ARTICLE
10 February 2015

P2P Lending Basics

MF
Morrison & Foerster LLP

Contributor

Known for providing cutting-edge legal advice on matters that are redefining industries, Morrison & Foerster has 17 offices located in the United States, Asia, and Europe. Our clients include Fortune 100 companies, leading tech and life sciences companies, and some of the largest financial institutions. We also represent investment funds and startups.
Peer-to-peer, or person-to-person, lending is a type of crowdfunding that involves the facilitation of loan originations outside of the traditional consumer banking system.
United States Finance and Banking

Peer-to-peer, or person-to-person, lending ("P2P lending") is a type of crowdfunding that involves the facilitation of loan originations outside of the traditional consumer banking system by connecting borrowers directly with lenders, or investors, through an Internet platform. P2P lending's use of Internet platforms reduces costs by eliminating many operational expenses associated with traditional consumer bank loans, such as the cost of maintaining and staffing physical branches. Some cost savings are passed along to borrowers through lower interest rates than those offered by traditional banks. P2P lending platforms may be subject to certain consumer banking and related regulations, and the funding side of P2P lending platforms is subject to SEC regulation. For more information about P2P lending, how it works, current regulations and considerations, see our client alert, "P2P Lending Basics: How it Works, Current Regulations and Considerations," available at http://www.mofo.com/~/media/Files/UserGuide/2015/150129P2PLendingBasics.pdf.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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