The definition of 'Peer-to-peer (P2P) finance'
Peer-to-peer finance, often abbreviated as P2P finance, refers to the direct exchange of money from individuals to other individuals or businesses through a platform that bypasses the traditional financial intermediaries such as banks and other institutions.
Peer-to-peer finance encompasses a range of financial products that includes bother debt (Peer-to-peer loans, invoice finance, mini-bonds, etc.) and equity (equity crowdfunding).
In the beginning, companies raising finance through equity or debt were often unable to get it from traditional sources though this has now changed. Lenders are attracted by the rates offered which tend to be much higher than those they would get from a savings account and investors are attracted by the potentially high returns that can be made from investing in an early stage business.