Forbes:
Credit-market carnage makes it all the more important for small businesses to understand the full range of potential sources for capital. A growing alternative to traditional sources: person-to-person lending Web sites.
These sites, with names like Prosper.com, Zopa, Lending Club and GlobeFunder, use social networking tools and other software to simplify the borrowing and lending of capital between strangers and even family and friends. For entrepreneurs, these sites offer an alternative and needed source of capital. For lenders, the fast-growing sites offer competitive rates of return and the opportunity to easily participate in the cornerstone activity of capitalism.
The overall online market for person-to-person lending is still small, as are the size of loans. The largest and one of the oldest sites, Prosper.com, has originated $120 million in loans since it started in 2006. Most loans offered by P2P sites max out at $25,000. With the uptick in the number of Web sites in this market, though, both the size of the market and the loan amount could increase substantially in the next several years. In 2007, several sites, including GlobeFunder and Lending Club, launched; and Zopa, a United Kingdom-based site, expanded into the United States.
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