One of the reasons why people confuse crowdfunding with peer-to-peer P2P lending and Investing is that the word ‘crowdfunding’ is often used as a catch-all term for many different financial activities. For the purposes of this P2P And Crowdfunding Reviews, we’ll be using crowdfunding to refer to two specific types of finance: equity crowdfunding and reward-based crowdfunding reviews.
Peer-to-peer lending is a different model: rather than owning a stake in a business, investors’ money is matched, via an online platform, to a loan for a person or business. A loan is very different from equity: it’s a specific amount of money, repaid over a defined term, and investors earn a return via interest payable on the loan.
Generally, the risks and rewards are more modest with peer-to-peer lending. RateSetter, for example, has facilitated £1.4 billion of loans, but no investor has ever lost a penny – although this is not a guarantee for the future. On average, its investors have earned a return of 4.7%.
Peer-to-peer lending platforms may specialize in lending to certain types of borrower – individuals, businesses or property businesses – or may diversify across borrower types.
In this section, you will see the most popular P2P And Crowdfunding platform Reviews.