A Brief Guide on Balance Sheet Lending

P2P lending has seen continuous progress because it is easy for lenders
and borrowers to benefit from this helpful financing method. The loan
providers and loan searchers can do successful business without any
middle-person or any organisation. This technique assists those individuals
who find it difficult to receive a loan from banking institutes because of their
demanding terms. It also suits the investors who don’t receive high profits
from the traditional bank savings account or any other investment mode. In
simple words, this kind of lending provides a platform for receiving loans
smoothly without any strict terms and policies. You can utilise these loans
for a variety of reasons. That can range from paying for education,
mortgages, credit card loans and much more.

P2P lending platforms are emerging because of the above reasons all over
the world. The consistent evolution of this financial system has led to the
development of several P2P lending techniques that are successfully
implemented in the market. So we will focus on one of these techniques
called balance sheet lending in this post.

Balance Sheet P2P Lending Model

The balance sheet lending model is also known as the portfolio lending
model. In it, the platform offers the loan straight to the borrower or any
business loan searcher. The loan is recorded on the platform’s ledgers or
balance sheet. That is how its name originated.

The primary difference between P2P lending and balance sheet lending
lies in the risk placement. As a result, risk management differs in both
cases.

Who will be responsible if a borrower defaults?

When it comes to balance sheet lending, the P2P platform takes on risk by
itself. So the P2P portal will lose its money if the borrower doesn’t repay the
loan. The balance sheet lending model can have plenty of variations.
However, the common characteristic in all these models is that the P2P
platform grants the loan by itself and at its own risk.

Moreover, the benefit of Peer to Peer lending is that it consists of a quick

loan allocation procedure for the borrower. It also saves the lender plenty of
time and effort because they can search for the right borrower from the
P2P platform listings. As a result, people are optimistic about P2P lending
because this technique serves everyone in the best possible manner.

Why Should You Opt for P2P Balance Sheet Lending?

There has been an increase in the number of P2P balance sheet lending
platforms in the past years. This method of debt settlement is becoming
famous globally. There are plenty of perks of this lending technique. Some
of them are mentioned here:

● Borrowing is simple and highly economical.

● Investing is easy and smooth.
● The ROI (Return on Investment) is high.
● The online borrowing procedure is user-friendly and fast.
● The ROI is as per the risk taken.
● The borrowers can receive both small and big amounts of the loan
according to their requirements.

The Conclusion

Peer to Peer lending has seen steady growth over the years. So this
financial assistance method has developed several variations because the
investor and borrower types differ according to their requirements. For
example, specific lenders may like to rely on the platform for offering loans
to needy individuals because they prefer taking risks for higher gains.
Moreover, the platform may lend the loan itself in balance sheet lending,
removing the individual or institutional lenders from the scenario. Similarly,
the borrower types may also differ as per their needs. For example,
borrowers may require educational loans, car loans, property loans, or
credit card loans. So it is wise to have a thorough knowledge of P2P
lending models before investing or taking a loan. In this way, you will know
which platform is suitable to work with at the best rates and terms.

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