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Introduction.

There's nothing new in Person-to-Person lending as an investment opportunity and a way to borrow money.

There is nothing new in the idea of social lending, where one private person lends money to another; where it is nothing whatsoever to do with the banks or finance companies. These private social lending arrangements are known by a variety of terms such as; peer-to-peer lending and person-to-person-lending. The advent of Web 2.0 technology has made the internet an ideal medium for social lending; connecting together those able to lend money and those seeking to borrow money. Needless to say the internet has come up with its own term for social lending; and seeing p-2-p lending on a website is quite intuitive as to what it is referring to.

Who uses social lending websites?

Quite simply there are two groups of people who want to use social lending websites. Those with money that they are prepared to lend money as an investment opportunity and those who, for whatever reason, need to borrow money. So, for the lender you can decide on the sort of return you want for your investment and then choose a social lending website that offers the level of return you expect to make. Whilst, for the borrower, you can decide which of the social lending websites will best serve the request that you will make to borrow money from. We now need to consider what that means for the lender and the borrower separately.

Social lending websites for the lender.

Just a few clicks on your mouse can get you linvesting money in a social lending website.

To be a lender on a social lending website you will need to register with the website and satisfy some criteria that you are able to provide the funds to furnish the sort of loans you’ll be offering. We’ll presume that your registration all goes well and you are accepted as a lender by the social lending website. If you look at some of the leading social lending websites on the internet you’ll find that they can offer various returns on the loans you might make. So, before deciding which social lending website(s) you want to register with do ask yourself: “Are you lending money purely to make a profit, or for more philanthropic reasons”? The reason for this is because you will find some websites are targeted at people purely looking to lend money for a profit and others that are more biased towards using p-2-p loans to help people; who would otherwise be unable to borrow money, through the usual banks and finance companies. Regardless of whether you choose to work with a people-to-people lending website that offers you a high return on your investment or a low one - it will have requests to borrow money from a very diverse range of people and, ultimately, you can decide how worthy their request is, if that aspect of making a loan is important to you. This means that you can decide which people or projects you want to lend money to. No matter whether you want to only lend a few hundred dollars or tens of thousands of dollars - there will be requests for loans that you can buy into.

Social lending websites for the borrower.

As a borrower in a social lending website - no one will try and 'strong-arm' you!

[You too should look at some of the various peer-to-peer social lending websites and make judgments as to which one(s) will best fit the sort of loan you're looking for. However, having decided which website(s) to use, you too will need to register with that website. For you, this will almost certainly include having your credit score checked. Having a poor credit score won't necessarily bar you from joining the p-2-p lending club. However, the website will need to be able to assure the potential lenders that they will get their money back; and a poor credit score might mean that you have certain repayment restrictions placed on any loan you seek. Essentially this means the more credit worthy you are the more favorable you can expect the repayment period and rate of interest to be.  People apply to borrow money on social lending websites for all sorts of reasons, indeed for just about any reason at all. So whether you're looking for capital to start up or develop a business, need a loan to buy something, are planning a wedding or even need help with your student loan - borrowing through a p-2-p system could be just the thing for you. Regarding your money borrowing status - if you do have a very poor credit rating or are considered to have a very low economic status - see the later section on Micro-Credit.

How do you actually borrow money in peer-to-peer lending?

It's as simple as this: having registered with a peer-to-peer lending website all you need to do is state how much you want to borrow and what the money will be used for. Of course the more details you can add - the more responses to your request you can expect. For example, saying you want to borrow $10,000 for your business is one thing. Saying you want to borrow $10,000 for your printing business to buy a top-end commercial color laser printer in order to take advantage of ... I'm sure you'd agree would be more helpful. Some p-2-p lending websites allow you to indicate the sort of interest and repayment rates you'd like to make. However, the final decision on that is often down to the lender. Don't worry if you want to borrow a very large or even a very modest amount of money either. You'll almost certainly find lenders willing to accommodate your request. The lenders on the website can then view your request and make offers to you. You then simply select the lender you'd like to work with, perhaps giving them some more details about your request; and wait for the money to be transferred to you.

Social money lenders and entrepreneurship.

You can get good returns from social lending, just watch your annual profits rise from the great investments you make.

In wanting to become a money lender on a social lending website you will undoubtedly have that streak of entrepreneurship within you. Whether you’re seeking small or big returns on your investment - you will have that mindset essential to being willing to take control of commercial activities. Of course commercial opportunities come along in all manner of types and sizes - but, don’t forget, you get to choose which ones you select to work with. If you’re getting involved with people-to-people lending for purely philanthropic/altruistic reasons - then you’ll probably be lending smaller amounts of money in the hundreds or a few thousand dollars. Anyone seeking to make some serious money through peer-to-peer lending will, of course, need to get involved in bigger and possibly longer term projects - in the tens of thousands of dollars if not more; that is where the real entrepreneurship comes in. However, it doesn’t matter how much money you personally have to invest in p-2-p loans - you can still become involved in the really big loan requests. Being based on Web 2.0 technology, social lending websites are ideal for bringing together lenders - who can then form a consortium to fund just about any borrowing request, which they could not have met as individuals. So, whether you want to become an investor with some redundancy money, a pension lump sum or savings that you have accrued - social lending could be an ideal opportunity to become your own boss and an entrepreneur.

Social lending websites and micro-credit.

A micro-credit loan could help someone with alow economy status develop a business opportunity.

Social lending websites are an ideal medium for anyone looking to become involved in micro-credit. Quite simply micro-credit is one of the terms used to describe the lending of money to people with a low economic status. The two other terms used for this are micro-lending and micro-loans. Micro-credit arrangements are usually made available to people for what would be seen as social/philanthropic projects. Subsequently, these loans are often made to people in developing countries and could be for projects such as helping someone complete their studies, or to enable a clean water supply to be accessed. However, micro-credit arrangements can also be made for purely commercial ventures too such as business developments. However, even then being a micro-credit arrangement it would have a social dimension to it; helping someone with a low economic status improve both themselves and those around them. The philosophy here being that in developing a successful business it will then generate new jobs/businesses around it, benefiting others in the community where it was founded. However, micro-credit loans are made on a commercial basis. This ensures that the recipient understands and is involved in a truly business transaction, whilst the lender sees a return on their money, for the inevitable risk that they would be taking.

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