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Major Banks Remain Standoffish Towards Involvement With P2P Lending

banks vs p2p lendersFrom -

Banks remain noticeably few and far between in the booming field of online marketplace lending.

The two largest U.S. platforms in this budding industry, Lending Club and Prosper, facilitated a combined $2.4 billion in loans in 2013, nearly triple the 2012 figure. Some investors are expecting explosive growth in the sector to continue over the next decade.

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Editor’s Notes:

  • The streamlined loan application process and increased availability of loans is a definite consumer need but many banks are staying out of the fray at present time. The double-digit returns that peer-to-peer lenders are able to earn still hasn't enticed most major bank institutions to join in. There are a few exceptions though.
  • One of the very few banks to take on loans through P2P platforms is Titan Bank, an $80 million-asset institution Texas, they acquire loans through both Prosper and Lending Club. Jonathan Morris, a director of Titan and president of its holding company, says these peer-to-peer loan arrangements are having great success.
  • SunTrust bank has opened a division that is actually serving loans much in the way that the major P2P lending platforms are doing. The division is known as LightStream and it offers an "Anything Loan" from $5,000 to $100,000 at rates of 1.999% to 9.999% and terms of 24 to 84 months. Prospective borrowers fill out a short online application and usually receive an answer the same day. These are not payday loans or loans for people with bad credit, they serve loans to borrowers with credit scores around 700.

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Peer to Peer Lending and Private Lending Info