Tesco
Peer-to-Peer Lending to Small Businesses
Report

Peer-to-Peer Lending to Small Businesses

Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs

Traci L. Mach, Courtney M. Carter and Cailin R. Slattery
Federal Reserve Board, 2014
Get the Report

Read or listen offline

automatisch generiertes Audio
  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×
automatisch generiertes Audio

Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Eye Opening

Recommendation

Many small businesses find it difficult to get bank loans, and entrepreneurs and start-ups often don’t qualify for traditional forms of financing. Once the smallest firms exhaust the resources of family and friends, their only recourse may be the local payday lender or loan shark. But the time may be ripe for technology to upend small businesses’ dependence on banks. Peer-to-peer (P2P) loan websites have made inroads into consumer lending, and dedicated business lending sites are starting to debut. getAbstract recommends this first-of-its-kind investigation into small-business P2P lending to entrepreneurs, investors, small-business owners and commercial bankers.

Take-Aways

  • Peer-to-peer (P2P) lending, in which individuals pool resources to fulfill a borrower’s loan request, is a form of crowdfunding that offers small businesses an alternative to bank credit.
  • P2P lending has jumped in popularity; one P2P website sponsored more than $20 million in loans to small businesses in 2012, up from only $850,000 in 2007. In that time frame, the average business-loan amount reached $16,200.
  • However, interest rates on P2P sites can be almost twice as high as interest rates on bank loans.

About the Authors

Traci L. Mach and Courtney M. Carter are Federal Reserve Board economists. Cailin R. Slattery is a PhD candidate in economics at the University of Pennsylvania.

Comment on this summary or Diskussion beginnen