Personal Borrowers: Everyday Needs and Debt Consolidation
These are individual borrowers looking for funds to cover personal expenses. This includes everything from medical bills and car repairs to wedding costs and home improvements. Many personal borrowers use P2P platforms as an alternative to credit cards or traditional bank loans. One of the most common reasons is debt consolidation. This allows them to merge multiple high-interest debts into a single loan with better terms.
Most personal borrowers are salary-scheme individuals. They tend to have average to good credit scores and borrow between €2,000 and €25,000. Personal loans are typically also unsecured, with no collateral. This can increase risk, but many platforms mitigate this with rigorous credit scoring and risk-based interest rates.
Business Borrowers: Fueling Growth and Expansion
Borrowers in this category include small and medium-sized enterprises (SMEs), startups, and sometimes even established businesses seeking alternative financing routes.
Business enterprises take loans for various reasons. These include:
- Inventory purchases
- Equipment upgrades
- Marketing campaigns
- Short-term cash flow needs
Many turn to P2P lending because traditional banks often have rigid requirements that are hard for younger or smaller businesses to meet. Borrowers include businesses that have clocked one year or have been operating for nearly 10 years. They can offer collateral and/or personal guarantees and take loans of between €5,000 and €500,000.
Such loans typically carry higher returns but also carry higher risk. So to allow lenders to know what they're getting into, P2P platforms might offer business credit scores, financial statements, or revenue projections.
As far as risk and return expectations go, business borrowers have a commendable default rate. Research carried out by the European Investment Bank found that while personal borrowers had a default rate of 3.56%, the public counterpart had a default rate of 2.59%. This can be explained by various factors including loan type, loan amount, repayment terms, and economic conditions, to mention a few.
Real Estate Borrowers: Bridging Property and Capital
This includes real estate developers, renovators, or landlords looking to fund new builds, refurbishments, or property acquisitions. Unlike large real estate firms, smaller players often don’t have the capital or credit history to secure big bank loans. P2P platforms help to fill that gap.
Real estate borrowers typically pledge their property as collateral and borrow between €50,000 and over €1 million. They generally have fixed terms and clear exit strategies (e.g., property sale or refinancing). Property-backed loans are among the most popular on P2P platforms. They offer lower risk due to collateral but are also less liquid due to longer holding periods.
Whether it’s personal, business, or property lending, the success of a P2P platform hinges on smart borrower selection and efficient risk-sharing. That’s why a platform like 8lends stands out. This Swiss crowdlending platform uses advanced credit scoring to support everything from local businesses to sustainable housing projects, giving investors strong returns while diversifying risk across a variety of real-world borrowers.
Student and Education Borrowers
The reason for student loans is not farfetched. College fees can be very expensive and unaffordable for many, leaving prospective students not many options other than acquiring student loans. However traditional student loans are not always available nor affordable, particularly for vocational or international study. Fortunately, P2P lending is flexible.
Borrowers in this group usually include young adults, often with little credit history. They rely on projected future income and typically request €1,000–€20,000.
These loans give lenders mixed feelings with the returns. They are smaller and can diversify a portfolio, but repayment hinges on future earnings, making them higher risk. All involved parties have to hope that borrowers lead successful lives in the future with well-paying jobs to offset these loans. Despite this concern, P2P education lending has not suffered a setback in recent years. Lenders and borrowers may have a good story to tell after all.
Green and Sustainability-Driven Borrowers
Green and sustainability-driven borrowers are another interesting type of borrowers. These are individuals or businesses borrowing for eco-friendly initiatives, whether solar panels, electric vehicles, sustainable farming, etc.
As awareness grows around sustainability, P2P platforms now feature “green loans” to support climate-conscious projects.
The profile for green and sustainability-driven borrowers differs somewhat from other forms discussed earlier. They vary from homeowners to agri-tech startups. Also, they often qualify for lower interest rates or receive platform incentives, and borrowing ranges from €5,000 to €100,000.
Lenders and borrowers alike find pleasure in this niche because it promises more than just financial advantages. Many lenders are drawn to these loans not just for returns, but for their impact. P2P Platforms often include environmental metrics alongside financial ones.
Medical and Emergency Borrowers
Medical and Emergency borrowers are people needing urgent funds for medical treatments, surgeries, or family emergencies. The importance of this provision can not be overemphasized. When insurance isn’t enough or isn't available, P2P lending can provide a lifeline with faster approval times.
There’s no age limit for borrowers in this category. They have varying incomes and borrowing amounts can range from as low as €500 to as high as €50,000. This type of loan often needs quick disbursement, because of the urgency that often accompanies the needs.
Though emotionally driven, these loans can be high-risk. However, some platforms offer guarantees or pooled risk-sharing to reduce exposure.
Niche and Emerging Borrowers
There is a large variety of people represented in this field, which are not usually able to receive traditional loans – freelancers, gig workers, expats, as well as small cooperatives. Their financial needs are not within the traditional framework, which can make accessing loans in conventional banks difficult, even impossible.
P2P lending appears to represent a more flexible and individual solution in the eyes of people who often apply for that credit. Their loaning requirements are usually situation-specific, i.e. money to start a small business, buying professional equipment, or even moving somewhere to achieve better opportunities. Loan amounts tend to be small and income might be of non-traditional type, e.g., remote work or foreign remittance to the country.
This is a challenge and an opportunity for lenders. They can be designated as higher-risk because their financial situations cannot be assessed with references to the common metrics. They are, however, also a growing group of underbanked citizens that have integrally become part of the digital economy. When sufficient precautionary measures are adopted, this kind of lending can create access to emerging markets.
Final Thoughts: What This Means for Investors
Any P2P investor should gain an insight into the diversity of borrowers. All categories of borrowers are associated with different risks giving them different risk characteristics, and they also have different returns and ethics attached to them. Even when it comes to diversification or social impact, if you want steady income to achieve your portfolio target, there will probably be a portion of a borrower classification that will fit your purpose.
By understanding platform data, borrower profiles, and risk ratings, investors will be more informed in their decisions and will help support people with real projects.
Ready to support real people with real projects – while earning steady returns? 8lends connects you to a carefully vetted range of borrowers, from climate innovators to community entrepreneurs. With smart diversification tools and industry-leading recovery protocols, it’s P2P lending done right.
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