Peer-to-Peer Lending

Lending to individuals or small businesses through an online platform that matches lenders with borrowers.

Example

Spreading 5,000 across 100 small business loans on a platform.

There is usually no deposit guarantee, and your outcome depends on both the borrowers and the platform's survival and servicing.

Platform Risk — The risk that the intermediary arranging or servicing investments fails, is poorly run or acts improperly, harming investors regardless of the underlying assets.
Expected Loss — The average loss a lender anticipates on a loan portfolio, calculated as probability of default times loss given default times exposure.
Default — The failure of an issuer to meet a contracted obligation - a missed coupon, a missed principal repayment, or the breach of a term that permits creditors to demand repayment.

You are the lender, so you inherit the lender's worst day — Private credit means lending money outside public bond markets - to companies, property projects or individuals - usually directly or through a platform or fund, with no easy way to sell the loan. (9 min)