Peer-to-peer (P2P) or social lending sites rose from the ashes of the recession, taking advantage of people’s dislike for financial institutions like banks. These sites lend money to common people faster than the other financial institutions.

P2P is beneficial for borrowers as well as lenders. But if you are thinking to become a lender, you must know the proper way to invest in P2P lending.

Peer-to-peer or person-to-person lending is a fast and easy way to borrow money without any hassle. The transaction is done directly between two individuals – a peer-to-peer – without going through a third party, such as a bank or broker.

They are beneficial to both the individual and there is money to be made. Other transactions peer-to-peer, such as charity, person-to-person philanthropy, along with crowdfunding, did form a relationship between the recipient and the donor, but no realized gains.

Updating Old Concept

The rebirth of the old concept is the result of technology, especially Web 2.0 and the development of the concept of a niche market. Adding to that is the global economic recession. Because of the recession, banks and credit unions raised the benchmarks by which the borrower qualifies for a loan. They are very leery of taking on too much debt.

Funds for lending to dry; credit-crunch on. As it happens, the social lending website began to appear. This place cut out the middle man and allows people to lend directly to businesses or individuals.