P2P lending connects individual retail investors with prospective borrowers. While traditional banks rely on rigid underwriting guidelines, P2P platforms leverage broader credit signals.
1. P2P Marketplace vs. Brick-and-Mortar Bank
| Feature | Peer-to-Peer (P2P) Marketplace | Traditional Bank / Credit Union |
|---|---|---|
| Application Processing | 100% Online / Automated | In-Person Branch Visit Often Required |
| Funding Speed | 1 to 3 Business Days | 5 to 14 Business Days |
| Underwriting Flexibility | Algorithmic (Cash flow + Credit) | Rigid FICO & Strict W-2 Requirements |
| Prepayment Penalties | $0 (Zero Prepayment Fees) | Varies by Institution |