC) solution that allows customers to complete an online application in minutes and receive an instant pre-qualification.

Funding Circle. This platform specialises in small business loans in the UK, US, Germany and the Netherlands. By lending directly to businesses through Funding Circle, investors can earn attractive returns. For individual lenders, the return amount may comprise about 4-6%.

Upstart. The company takes creditworthiness very seriously. Therefore, the platform is aimed at certain categories of users. Besides credit scores, they also take into account education, area of study, and job history before coming to a decision. Borrowers can get a loan of up to $50,000, starting at 4.73% interest and up to 35.99%. While automated recurring payments are easy to set up, payments by cheque or one-time electronic payment can also be used to repay a loan. Borrowers have the flexibility to choose the repayment method that works best for them. Investors have the option of setting up an IRA on the site, which is a nice perk few peer-to-peer lending sites offer.

Kiva. Kiva fundamentally differs from the other platforms on this list: it’s a charitable peer-to-peer lending site. Rather than investing in loans to make a profit, with Kiva, you invest in specific projects or individuals to make a change. With a small donation/investment, you can help aspiring farmers or entrepreneurs in developing economies. All potential lenders are pre-approved, so you know they are legitimate, and the loans have a payback rate of 97%. Those looking to borrow through Kiva anywhere around the world can apply for an interest-free loan of up to $10,000. As an investor, you will get your donation repaid slowly and steadily, although without any additional interest. Nevertheless, the impact you can make on someone’s life with just a few bucks is incredible.

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