Best peer-to-peer lending sites for borrowers

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
• Best for good or excellent credit: Prosper
• Best for fair credit: LendingClub
• Best for emergencies: SoLo funds
• Best for small businesses: Funding Circle
• Best for startups: Kiva

Best for low rates: Peerform personal loans

Peerform personal loans

Finder rating 3.2 / 5
★★★★★

Go to site

on Peerform's secure website

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

• Pros and cons

  Pros

  • Fair credit OK
  • APRs starting at 5.99%
  • Live chat on website

  Cons

  • Loans from $4,000 to $25,000
  • Long turnaround
  • Few customer reviews

• More details

  Loan Amount	$4,000 – $25,000
  APR	5.99% to 29.99%
  Interest Rate Type	Fixed
  Min. Credit Score	600
  Maximum Loan Term	5 years
  Minimum Loan Term	3 years

Min. Credit Score	600
APR	5.99% to 29.99%
Loan Amount	$4,000 – $25,000

Go to site

on Peerform's secure website

Best for good or excellent credit: Prosper personal loans

Prosper personal loans

Finder rating 3.42 / 5
★★★★★

Go to site

on Prosper Funding LLC's secure website

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

• Pros and cons

  Pros

  • Accepts DTI rates of up to 50%
  • Fair credit OK
  • No hard credit check for preapproval

  Cons

  • High maximum APR of 35.99%
  • Origination fee of 2.4% to 5%
  • Turnaround may be up to five business days
  • You must have at least three open credit accounts to qualify

• More details

  Loan Amount	$2,000 – $40,000
  APR	7.95% to 35.99%
  Interest Rate Type	Fixed
  Min. Credit Score	640
  Turnaround Time	Up to five business days
  Maximum Loan Term	5 years
  Minimum Loan Term	3 years

Min. Credit Score	640
APR	7.95% to 35.99%
Loan Amount	$2,000 – $40,000

Go to site

on Prosper Funding LLC's secure website

Best for fair credit: LendingClub personal loans

LendingClub personal loans

Finder rating 3.6 / 5
★★★★★

Go to site

on Lending Club's secure website

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

• Pros and cons

  Pros

  • Low starting APR of 3.99% for auto refinancing
  • Coapplicants welcome
  • High Trustpilot rating

  Cons

  • Turnaround of up to 15 business days
  • Not available in every state

• More details

  Loan Amount	$1,000 – $40,000
  APR	7.04% to 35.89%
  Interest Rate Type	Fixed
  Min. Credit Score	640
  Turnaround Time	As little as 4 days
  Maximum Loan Term	5 years
  Minimum Loan Term	3 years

Min. Credit Score	640
APR	7.04% to 35.89%
Loan Amount	$1,000 – $40,000

Go to site

on Lending Club's secure website

Best for emergencies: SoLo Funds payday loan alternative

SoLo Funds payday loan alternative

Read review

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.

• Pros and cons

  Pros

  • Optional tip capped at 10%
  • Loans as low as
  • Short turnaround time for a P2P platform
  • Bad credit OK

  Cons

  • Short maximum term of Up to 15 days
  • Steep late fees compared to other short-term loans
  • Difficult to qualify with a past charge-off

• More details

  Loan amount	Up to $500
  Interest rate type	Fixed
  Loan Term	Up to 15 days
  Turnaround time	As soon as the same day

Loan amount	Up to $500
Turnaround time	As soon as the same day

Read review

Best for small businesses: Funding Circle business loans

Funding Circle business loans

Finder rating 4.4 / 5
★★★★★

Read review

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.

• Pros and cons

  Pros

  • Low starting APR of 4.99%
  • Loans as high as $500,000
  • Accepts fair credit

  Cons

  • High starting loan of $5,000
  • Requires at least two years in business
  • High origination fee of 3.49% to 6.99%

• More details

  Loan amount	$5,000 – $500,000
  APR	4.99% to 38.43%
  Min. Credit Score	660
  Loan Term	3 to 120 months
  Requirements	660+ personal credit score, 2+ years in business, for-profit business in an approved industry, not located in Nevada

Loan amount	$5,000 – $500,000
APR	4.99% to 38.43%
Min. Credit Score	660

Read review

Best for startups: Kiva business loans

Kiva business loans

Finder rating 3.7 / 5
★★★★★

Read review

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.

• Pros and cons

  Pros

  • No minimum credit score
  • Available to entrepreneurs
  • Direct and P2P options

  Cons

  • P2P loans can come with interest, unlike direct loans
  • No return for investors
  • Potentially long turnaround

• More details

  Loan amount	$25 – $15,000
  APR	0%
  Loan Term	1 to 3 years
  Requirements	Have members of social network willing to contribute, live in US, ages 18+, not in bankruptcy, not a registered sex offenders or terrorist, not convicted of violent or financial crimes in past five years.

Loan amount	$25 – $15,000
APR	0%

Read review

Summary of best peer-to-peer lending platforms

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

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.