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The SEC Slows Down Peer to Peer Lending

Person to person loans or peer-to-peer lending, often abbreviated as P2P lending is a type of financial transaction takes place directly between individuals or "peers" without going through a traditional financial institution, as a bench. P2P lending is mostly an activity for profit, no interest charged for providing the loan will make money with money borrowed. This difference of charities from person to person, person to person philanthropy and public funding to create connections between donors and recipients of donations, but contributions do not charge interest or make some money and supplies to profit.Lending friends family and members of the community is prior to the official formation of financial institutions. However, the birth of its modern form is the result of Internet technology by-products, especially Web 2.0, and the development of niche market. This was further fueled by the global economic crisis or recession that began in 2007. P2P platforms offering credit loans to individuals and companies at the time that banks and other financial institutions are having fiscal difficulties.

Peer-to-peer (P2P) or social lending websites have risen from the ashes of the recession and took the disgust that many have of our current financial institutions. Essentially, P2P lending sites cut out the middleman and allow you to lend directly to other individuals or companies. You choose how much to pay, you want to lend, and the amount of interest that should pay.The first person to person lending company to launch was Zopa in the UK, in 2005. Zopa is considered a big fish in the P2P market and represents approximately 2% of the market for unsecured personal loans in the UK. The site lets you choose the type of borrower, the level of risk they are willing to take, and the interest rate to be received. Your money is given to several different lenders approved to reduce the impact of defaults. When a payment is received a portion of your capital investment back, along with some interest. Zopa also pursue all past due payments either through a collection agency debt or the courts if necessary. However, despite these precautions, some default values ​​still occasionally occur and can eat into profits.

A similar site is the Circle of funds, but the key difference is that you are lending money to small businesses and not individuals. All business borrowers are identity fraud and credit controlled by the site and must have at least two years of audited accounts to be eligible for a loan. The company creates an application for a loan and indicated its interest rate target. Lenders are invited to offer their cash and specify what they want to receive. The main attraction of the Circle of financing is that you can see the type of business that your money will go to, check the accounts and ask questions about what your money will be used for.Peer to peer lending is a new type of loan that involves individuals lending money to each other. The SEC has made this business a little more difficult for the beginning involved.In peer to peer lending, regulation of the industry was lax. The loans were issued in amounts ranging from $ 1,000 to $ 25,000 during a period of three years.

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