Learning Centre

Peer to Peer Lending

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What is peer to peer lending?

Peer to peer lending is broadly defined as lending between investors directly to recipients of funds, that excludes a bank. A bank is an entity that lends from its balance sheet – a peer to peer lender’s primary mode of financing is not balance sheet based.

MarketInvoice’s unique offering

Unlike conventional working capital solutions, MarketInvoice doesn’t charge clients monthly fees,or require them to use MarketInvoice a certain number of times a year allowing firms maximum flexibility. We don’t ask for a personal guarantee or demand onerous charges. We also offer a completely confidential service.


Peer to peer lending is a mechanism of financing consumers, businesses and many other entities. A fast-growing area, peer to peer lending explicitly refers to internet based sources of finance. MarketInvoice is one of this group of financing mechanisms. Learn more about how MarketInvoice works here.

Peer to peer business finance

Peer to peer lending for businesses is a relatively new phenomenon. Peer to peer lending began with models such as Zopa, lending to consumers. In the UK, this was later followed by other consumer based peer to peer lenders such as Ratesetter, who innovated with their provision fund.

However, with the 2008 financial crisis, in the UK the big four retail banks restricted lending to SMES, who are critical to any economic recovery and general employment. Lending to businesses requires much larger volumes of capital and hence only began once the market had reached some maturity. The distinction between sole traders and businesses with regards P2P lending is important, as sole traders are classified as consumers, hence have more legal restrictions than lending to limited companies or LLPs, who are less at risk of misselling.

Different types of peer to peer business finance

When lending to businesses or SMEs, there are different models that lenders can take: they can lend on the basis of cash flow, a personal guarantee, or collateral. Collateral could be a property, or indeed an invoice. MarketInvoice works on the basis of the collateral of an invoice. This is similar to invoice finance or factoring, but different in a number of material ways. Lending on the basis of specific investors is secured lending; when there is no specific collateral this is unsecured lending.