Poverty is a global problem, it exists even in economically advanced countries. One of the most effective methods of reducing it is to provide poor but business oriented people with the much-needed capital. With today’s inter-connectivity advancements, it is now possible for lenders to provide personal loans to borrowers residing halfway across the world.
Peer to Peer(P2P) lending is the practice of loaning to an unrelated individual(peer) without the use of traditional intermediaries like banks or financial institutions. This personal approach results to people gaining access to money at very low rates or even with no interest. It is an alternative financing system that’s way more effective than banks.
How do lenders connect with borrowers? It is through the use of free online lending platforms.
One such platform is Kiva.Org. It is a non-profit organization with the main objective of “connecting people through lending to alleviate poverty”. They have a worldwide network of micro-finance institutions which they call Field Partners who administer the loans in the lender’s behalf. You can lend for as low as $25.00 and immediately make a big impact on other people’s lives. One hundred percent of your loan is sent to these institutions without any interest or deductions.
Another website that’s highly recommended is Zidisha.Org, which was founded in 2008. I consider it the truest form of a peer to peer lending in the sense that it has completely gotten rid of the middleman. In their platform, its just you and the borrower which they call an entrepreneur.
Estonia based Bondora offers the Go and Grow investment product. It is an automated highly liquid but low risk diversified loan portfolio that promises a return of up to 6.75%* p.a. They charge a flat €1 withdrawal fee regardless of the account size.
Mintos is a loan aggregator, getting loans from partner lending companies around the world. Invest for as low as €10 per loan and get as high as 12.08% income per year. More than 95% of the loans come with a buyback guarantee. This means if the loan is delayed by more than 60 days, the lending company will automatically buy back the investment and pay the interest.
There are lots of platforms out there and the easiest way to gather information is to visit CrowdSourcing.Org. According to their site, they are the “leading industry resource offering the largest online repository of news, articles, videos, and site information on the topic of crowdsourcing and crowdfunding”. This is where I came across Zidisha.
Got an innovative project that will save the world but lacking funds? Kickstarter is a crowdfunding platform that brings people with ideas and people who have funds together and enable the idea to become a reality. Ideas can be about anything like technology, films, games, music, art, etc. By resorting to crowdfunding, creators increase their chances of launching their projects compared to say, applying for a bank loan. One good thing about this service is, the originators of the idea/project retains ownership.
Despite the good intentions, take note that peer to peer lending is not an investment, rather it is about helping through lending. Having said that, there’s a chance that you might lose your money and this happens when the borrower defaults on their loans. Most of the time this is not intentional but due to circumstances. This is especially true in areas that experienced war or calamity that completely destroyed their livelihood. These setbacks, if they do occur, shouldn’t deter you from doing a very noble gesture.
Locally, Vidalia assures a 2-18% depending on the term selected. 2 months get you 2.75%, while 12 months gives out the maximum. 5,000 PHPH minimum investment required. AcuDeen allows investors to buy a business’s receivables. 1,000,000 PHP minimum investment. FarmOn is special, it focuses on investments in agriculture projects.
Personally, I’m happy knowing that I have done my share of helping others in achieving their goals.