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P2P Lending
11 Feb 2019

Should You Try P2P Lending as a Source of Fast Cash?

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America has collectively taken on more than 120 billion dollars worth of personal loans.

There are a lot of contributing factors when it comes to the largeness of that number and not all of them are negative.

For starters, the economy is excellent which has led to near-record low unemployment. That has empowered consumers to feel comfortable with taking on debt to finance projects like home repairs and other lifestyle upgrades. Another contributing factor is all of the new ways people can now borrow money.

One of the newest means of borrowing is via p2p lending.

P2p (peer to peer) lending is different in many ways from loans obtained through traditional methods. Consequently, many borrowers (particularly those with below-average credit) are wondering if p2p lenders are going to make getting loans easier.

Below, we address that question and many more circulating around p2p lending.

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What Exactly Is P2P Lending?

P2p lending is similar to traditional lending in that it offers borrowers a method to get the money they need to finance everything from business expenses to car repairs. What makes this form of lending different than traditional borrowing methods is the means in which the money is sourced.

With traditional loans, money is sourced from banks or businesses who are in the profession of lending. When you get your loan funded through p2p lending, you’re getting your money from people just like you.

You read that right.

P2p lending empowers everyday individuals (who meet certain requirements) to loan borrowers their money in exchange for interest. Basically, regular people, typically with full-time jobs unrelated to banking, act as your bank when you borrow through p2p platforms.

Is P2P Lending Safe?

P2p lending, in most cases, is as safe as borrowing money from any lender. As a matter of fact, p2p borrowing can be a lot safer than borrowing from unknown “loan professionals” that may offer “shark rates” and hidden fees that can lead you to financial ruin.

With p2p lending, you’re typically not borrowing directly from a consumer. You’re going through an intermediary or platform that facilitates the loan.

That intermediary provides ample protections as is required by law to ensure that all of your information is safe and that your lenders are vetted.

How Fast Is P2P Lending?

Sometimes borrowers need to get their hands on loans quickly. This urgency leads many to turn to payday loan lenders that can provide cash same day but often at the expense of high-interest rates.

When you borrow through p2p platforms, you’re not likely to get your money as quickly as you would when borrowing through a payday loans provider. That’s because p2p loans are “crowdsourced”.

When a loan gets crowdsourced, the money that goes into your loan comes from multiple people rather than just one. That allows the risk of lending to get spread out rather than one person taking on the risk that a borrower will default.

The crowdsourcing process can take a little bit of time and as such, most p2p lending inquisitions advertise loan fulfillment within 3 to 7 business days.

What Are Some Things to Watch Out for with P2P Lending?

There are no risks unique to p2p lending that don’t exist with any type of personal loan lenders.

When you borrow, always be aware of fees that get applied to your loan and interest rates that are being charged. These rates and fees will vary from platform to platform.

Also, be aware that just because you’re not borrowing from a bank doesn’t mean that there are no repercussions for defaulting on your debt. Debt serviced through p2p platforms will affect your credit score and may get sold to collection agencies the same way other debts do.

If you’d like to learn more about what can and cannot be done with your debt and personal information on a particular p2p platform, review the platform’s privacy policy which can typically be found in its website’s footer.

Is P2P Lending a Good Lending Solution for People with Bad Credit?

People with bad credit are often the people most in need of borrowing money. The issue is that borrowing from a traditional lender when you have bad credit backing you can be difficult.

That’s why many sub-prime borrowers have wondered whether or not p2p lending is the answer they’re looking for to further diversify their means of taking out loans.

Unfortunately, p2p lending is not likely to be the solution that bad credit borrowers are looking for.

The vast majority of p2p platforms have strict requirements in who they allow to take out their loans. That’s because they want to protect their investors (the regular people who are paying for the loans) from high-risk borrowers.

As is the case with all lenders, requirements will vary from p2p platform to p2p platform. Still, you’d be hard pressed to find a reputable p2p lender that doesn’t require good credit, good income, or both in order to service your loan.

What Is Considered Good Credit or Income to Borrow From P2P Platforms?

There is no one size fits all answer to the question of, “How good is good enough?” Looking at one of the most popular p2p lending platforms, Upstart, their average borrower has a FICO score of 688 and an annual income of $80,813.

Remember, average means that there are borrowers that get accepted who fall below that range.

Be sure to research p2p lending platforms to understand your odds of getting approved before applying for loans. If you apply for p2p loans and get rejected, your credit score may take a hit for each rejection you receive which will further hamper your odds of borrowing.

Where Can You Get a P2P Loan?

P2p loans are usually serviced through online platforms. You can find a number of them via a Google search.

Here are a few p2p lenders that service the majority of loans within their niche:


This platform is perhaps the most popular p2p lender and offers a plethora of information on its site regarding their lending options and who they typically lend to.

The vast majority of Upstart loans get taken on by people looking to refinance their credit card debt.

Funding Circle

Funding Circle is a popular p2p lender for small businesses. If the loan you’re taking out is for business related expenditure or debts, the platform is worth looking into.

Funding Circle has lent over 5 billion dollars to businesses in the United States and the United Kingdom.


Being one of the original p2p lending platforms, Peerform has made a name for itself for its easy to use interface and quick loan approval (or denial) process. Like most p2p lenders, Peerform advertises its loans as being for “prime” borrowers.

That means that you may have trouble getting funded with bad credit and/or bad income.

P2P Alternatives for People with Bad Credit

If you have poor credit and are looking to borrow money, there are alternatives to p2p lending.

For example, a number of online lenders exist that lend exclusively to sub-prime borrowers. Many offer fair terms, flexible payment schedules, and a wide array of amounts that can get borrowed.

If you’re interested in finding an online lender that may be able to work with your financial situation, consider using our loan finding tools at Bonsai Finance so you can get an overview of your options at the click of a button.

Is P2P Lending Right for You?

We hope that this article has answered your questions on what p2p lending is and whether or not it’s right for you.

If you qualify for p2p lending, it can be a fast and powerful way to borrow money that cuts banks out of the equation. If you can’t qualify for p2p lending, it’s important to not get discouraged and to continue exploring your options.

Bonsai Finance has made a name for itself by offering free and powerful tools that allow borrowers like you to quickly understand what loan products they qualify for. If you’re interested in exploring hundreds of online lenders and comparing their offers side by side, using our loan finding tools is the best way to achieve that end.

Start your loan search today by clicking here and filling out the form on your screen.

If you’d like to learn more about borrowing options and money management, consider diving deeper into our educational content in the Bonsai Finance Learning Center today!

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