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Best peer-to-peer lending sites for borrowers

The best peer-to-peer lending platforms offer low rates, have a simple application and accept fair credit.

Peer-to-peer (P2P) lending sites allow you to get a loan directly from other individuals. They offer a popular alternative to bank loans for those looking for a simplified application or options for fair credit scores.

The best peer-to-peer lending sites offer low interest rates, low origination fees, a wide range of loan amounts and a fast turnaround time compared to other platforms. We also considered factors like the types of loans available and eligibility requirements when selecting the best peer lending platforms.

However, the pool of peer-to-peer lenders is relatively small. You may also want to consider alternatives like direct online lenders before you apply for a loan using one of these platforms.

6 best peer-to-peer lending websites

Best for low rates: Peerform personal loans

Peerform personal loans


Finder rating 3.2 / 5
★★★★★

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on Peerform's secure site

In 2010 a group of Wall Street executives founded Peerform to give more borrowers access to low-cost personal loans. Thanks to low operating costs, Peerform offers some of the lowest interest rates and fees you'll find on a P2P lending platform — and it only requires a credit score of 600. If cost is your top priority, this provider might be your best option. But it only offers personal loans up to $4,000 — half what some other P2P lenders offer. Plus, it can take several days to get your funds.

  • Not available in: Connecticut, Hawaii, Idaho, Iowa, Maine, North Dakota, Vermont, Washington, West Virginia, Wyoming

Best for good or excellent credit: Prosper personal loans

Prosper personal loans


Finder rating 3.42 / 5
★★★★★

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on Prosper Funding LLC's secure site

Prosper is the peer lender that started it all when it launched its US platform in 2005. While its rates are higher than Peerform, it offers a wider range of loan amounts and it has a high debt-to-income (DTI) ratio cap of 50% make it particularly great for debt consolidation. But it might get expensive for borrowers who just meet the minimum requirements — it charges higher interest rates for lower credit scores than other P2P lending websites. It can also take up to five business days to get your funds, and its origination fee falls on the high side, even compared to other peer lending platforms.

  • Not available in: Iowa, North Dakota, West Virginia

Best for fair credit: LendingClub personal loans

LendingClub personal loans


Finder rating 3.6 / 5
★★★★★

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on Lending Club's secure site

The second P2P lender to the scene, LendingClub might be the most recognizable peer lending site. It offers a wide range of different types of financing, including personal loans, business loans and car loan refinancing. It has a relatively high starting interest rates and origination fees compared to other peer-lending platforms. But you may be able to score a lower rate and fee with this platform if you have less-than-perfect credit, compared to other peer lending websites.

  • Not available in: Idaho, Iowa

Best for emergencies: SoLo Funds payday loan alternative

SoLo Funds payday loan alternative

SoLo Fund founder Travis Holloway created the platform as an inexpensive alternative to payday loans for people living paycheck-to-paycheck. Members of the SoLo Funds community fund small loans up to $500, in exchange for an optional tip instead of interest or fees. And you can receive your funds within one to two days of making a request. But it's best saved for situations where you can pay back the loan within a couple weeks — like paying an electric bill to avoid steep fees to restore service. Terms only last 15 days, with no option to roll over. Otherwise SoLo Funds charges a late fee of 15% of the loan, plus $5.

Best for small businesses: Funding Circle business loans

Funding Circle business loans


Finder rating 4.4 / 5
★★★★★

Funding Circle is one of the only peer lending platforms that specializes in business loans. Founded in 2010, Funding Circle aims to bring more financing options to growing businesses and high returns for investors. Since, investors have poured some $11.7 billion into over 81,000 small businesses. Its rates are low for a business lender, starting at 4.99%. And you can qualify with fair credit. But it doesn’t offer loans under $5,000, making this a better option for large, one-time expenses.

Best for startups: Kiva business loans

Kiva business loans


Finder rating 3.7 / 5
★★★★★

Kiva is a nonprofit microlender that specializes in funding entrepreneurs and startups. It offers both peer-funded and direct loans. Its direct loans are interest-free — though you’ll have to crowdfund part of it yourself through your own social network. Its peer-to-peer loans are funded with $25 investments from the public. While anyone can invest, you won’t make a profit — and might not get all of your money back. The main reward is supporting a cause that you believe in.

Summary of best peer-to-peer lending platforms

Use this table to quickly compare our top choices for peer-to-peer lending sites.

Peerform

Low rates

5.99% to 29.99%
600
3 to 5 years

Prosper

Good or excellent credit

7.95% to 35.99%
640
36 or 60 months

LendingClub

Fair credit

7.04% to 35.89%
640
3 to 5 years

SoLo Funds

Emergency expenses

Not applicable

None

Up to 15 days

Funding Circle

Small business loans

4.99% to 38.43%
660
3 to 120 months

Kiva

Startups

0%
None
1 to 3 years

Peer-to-peer lending connects borrowers with individual investors

Peer-to-peer lending — sometimes called "social lending" or "crowd lending" — allows borrowers to get a loan directly from other individuals. This type of lending replaces financial institutions with peer-to-peer platforms as the middle man.

Generally, peer-to-peer platforms aim to offer low rates to borrowers with fair credit scores as low as 600, who can have trouble qualifying for a bank loan. Platforms do this by cutting down on operating costs. They use algorithms to underwrite loans, have few physical offices and rely on investors to provide the funds.

Peer-to-peer sites work like moderators, not lenders

Peer lending platforms are relatively hands-off compared to a financial institution. Here's how peer-to-peer lending generally works.

  • The peer lending site sets the range of loan amounts, terms, rates and fees available for borrowers.
  • As a borrower, you can check your rate, by filling out a quick application. Typically this takes a few minutes and is based on a soft credit pull that doesn't affect your credit score.
  • If you decide to fully apply, the site uses an algorithm to underwrite each application.
  • Once approved, you'll receive a letter grade that determines your rates and fees.The loan amount and term can also affect your rates and fees — longer terms typically come with higher rates.
  • Investors select loans to fund based on the letter grade. Most prefer to build a portfolio with a variety of letter grades. Lower letter grades have a higher risk but higher returns.
  • Once an investor funds your loan, the platform transfers the funds to your bank account.Typically, this takes one to five business days.
  • After receiving the funds, you'll repay the loan in monthly installments and the investor collects on interest.

The platform makes money by charging borrowers an origination fee of around 1% to 6% of the loan and investors a service fee of around 1% per year.

3 main P2P loan eligibility requirements

While each platform has its own requirements, you can typically qualify for a peer-to-peer loan if you meet the following criteria:

  1. Personal credit score of 600 or higher
  2. Annual income of at least $25,000
  3. US citizen or permanent resident

Some platforms aren't licensed to lend in all 50 states, so make sure you live in an eligible state before you apply.

Most P2P sites offer unsecured personal loans — but that's not the only option

Peer-to-peer lending sites can offer the following types of financing.

  • Unsecured personal loans for debt consolidation, a home improvement project or other large, one-time expenses — without collateral.
  • Unsecured business loans for one-time business expenses without collateral. These are typically geared toward small businesses.
  • Medical loans to pay for dental and healthcare procedures that your insurance doesn't cover. These are sometimes available directly through your healthcare provider.

It's also possible to find short-term loans, car loan refinancing and student loans on peer-to-peer lending sites. But these options are less common.

Peer-to-peer lending is relatively new

Peer-or-peer lending has only recently become available, thanks to the rise of the Internet. Prosper was the first peer-to-peer lending platform available in the US, which launched in 2005.

Since, it's become a widely accepted alternative to bank loans and direct online lenders. A 2015 Small Business Administration brief found that "peer-to-peer lending may be a viable financing alternative for small businesses" — especially those that couldn't find low-cost financing from traditional marketplaces.

Online lenders can offer a less-expensive alternative

Peer-to-peer lending may have many advantages compared to traditional bank loans. But direct online lenders are often able to offer a wider range of loan amounts with lower APRs — and often, no origination fee. And with similarly low operating costs, they're often able to fund borrowers who can't qualify for a bank loan.

Some direct online lenders like SoFi and Upstart originally started as peer-to-peer lending sites, before partnering with banks to fund the loan.

Read about our picks for the best personal loans of October 2021 before you apply for a peer-to-peer loan.

Frequently asked questions

Here are answers to questions borrowers often ask about peer-to-peer lending.

Is peer-to-peer lending safe?

Peer-to-peer lending as long as your lender uses SSL security on its online application. Look for the lock feature to make sure the site is secure — and scroll down to the bottom of the page to look for other security badges.

You can make sure the lender you’re working with is legit by reading online reviews and looking out for lawsuits against the lender.

Will my loan have multiple investors?

In most cases, however, you will have a few lenders funding your peer-to-peer loan. Most investors attempt to spread out their funds to limit losses, but if you’re only requesting a small loan amount, you may end up with a single investor interested in funding the entirety of your loan.

How often do I have to make payments?

As with many other types of loans, you typically have to make monthly payments on a peer-to-peer loan. The main exception is a short-term personal or business loans. These can come with weekly or daily payments.

What kind of returns can I expect from peer-to-peer lending?

The average return for investors hovers around 5% on most peer-to-peer lending platforms — like LendingClub and Prosper. But others can work differently. For example, anyone can invest in a Kiva loan — but you won’t get any returns.

Do I pay taxes on peer-to-peer lending?

You don't have to pay taxes on a peer-to-peer loan as a borrower. However, the IRS considers any on peer-to-peer lending returns as income, so you’ll have to pay taxes as an investor. Some platforms like LendingClub offer a way to get around taxes by sending your returns to an IRA. But you won't be able to touch the funds until you're almost 60 years old.

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10 Responses

    Default Gravatar
    AmySeptember 10, 2018

    I am in desperate need of a loan up to 5,000 for debit consolidation. I have tried every where my credit score isn’t the best and I know that’s what is hurting me. I just need someone to look past that an give me a chance. So I can get back on my feet.

      Default Gravatar
      joelmarceloSeptember 11, 2018

      Hi Amy,

      Thanks for leaving a question on Finder.

      Sorry to hear you are going through difficult times. Debt consolidation is one way to manage repayments and reduce debt if you have more than one account on which you pay interest. By moving all the separate balances into one account, you can start to reduce your liability by paying one monthly repayment instead of several. While many lenders require you to have a positive credit history to take out these loans, there are some who approve debt consolidation loans for those with bad credit.

      Cheers,
      Joel

    Default Gravatar
    CandiceJanuary 23, 2018

    I’m in desperate need of $4000 to buy a car.. I had a credit score of around 630 6 months ago but it’s 454 now because I have lived with a man for 4 years that WILL NOT work.. I’m on Disability.. I am sick..they think I have celiac disease..my mom got a loan for me but as always she never follows through..my husband is abusive.. I just need a break.. Is there someone who can help me??

      Default Gravatar
      joelmarceloJanuary 23, 2018

      Hi Candice,
      Thanks for leaving a comment on finder.com. You may still be eligible for a loan while on a disability pension. Please note that laws that apply to loans may vary from state to state so make sure you choose your state from the dropdown.

      If you need further help, please send us a message anytime.

      Cheers,
      Joel

    Default Gravatar
    kdogDecember 19, 2017

    Hello! I would like to start rebuilding my credit..my score is right at 590 to 600. Exp even had me at a 623. So, I did get a capital one journey card, 300.00 limit. Can I get a personal loan anywhere with this score? Or should I give up until I have established better history with this new card?

      Avatarfinder Customer Care
      RenchDecember 20, 2017Staff

      Hi,

      Thanks for your inquiry.

      An Experian credit score that falls within the range 580 to 669, it is considered Fair.

      Applicants with a Fair credit score are usually seen by lenders as having unfavorable credit and may decline their credit applications. However, there are lenders that offer bad credit personal loans that may be suitable for you.

      If you do not need to have an urgent need for a loan, you can improve your credit score first so you will have access to loans with flexible options and better interest rates and terms.

      Best regards,
      Rench

    Default Gravatar
    BenitaAugust 16, 2017

    I have low credit score defaults and I’m on fixed income monthly I would like to and need to take a loan however these facts of plow credit score and defaults have not been approved and I do not have a bank account so how can I or will I qualify for a loan

      Default Gravatar
      AshAugust 16, 2017

      Hi Benita,

      Thank you for reaching out to us.

      You can refer to these pages to compare your options for bad credit personal loans and cash loans.

      Before applying, kindly make sure that you have met the eligibility requirements of the Lender and have reviewed the details of the loan.

      I hope this information helps.

      Let us know if there is anything else that we may assist you with.

      Cheers,
      Ash

    Default Gravatar
    ChydikeMarch 24, 2017

    How can I borrow a loan for a small business?

      Avatarfinder Customer Care
      HaroldJuly 12, 2017Staff

      Hi Chydike,

      Thank you for your inquiry.

      Thankfully, we do have a list of business loans you may consider. Please see that list to learn more about your options and how to go about applying for a loan.

      I hope this information has helped.

      Cheers,
      Harold

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