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If you are looking for a loan to float your business or maybe pay off some debt, you may want to consider a peer-to-peer (P2P) loan. A P2P loan can provide you the financing you need without the hassle of trying to apply for a conventional loan. It may be easier for you to secure a P2P loan than a traditional loan as there are investors backing the funding versus a financial institution.

Lending Club vs. Prosper vs. Upstart

Just like a traditional loan, P2P loans are backed by the Securities and Exchange Commission (SEC), but your state may have specific regulations about taking out one of these loans. Unlike a conventional loan, P2P loans typically have a lower fixed APR rate, which is, of course, dependent on your credit score.

Most P2P loans can be obtained in as little as one business day, making them a quick and easy route for consumers to take when they need money fast. P2P loans do have some fees that you may have to contend with such as origination, late payment, and failed payment fees. To help you select the right P2P lender, we’ve compared the top three in the industry. Here’s a look at the pros and cons of selecting between P2P lenders Lending Club, Prosper, and Upstart. 

Lending Club

Lending Club vs. Prosper vs. Upstart

There are several advantages to selecting Lending Club as your preferred P2P lender. The company has a strong reputation in the industry and is one of the best known P2P lenders in the market. If you are a business owner, you may want to sway towards Lending Club. It is one of the P2P lenders that offer larger loan amounts, which may be just what you are looking for.

Lending Club is also known for its variety of investment account options. You can select from an individual, joint, trustee, corporate, custodial as well as IRA accounts. Lending Club provides as much as a 99.9 percent return for its investor and does require a minimum credit rating for borrowers of 660, which is higher than most P2P lenders.

There are some drawbacks to considering Lending Club as a P2P lender. While for some a 660-credit rating may fit within their financial background check. Others may have trouble getting a loan with Lending Club if their credit score is below this rating. Lending Club also doesn’t offer the best APR rate, so you may pay more for your loan than with other P2P lenders.

There are also restrictions on who can borrow from Lending Club. If you are a resident of Iowa or Idaho, you are unable to secure a personal or small business loan with the company. On the investment side, only individuals in 33 states are eligible to invest with Lending Club. You will also find that Lending Club has a limited variety of personal loan options, making it difficult to find the right loan for your current financial situation.

Lending Club was formed in 2007 and is thought of as one of the first P2P lenders to offer P2P loans to consumers and businesses. It is a top performer in the industry with a strong investor base backing it. It is the ideal P2P lender for small businesses as well as personal borrowers that want to consolidate their debt or pay off their credit cards. 

Prosper

Lending Club vs. Prosper vs. Upstart

Another option for your P2P loan is Prosper. This company has an extensive array of personal loan options even including loans for military members, wedding planning, engagement rings, upcoming babies or adoption as well as bridge and short-term loans. It does offer one of the lowest APR rates in the industry and allows for a lower credit score rating from its borrowers versus other P2P lenders.

Interestingly, as much as 92 percent of Prosper’s employees are investors for the P2P loans the company offers. This is a sign that they support the company and its endeavors. Prosper is a very transparent company, providing its SEC and legal documentation all on its website. They also offer a program for finance professionals to get involved in and better understand the P2P lending process as a perk to the industry.

But, like all P2P lenders, there are some cons to be aware of with Prosper. The maximum loan amount the company offers is $35,000, which may or may not be enough for your business or personal loan requirements. Terms of Prosper’s loans only extend 36 or 60 months, requiring you to pay back your loan amount sooner than its competitors and it may be at a higher payment amount.

Investing in Prosper may be riskier for investors as the lower credit score requirements of its borrowers can mean poor payback coupled by a higher APR rate. The company has also received a large number of complaints through online forums, and many find their website challenging to navigate.

Prosper, like Lending Club, is a larger P2P lender and is considered by many to be a top player in the industry. Prosper’s parent company launched in 2005 and introduced the P2P lender’s website a short time after that. The company has generously provided $2.5 billion in personal loans while raising $70 million in funding from investors like Francisco Partners, Institutional Partners, and Phenomen Ventures. 

Upstart

Lending Club vs. Prosper vs. Upstart

Newer to the P2P loan market is Upstart. This P2P lender opened its doors in 2012 and does offer personal loans as well as student loans, relocation loans, travel loans, and medical bill loans to name a few. If you are entrepreneur looking to start your own business, you may find great success with partnering with Upstart for your P2P loan as it does provide small business startup loans to up and coming companies like yours.

You can easily get the assistance you need with Upstart as its customer service detailed and attentive. You can contact customer service through live chat, email or phone, giving plenty of options to get the information you need about your P2P loan.

The drawbacks to Upstart are few but necessary to know. The company does charge a $15 check processing fee if you pay your P2P loan payment by personal check. All investors must also be accredited to invest in the P2P loans that Upstart offers to its borrowers.

Upstart is a strong option for college students and entrepreneurs looking to secure a loan quickly and easily. The company makes a point of looking past your credit score number which can help riskier borrowers get the financing they need to get their feet off the ground and back to reality.  The loans from Upstart are not secured, but investors can purchase their own loan securities for peace of mind and ownership in the loans.

As you begin your search for a P2P lender, keep these three companies in mind as preferred options for your loan needs. While there are cons to each P2P lender listed here, their advantages may outweigh them, and you will find the loan option you are looking for at a rate you can afford. Think about what your P2P loan requirements are and consider Lending Club, Prosper, or Upstart as options to financing it. With a little bit of effort and homework, you match yourself with the right P2P lender and get started on your new business or personal venture.

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