Peer-to-peer business lending explained

How peer-to-peer lending works

Peer-to-peer (P2P) lending, also called marketplace lending, connects businesses that want to borrow with investors — individuals and institutions — willing to lend, through an online platform. The platform is the intermediary, not the source of the money: it lists your loan, sets the framework and handles repayments, while the actual funds come from the investors behind it.

In practice you apply to the platform, which assesses your company and assigns a risk grade. That grade drives the interest rate offered. Your loan is then funded — either by many investors each contributing a slice, or by institutional money flowing through the platform. Once live, you repay through the platform, which distributes the money to the investors. The model grew up to offer an alternative to bank lending on both sides: a route to capital for borrowers, a return for lenders.

The cost and speed trade-offs

P2P sits between high-street banks and the fastest alternative lenders, and it involves real trade-offs:

• Cost. Your rate is set by the platform's risk grade plus its fees. A strong, well-established company can secure competitive pricing; a higher-risk profile pays more, because investors demand a return for the added risk. There is usually an arrangement fee on top.
• Speed. This is the variable to watch. Application and grading can be quick, but a loan still has to be funded by investors. With strong appetite that happens fast; in a thinner market, or for a larger or riskier loan, funding can take longer, and your cash arrives only once the loan fills.

That funding step is the structural difference from a direct lender: with P2P you are partly dependent on investor demand, not just a single yes-or-no credit decision.

How it compares to a direct lender

A direct lender — like Credicorp — lends its own capital. There is no marketplace and no waiting for a loan to fill: the lender assesses your company and, if approved, funds it directly. That tends to make the decision and the timing more predictable, because one party controls both.

Neither is universally better. P2P can be competitive for a strong borrower and is worth comparing; a direct lender removes the funding-demand uncertainty and keeps the relationship with one counterparty.

Choosing between them

P2P can be a good fit if your company has a solid profile likely to earn a favourable grade, and you are comfortable with funding that depends partly on investor appetite. It is worth getting a quote and putting it alongside other options. A direct lender suits you better when speed and certainty matter most, or when you would rather deal with one party from decision to drawdown.

Credicorp lends its own capital directly to limited companies, with decisions based on company affordability and no personal guarantee — your loan is funded on approval, not when a marketplace fills it. Compare the routes using our choosing a business lender guide, then explore our business loans or register to apply. This guide is educational, not financial advice.