Question 1: P2P Lending Attempts To Connect Borrowers Who

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QUESTION 1: P2P lending attempts to connect borrowers who have been either denied by traditional banks for loans or borrowers who see cheaper loan service to lenders prepared to take a chance on those borrowers. Prior to the 2008 crisis banks were lending way more than they actually had and following the crisis, they gave significantly less than they had in order to be precautious, this allowed for P2P lending to emerge. The goal for banks was to make money off certain borrowers with a minimum credit score to alienate risk, however, P2P lending gets rid of the intermediary and empowers lenders to choose who they want to lend to based on whether they want to take a risk on a borrower for a higher return or play it safe and get a small risk…show more content…
Lenders do not need to be a part of a firm to lend and the lenders are empowered in the sense that they can pick and choose which borrowers to lend to based on if they want risk associated with it or a non-risky loan guaranteeing them a small payout. Borrowers also benefit because they remain anonymous throughout the process, most of these loans are unsecured meaning they do not need to place anything they own of value against this loan. Borrowers also save money with these lower rates as opposed to going to a bank for a higher interest rate. Credit scores do not matter because the lenders choose who they want to lend to and if they want to take a risk on you they can. QUESTION 3:
Company: Propser SoFi ThinCats Lending Club
Minimum Credit Score Score of 300 N/A N/A Score 640
Business Model Receive between a 1%-5% fee from borrowers based off borrowing amount. Also receive 1% servicing fee from lenders. Target students attending elite universities. Also include other loans like mortgages and personal loans. Receives money by charging investors servicing fees and selling loans to investors at a premium. Also SoFi holds a few loans and collects interest on them. Target businesses. Do not charge lenders or borrowers for the primary loan market, however charge 1% to the sellers of secured SME loans. Charge 1.1%-5% origination fee based on the borrowers credit score
Lending Loans can be anywhere between $2,000 and $35,000. Borrowers post how much of a loan
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