The Best Peer to Peer Lending for Investors: What are Your Options?

Peer to peer lending – a system through which people lend directly to other individuals and businesses – has become popular among investors in recent years. But while peer to peer lending offers real rewards, you need to do your research before you make an investment.

Different types of peer to peer lending, for example, may suit different investors. That’s why we’ve prepared this guide to three prominent types of lending: consumer loans, small business loans, and property loans.

Consumer Loans

Consumer loans have been around since 2005, with the launch of Zopa. They are therefore the ‘classic’ form of peer to peer lending and still remain popular today. Typically, people take out consumer loans to help cover expensive purchases, such as weddings or holidays. Other people use these loans to simplify and consolidate their financial obligations, such as credit card debt.

As a result, consumer loans are usually small and unsecured, with interest rates from 4-5% per annum. Peer to peer platforms that offer these loans typically assess borrower reliability with data from Experian or Equifax, which sort consumers by their credit ratings, helping investors to make informed decisions. Another advantage is that consumer loans have a relatively low investment threshold, with some platforms letting you invest with as little as £10.

Small Business Loans

Small business loans are aimed at active limited companies and are typically secured against the business’s assets. The borrowers are typically small companies seeking to expand their operations, finance expensive asset purchases, or bridge short-to-medium term cash flow issues.

The investment threshold is a little higher here than with consumer loans, but you usually still only need £1,000 to get started. The returns, meanwhile, usually range from 6-7%.

Property Loans

Investing in a peer to peer property lending is a simple way to bypass many of the barriers associated with traditional property investment. For example, with secured peer to peer lending options ranging from short-term bridging loans for homeowners to financing for larger development projects (check out: property development investment), investors have plenty of choice over how to use their money.

Moreover, in 2016 the UK government introduced a peer to peer lending ISA (known as an Innovative Finance ISA), which can be based on a portfolio of property loan investments.

Again, you can get started with as little as £1,000. Unlike owning a buy-to-let property, you do not need to to manage property or find tenants (or pay an agent to do this) when you invest in a loan. And interest rates on property loans are often higher than rental yields, so you can expect to earn between 7-10% per year depending on your loan of choice.

This return may depend on the level of risk involved in the loan, which is a key factor. But investors can mitigate risk via due diligence. And you can secure a loan against a property using a first legal charge, so the lender will always receive a pay-out first if the borrower defaults (however, property prices can go down as well as go up so this does not mean that you are guaranteed to get your capital back).


Type of loan




Average minimum investment


Average interest rate


IFISAs available?


Consumer loans

Loans to individual consumers, usually small and unsecured  



4-5% p.a.




Small business loans

Loans to small businesses, usually secured  



6-7% p.a.




Property loans

Loans to property buyers or developers, usually secured  



7-10% p.a.



What Makes a Great Peer to Peer Lending Platform?

As well as the type of loan you want to invest in, you need to consider the lending platform you will use. But what makes a good peer to peer lending platform? Key questions to ask include:

  • What is the background and experience of the lending team?
  • What is the overall track record of the platform?
  • How easy is it to access information about your investments?
  • What are other customers saying about the service?
  • How thorough is the platform’s due diligence process?
  • What processes does the platform put in place to secure investors’ capital?
  • What is the range of investment options offered?

best peer to peer lending

Peer to peer lending platforms should want you to make an informed decision, so they should make the answers to the questions above easy to find. It’s also a good idea to contact the platform directly if you have any questions. If you can’t find key details about how a platform operates – and they won’t respond to your questions – you may want to look elsewhere!

There are many lending opportunities available and as such the investment that works best for you will depend on your personal financial goals. And this means you need to do your research. Nevertheless, investing via peer to peer lending is much better than letting your money stagnate in a traditional savings account.

If you’re looking for the best peer to peer lending for investors or other property investment opportunities, we can help. Register for an account or get in touch with our specialists today.

Your capital is at risk and rates are not guaranteed. Please read our Important Information and Risk Warning before investing.