Home > Finance > Best Peer to Peer Lending Sites: Upstart vs Sofi vs Lending Club vs Prosper vs Funding Circle & More!

Best Peer to Peer Lending Sites: Upstart vs Sofi vs Lending Club vs Prosper vs Funding Circle & More!

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Lending club logo
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Upstart logo
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Prosper logo

Have you been turned down by a bank for the loan you need? Or are you worried your credit score won’t cut it? Whether you need to consolidate debt, boost your small business or want to make some home improvements, you’re still in luck. Peer-to-peer lending sites could be the answer to your financial needs. In many cases peer-to-peer (P2P) loans are an excellent alternative to traditional loans. But what are P2P lending sites? How do they work? What are the risks? And how do you know which site can provide you the type of loan you need? We’ll answer all these questions and more with our best peer-to-peer lending site reviews.

How Do Peer-to-Peer Lending Sites Differ From Traditional Loans?

The biggest difference is that everyday investors back peer-to-peer (P2P) lending sites rather than financial institutions. Many P2P lenders also grant loans to people who might not qualify for a traditional bank loan (i.e. if your credit score is lower or your small business isn’t showing strong profits yet). Also, P2P lending sites are known for quicker loan approval and disbursement of funds compared to traditional banks.

What Can I Expect as a Peer-to-Peer Borrower?

First, it’s important to know that your state may not permit you to borrow or invest with certain P2P sites. P2P lenders in the United States are required to register with the federal Securities and Exchange Commission (SEC), but each state has different regulations regarding securities.  Check each P2P lending site to see if your state allows you to invest or borrow money online with that company.

Most peer-to-peer lending sites allow you to check your interest rate or apply for pre-approval (often called a soft inquiry). This soft inquiry won’t negatively impact your credit score; applications for traditional loans usually affect your credit report. Similar to typical loans, P2P sites base your interest rate on your credit score, your credit history, your loan amount and terms (the period you’ve chosen to repay your loan).

Once you’re approved, P2P lenders assign your loan request a grade based on your overall risk factor as a borrower — these grades give investors the information they need to decide the level of risk they want to take with their investment (the greater the risk, the higher the investment returns).

What Kind of Loan Can I Get With a P2P Lender?

Want to buy a new car or house? Need to pay off medical expenses or high-interest credit cards? Does your small business need a boost? Debt consolidation accounts for more than half of all peer-to-peer loans, but you have a ton of options depending on the lending site. Most P2P sites offer personal and student loans. Others focus on peer to peer business lending. Our reviews below will give you a better idea of what type of loan you can get with each company.

Why Invest with Online Lending Companies?

Investing with a peer-to-peer lending company has a lot of benefits. First, average returns are higher compared to similar investment opportunities. And you’re in the driver’s seat — you choose who you want to fund based on the risk and potential yield. Many P2P lending sites allow you to lend money online for as little as $25!

Not a fan of big financial institutions? P2P sites eliminate the impersonal “big bank” approach to lending. Don’t forget, these are everyday borrowers who have genuine needs and heartfelt personal stories. You have the chance to make a real difference in someone’s life. The major drawback for potential investors? Most person to person lending sites require you to be an accredited investor, which may be a roadblock for some people (essentially this is individuals who make an annual income of $200,000 or greater, or have a net worth of at least $1,000,000).

You’ll want to watch this Money Talks News video if you’re considering investing in P2P social lending sites.

Are P2P Loans Risky Investments?

If you are interested in P2P investing, you should be somewhat risk-tolerant. The biggest risk is a financial loss. Most peer to peer loans are unsecured — if a borrower fails to pay, you lose some or all of your investment. Diversification with peer-to-peer loans is crucial, and most P2P sites allow you to do this pretty easily. That’s where “notes” and the risk grading system come in.

Individual investors have the ability to fund small portions of loans, called notes. As an investor, you can typically select many different notes to fund and the amount you’d like to invest for each note. As we mentioned above, a P2P site assigns each borrower a letter grade based on the borrower’s riskiness. So you can invest in a diversity of risk grades to minimize your risk of loss.

There’s always the risk of a peer-to-peer lending site going under. P2P notes typically aren’t guaranteed by a government body or other institution. That’s why it’s important to choose one of the best peer-to-peer lending sites.

Best Peer-to-Peer Lending Site Reviews

Below are our top three picks for the best P2P lending sites with pros and cons for each, followed by two easy to use comparison tables and then several other peer-to-peer lending companies that didn’t make our top three but are worth consideration. We’ve given you information to help you decide which site is best for you whether you’re a borrower or an investor.

Lending Club Review

#1

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Lending Club, the clear leader in this industry, wins our #1 spot for best peer-to-peer lending site. Lending Club has built a solid reputation since becoming one of the first peer-to-peer lending sites — they’ve granted more than $20 billion in loans since 2007, and they continue to have a loyal base of investors. They also offer competitive APRs, flexible terms, excellent customer service, good investment options and more. You can obtain small business loans up to $300,000 or get a personal loan up to $40,000 for a variety of reasons. Lending Club has competition, but their reputation is hard to beat.

Pros

Cons

  • Solid history, reputation and financial backing
  • Wide variety of personal lending loan types
  • Higher maximum personal loan amount than most
  • Can borrow up to $300,000 for small business loan, and they offer business line of credit
  • Variety of terms (2, 3 or 5-year personal loans; 1-5 year small business loans)
  • Borrowers get a dedicated adviser
  • For investors: not as many risky borrowers as some other P2P sites
  • More investment types than most, including IRA and 401K Rollover
  • Excellent customer service
  • BBB accredited rating: A+
  • For borrowers: more selective with who gets approved (minimum credit score not listed but was 640 last year)
  • High end of APR rate is above average
  • Investors incur hefty collection fees if loan goes unpaid
  • No weekend customer service hours
  • Check processing fee of $7 per month if you choose to make loan payments by check

Upstart Review

#2

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Upstart, our #2 pick, is a relative newcomer among peer-to-peer lending sites (launched in 2012 by “ex-Googlers”). But they’ve made a reputation for themselves with more than $300 million in loans and double-digit month-over-month growth. Geared more toward young professionals (20’s and 30’s), Upstart says they place more emphasis on the “potential” of borrowers, rather than static eligibility requirements. Their approval process considers employment history, schools you attended and academic performance among other factors. Upstart is a great option for people who haven’t had time to build up a long credit history.

Pros

Cons

  • Excellent reputation thus far, but not in the biz as long as Lending Club and Prosper
  • Wide variety of personal loan types, including student loans, business startup, medical expenses and more
  • Among the highest maximum personal loan amount at $50,000 (higher than our #1 pick)
  • Lower than average APR rates
  • For borrowers: Lower minimum credit score required for approval than Lending Club and Prosper
  • Excellent customer reviews
  • Customer service 7 days/week via chat, phone, email
  • BBB accreditation: A+
  • No monthly check processing fee
  • Small business loans are personal loans and capped at $50,000
  • Only offer 3- and 5-year terms
  • No dedicated adviser for borrowers
  • Late payment grace period is only 10 days (all others are 15 days)
  • For investors: Borrowers may be riskier due to lower minimum credit score requirements than Lending Club and Prosper

Prosper Review

#3

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Prosper, the first company to offer online peer-to-peer person loans, comes in 3rd place in our best P2P lending site reviews. Prosper and our number one pick, Lending Club, are the two major players in the industry. What keeps Prosper out of our top two spots? Prosper only offers personal and personal small business loans at a cap of $35,000, and their eligibility requirements are more strict than Upstart. But that’s good news for potential investors. Prosper has a long history of investor backing, and they’re careful about who they approve for loans.

Pros

Cons

  • Solid history and reputation (first P2P online lender)
  • Lowest interest rate out of companies we’ve reviewed
  • Wider variety of loans for personal use than most, including wedding costs, baby and adoption, engagement ring and more
  • For borrowers: better debt-to-income ratio to qualify than many other sites
  • For investors: Minimum credit score of 640 is higher than most (less risky borrowers)
  • For investors: easier way to diversify your investments than our top two winners
  • Good customer service with Saturday hours
  • A+ BBB accredited
  • No monthly check processing fee
  • Maximum loan amount only $35,000 for all loans
  • Small business loans only available as personal loan (and capped at $35,000)
  • For borrowers: Higher minimum credit score (640) than many alternative sites
  • Highest upper end of APR rates we’ve seen
  • Only offer 3- or 5-year terms
  • No dedicated adviser for borrowers
  • Investors’ collection rates for unpaid loans are high at 17%-35%

P2P Lenders Compared Side by Side

We’ve compiled side-by-side comparison tables to help you easily see the differences between our best peer-to-peer lending sites. Our first comparison table is for borrowers, and the second is for investors.

For Borrowers

 Winner: Lending Club2nd Place: Upstart3rd Place: ProsperCircleBack LendingFunding CirclePeerformSoFi
Winner: Lending Club2nd Place: Upstart3rd Place: ProsperCircleBack LendingFunding CirclePeerformSoFi
Read ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead Review
Visit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit Website
Personal LoansCheckmarkCheckmarkCheckmarkCheckmarkCheckmarkCheckmark
Small Business LoansCheckmarkAs a personal loanAs a personal loanAs a personal loanCheckmark
Minimum Loan Amount$1,000 Personal; $5,000 Small Business$1,000$2,000$3,001$25,000$1,000$5,000
Maximum Loan Amount$40,000 Personal; $300,000 Small Business$50,000$35,000$35,000$500,000$25,000$100,000
Minimum Credit ScoreUnlisted620640UnlistedUnlisted600Unlisted
Check Your RateCheckmarkCheckmarkCheckmarkMust applyMust applyCheckmarkCheckmark
Lowest Interest Rate5.32%4%3%5.96%5.49%6.44%Unlisted
Lowest APR Rate5.99%4.66%5.99%6.63%5.49% (interest rate)7.12%5.95%
Highest APR Rate34.34%29.99%36%34.93%27.79% (interest rate)
29.99%12.99%
Origination Fee1-6%1-6%1-5%.99-4.99%.99-5.99%1-5%None
Approval Time7 Days AverageAs Soon as 1 Day7 Days AverageAs Soon as 1 DayUp to 72 Hours1-14 DaysSeveral Business Days
Loan Terms24, 36 or 60 months personal; 1-5 years small business36 or 60 months36 or 60 months36 or 60 months12, 24, 36, 48 or 60 months36 months36, 60, or 84 months
Late Fee$15 or 5% of missed payment amount (whichever is greater)$15 or 5% of missed payment amount (whichever is greater)$15$15 or 5% of missed payment amount (whichever is greater)10% of missed payment amount$15 or 5% of missed payment amount (whichever is greater)$5 or 4% of missed payment amount (whichever is less)
Grace Period15 days10 days15 days15 daysUnlisted15 days15 days
Failed Payment Fee$15$15Unlisted$15$35$15Unlisted
Check Processing Fee$7$5Unlisted$15Unlisted
Dedicated Account Advisor$15 or 5% of missed payment amount (whichever is greater)$15 or 5% of missed payment amount (whichever is greater)
Customer Service HoursMon-Sat: 6am-5pm PSTMon-Sun: 6am-5pm PSTM-F: 8am-9pm; Sat. 9am-5:30pm ESTUnlistedM-F 8am-8pm PSTM-F 9am-6pm ESTM-Th 7am-8pm; F-Sun 7am-4pm PST
Visit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit Website
Read ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead Review

For Investors

 Winner: Lending Club2nd Place: Upstart3rd Place: ProsperCircleBack LendingFunding CirclePeerformSoFi
Winner: Lending Club2nd Place: Upstart3rd Place: ProsperCircleBack LendingFunding CirclePeerformSoFi
Read ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead Review
Visit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit Website
Minimum to Invest$25$100$25Unlisted$500UnlistedUnlisted
Manual InvestingCheckmarkCheckmarkCheckmarkUnlistedCheckmarkCheckmarkUnlisted
Automated InvestingCheckmarkCheckmarkCheckmarkUnlistedCheckmarkCheckmarkUnlisted
401K RolloverCheckmarkCheckmarkUnlistedUnlistedUnlisted
IRACheckmarkCheckmarkCheckmarkUnlistedCheckmarkUnlistedUnlisted
Risk GradingCheckmarkCheckmarkCheckmarkUnlistedCheckmarkCheckmarkCheckmark
Return Range5%-8%Unlisted4.32%-11.25%UnlistedUnlistedUnlistedUnlisted
Monthly Service Fee1%Unlisted1%Unlisted.083%UnlistedUnlisted
Reinvest OptionCheckmarkCheckmarkCheckmarkUnlistedCheckmarkUnlistedUnlisted
Customer Support HoursM-F: 7am-5pm PSTM-F: 6am-5pm PSTM-F: 11am-8pm ESTEmail only to get startedM-F: 8am-6pm PSTM-F: 9am-6pm ESTM-Th: 7am-8pm; F-Sun: 7am-4pm PST
Read ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead ReviewRead Review
Visit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit WebsiteVisit Website

Other P2P Lending Sites

Click on a link below to jump straight to a peer-to-peer lending review you’re interested in, or just keep scrolling.

CircleBack Lending | Funding CirclePeerform | SoFi

CircleBack Lending Review

CircleBack Lending logoVisit Website

CircleBack Lending launched in 2012, but this peer-to-peer company that offers personal loans online took some time to get its footing. In 2014, the global investment bank Jeffries securitized $500 million in consumer loans, which was a huge boost for CircleBack. Still, the company is far from the big leagues in this industry, and it needs more time to build a solid track record. An important note: CircleBack Lending isn’t available for borrowers in 15 U.S. states.

Pros

Cons

  • Wide variety of personal loan types, including medical expenses, motorcycle or boat purchase, wedding/engagement ring purchase and more
  • Loan approval as early as one day after applying (much quicker than our top 3)
  • Slightly lower origination fees than most competitors
  • A+ BBB accredited rating
  • Check processing fee lower than many at $5 per month
  • Reputation needs improvement
  • All loan types capped at $35,000
  • Higher than average APR rates compared to other peer-to-peer loans
  • Small business loans only available as personal loan
  • Only offer 3- or 5-year terms for repayment
  • No dedicated adviser for borrowers
  • No information for investors on website (you must contact them)
  • Customer support via email and phone but no hours listed (and no help center)

Funding Circle Review

Funding Circle logoVisit Website

Funding Circle is a global leader in peer-to-peer lending, but you won’t find personal loans here. They focus entirely on small business P2P loans — and they do it well. Since 2010, Funding Circle has lent more than $2 billion to over 5,000 businesses. What’s their secret? All of Funding Circle’s loans are secured. In early 2015, Victory Park Capital backed Funding Circle’s loans with a hefty $420 million in capital. But Funding Circle remains a powerhouse for investors wanting the higher returns with online person-to-person loans. They’re not the go-to place for startups, however. To qualify, you must submit two years of business tax returns among other criteria. Funding Circle no longer has a minimum revenue requirement, and you no longer have to show a profit in the last two years.

Pros

Cons

  • Excellent reputation and solid backing
  • All loans are secured (most P2P loans are unsecured)
  • Small business loans up to $500,000
  • Competitive APR rates
  • Flexible terms at 1-5 years
  • Loan approval within 72 hours
  • Dedicated account manager and personal underwriter provided
  • Investment options include Fractional Loan Marketplace or Diversified Income Fund, LP
  • Responsive customer support via phone and email
  • BBB accredited: A+
  • No personal loans
  • Not for startups — must have been in business for at least two years
  • Minimum loan amount is $25,000 (may be too high for some small businesses)
  • Late payment fees higher than other P2P sites we reviewed
  • No weekend customer support hours

Peerform Review

Peerform logoVisit Website

Peerform hasn’t been in the P2P lending industry as long as Lending Club or Prosper, but a six-year track record is impressive in the ever-changing world of web-based companies — and especially regarding P2P online loans. Peerform’s minimum credit score is 600, lower than most peer-to-peer lending for bad credit. But, you’ll pay higher APR rates with Peerform. They offer personal loans for debt consolidation, installation loans, wedding loans, home improvement, medical expenses, moving and relocation, and car financing (no small business loans).  On the investment side, Peerform mainly focuses on institutional investors rather than individuals.

Pros

Cons

  • Six-year history of solid lending
  • For borrowers: lowest publicized minimum credit score to qualify
  • You can submit income sources other than employment to qualify
  • Potential for quicker loan acceptance than with other sites
  • Ability to accept partially funded loans with certain restrictions
  • Investing allowed in all 50 states
  • Doesn’t offer small business loans
  • $25,000 cap on all loans (less than most)
  • High interest and APR rates
  • Only offers 3-year payback terms
  • Investing is largely limited to institutional investors
  • For borrowers: you incur a collection fee up to 33% if loan goes into default
  • No weekend customer service hours
  • No dedicated adviser
  • Not BBB accredited
  • $15 check processing fee

SoFi Review

SoFi logoVisit Website

Social Finance, Inc. (SoFi) launched in 2011 as a peer-to-peer lending site for student loan refinancing, but in 2015 they expanded into personal loans. They also offer MBA loans, parent loans and mortgage loans. SoFi has impressively low APR rates for student loan refinancing — you can even consolidate federal and private loans. Their rates for personal loans are competitive, and with each type of loan, you can choose a fixed or variable rate. In 2014 SoFi got a financial boost with $200 million in Series D funding from Third Point Ventures, but they still welcome everyday investors. There’s not much on their site about the investment side, so you’ll have to contact them to learn more.

Pros

Cons

  • Good reputation as a trustworthy P2P lender
  • Very competitive APR rates for personal loans
  • Personal loans up to $100,000 and student loan refinancing up to total amount owed
  • Low student loan refinance APR rates, starting at 2.2% variable or 3.5% fixed
  • Flexible terms for repayment
  • No borrower origination fees for all loan types
  • Ability to consolidate federal and private student loans
  • Only site we reviewed that offers unemployment protection (they suspend your loan payments if you become unemployed)
  • Accepts co-signers for MBA loans and student refinancing in some situations
  • Offers career assistance and job placement support
  • Good customer support 7 days/week via email, phone and live chat
  • No small business loans
  • Strict eligibility requirements, including good credit score, strong employment history, solid income, etc.
  • Must have a degree from a Title IV accredited university or graduate program to qualify for student loan refinancing
  • No dedicated adviser
  • Website lacks information for potential investors
  • Not BBB accredited

Can I Trust Peer to Peer Lending Sites?

Peer-to-peer lending is an industry that’s in constant flux. But for now, we believe you can trust our best peer-to-peer choices. Why? The traditional peer-to-peer lending model hasn’t held up over the last few years, and most peer to peer lending platforms have had to turn to investment brokers to provide the funding many of their loans. So, their financial backing is more solid. For borrowers looking for the alternative to big banks, P2P lending is still a much better choice. And for investors, there’s still a large market of qualified borrowers.

Which peer-to-peer lending site would you recommend and why?

Sally is a passionate writer but her interests do not stop there. She spends a lot of time daydreaming about the beach, however, she spends most of her time taking advantage of all the activities her town has to offer in the foothills of the Blue Ridge Mountains.

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