P2P Business Trend
Everything new is well-forgotten old. The same can be said about the trend for P2P business, which excludes the intermediary from the cycle of exchange of goods and services.
P2P lending as a business
P2P- person-to-person. The basis of the idea of this type of lending is to transfer money directly from user to user, without the participation of intermediaries in the form of banks. It is implied that the bank is a very voracious intermediary, which is a cumbersome structure containing many clerks in its staff. And, instead of feeding this horde of workers, smart people came up with the idea to bring directly those who want to borrow money with those who are willing to lend. And given the fact that there will be no need to share an interest with banks, everyone will get their own benefit. The lender has a correspondingly higher percentage compared to the bank. Well, the borrower, more flexible terms.
Most often, lending on P2P platforms is resorted to:
- Private individuals. But we have already discussed this, this is the basis.
- A small business that has difficulty confirming income. Of course, most often we are talking about starting a business, or a short-term period when it is necessary to close the cash gap.
- Refinancing. This is a whole separate industry in the States, which, if desired, can also be considered for a long time.
How P2P platforms function?
If we talk about the first type of platform, then everything is simple. There are borrowers who place an application on the platform. These applications can be seen in the public domain by those who wish to borrow funds at a percentage. In fact, in this case, the participants are contacted directly, and the platform receives its percentage.
But do not think that she gets this percentage for nothing. It is responsible for the assessment and ranking of borrowers, called scoring in the banking environment. Also, some companies insure deposits, provide other types of security guarantees. The percentage at which the borrower can receive money depends on the rating of the borrower on the platform. Accordingly, the depositor chooses a borrower based on his preferences. If he wants to sleep peacefully, he chooses a more reliable borrower. But, accordingly, the percentage of profitability will be lower.
How to get profit?
You have two options, either just become an investor and lend your money at a percentage to other people, or create your own platform of this type. The lending market is mostly filled with banks, and only a small percentage is P2P lending. To create such a platform, of course, you will need initial capital, as for any other business, but only it will definitely be spent on the case since you will need to create a website and its software. You can easily contact specialized companies and order a similar website. You don’t need a large team of employees, just an administrator. And as experience shows, such a business will calmly beat itself off in a couple of years.