Peer-to-peer is a way to borrow immediately from individuals. In most cases, the lender and borrower do not meet. Although there are many ways to do this, it is usually quite simple.
The borrower registers on one or more peer-to-peer sites and is then matched with interested lenders. Lenders are selected based on the borrower's interest rate and other factors. You can also find detailed information about peer-to-peer lending at Crowdfunding-platforms
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Over the last few years, the P2P industry has seen rapid growth. In 2005 there were $118 million in outstanding loans. By 2011, it had risen to more than $500 million. P2P sites make a profit by charging borrowers interest rates (often 2 to 5 percent above what lenders require).
A P2P loan process has a success rate of about 10%. Because new ventures require less funding than in the past, microfinancing is becoming more popular.
Crowdfunding is another creative funding option that has developed in recent years. Crowdfunding, also known as crowd financing, is a way for individuals to pool their resources and finance a project independently of a financial intermediary. However, unlike P2P, crowdfunding is not purely for financial gain.
The "lenders" are often more like donors than lenders. An entrepreneur may go on a crowdfunding site and propose the amount for the project. If the pledge amount is met, the funds will be received by the crowd funders. Crowdfunders usually receive something in return.
For example, a product or album from the business, but not their money back. Funds are not considered donations in strict terms. Studies show that the main motivation for most backers is their reward. Crowdfunding sites make a small profit (around 5%) by taking a percentage of the money raised before it goes to the entrepreneurs.