Peer-to-peer lending, also referred to as P2P lending, is simply a money lending activity to individuals or businesses throughout online websites or apps. The P2P company, which is the lender, offers lending services to individuals and businesses with an easy easier process than the traditional lending practices used by banks and other traditional lending institutions.
Even though the regulations of peer-to-peer lending business in South East Asia are not fixed in some countries, the lenders commonly target particular businesses and people.
Peer-to-peer lending is steadily gaining more attention in South East Asia. There are many reasons for this. The borrower, both businesses and individuals, that borrow money from the P2P company, can get the loan easily and at lower rates. For this reason, many new borrowers in South East Asia constantly get attracted to participate in the practice. Besides, this practice is popular because P2P lending companies don face any competition from the local banks. There are many other reasons why the popularity of peer-to-peer lending business in South East Asia continues to grow:
- Many businesses are not able to get bank loans
As already been stated above, Peer-to-peer lending companies target businesses and individuals. One reason this practice is gaining much attention in South East Asia is because there are very many companies that are unable to secure a bank loan. Most of these companies are small and medium businesses with lack of capital and assets.
- Easier and faster
Since peer-to-peer lending business in South East Asia is operated online, the entire lending process is far much easier as compared to the traditional lending practices. All procedures can be completed digitally, and face-to-face meeting is not necessary. It actually takes a minute or less to complete the procedures digitally. After completing all the required steps, the loan is quickly approved or rejected without any delay.
- Lower rates
Another reason peer-to-peer lending business has become popular and a trend among millennials in South East Asia is because of the lower interest rates that they attract. Most companies that deal in peer-to-peer lending tend to offer far much lower interest rates than those of bank loans. Besides, these companies also offer easy payment procedures than bank loan.
However, the interest rates may increase gradually depending on the loan platform. To avoid the higher rates, the borrower should pay of their loan before the due date. This is because in some cases, you will have to pay a fine if you fail to pay on time.
- There are so many unbanked businesses and individuals
Many people living in the larger South East Asia are still unbanked. This side of the world is one of those places with very large number of productive people but many of them are unbanked. When this group of people want to start businesses, their application for bank loan is most likely to be rejected. So, they usually turn to peer-to-peer lending companies, which do not put emphasis on whether an individual or a business is banked or not.