By Alex Lee
NEW YORK, Jan. 25 (Business Law Currents) - With the promise of high yields, peer to peer lending is attracting record amounts from institutional investors and individual lenders alike, even in the face of a cloudy regulatory future. Potential uncertainty aside, the attraction of an estimated $2.5 trillion industry is proving too hard to pass up for investors. The two largest P2P lending companies, LendingClub and Prosper have funded loans so far to the tune of over $480 million and $290 million respectively.
By way of background, peer to peer (P2P) lending microcredit institutions sprang up in 2005 in order to provide needy borrowers with viable alternatives to normal commercial bank loans. This industry had as its backbone, the seemingly novel concept of stripping out intermediaries, such as banks, and allowing lenders and borrowers to connect to reach their own financial terms for loans via the internet. The nascent industry made significant strides when even credit-worthy borrowers were locked out of the commercial credit markets due to the credit crisis. (more…)
