Debt Finance (4)

Question 1

What is P2P lending?

Answer 1

A method of debt financing that enables individuals to lend money to small businesses without the use of an official financial institution as an intermediary

Question 2

Advantages of P2P lending (income)

Answer 2

Loans generate interest income for lenders

Question 3

Advantages of P2P lending (access)

Answer 3

Borrowers have access to finance when banks

Question 4

Advantages of P2P lending (middleman)

Answer 4

By effectively cutting out the middleman (i.e. the formal banking system), interest rates can be relatively attractive to both lenders and borrowers.