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Peer-to-Peer Lending: Advocacy Analyzes Alternative Finance Option for Small Business

Release Date: 
Thursday, September 10, 2015 - 3:00pm
Release Number: 
Elle Patout

For Release: September 10, 2015                                                                                                                

SBA Number: 15-05 ADV                                                                               


Contact: Elle Patout


Peer-to-Peer Lending: Advocacy Analyzes Alternative Finance Option for Small Business


WASHINGTON – Today, the Office of Advocacy, an independent office within the U.S. Small Business Administration, released an issue brief entitled Peer-to-Peer Lending: A Financing Alternative for Small Businesses


Peer-to-peer lending (P2P) is an alternative funding model in which individual investors provide small sums as personal loans to individuals via Internet platforms.  In today’s brief, Research Economist Miriam Segal builds upon existing research and discusses the emerging funding option by explaining the investment model, comparing it to traditional small business financing options, and presenting implications regarding the future of peer-to-peer lending. While the brief outlines scholarly research on various sources of capital, this report also gives the research economist, the potential investor, and the small business owner, the most up-to-date information on different opportunities for accessing capital in today’s economy. 


            “This brief delves into a relatively new potential avenue of finance for the American small business owner,” said Christine Kymn, Chief Economist and Director of Economic Research.  “While there are still some uncharted waters for new lending platforms, this issue brief gives great guidance on the changing access-to-capital landscape for the American entrepreneur.”


The brief expands on these main points:


  • P2P loan growth is undeniable, and P2P lending platforms appear to fill a niche market for small business capital.
  • Because of the small-dollar amount loans and decreased application time offered by P2P lending, microbusiness owners could be attracted to it as an alternative to more traditional forms of capital; but the trade-off for convenience and matching is higher interest charges.
  • P2P lending has the potential to change the landscape of small business financing in the years to come.
  • The financial regulatory environment is also particularly important because new regulations could allow for more investors to participate in P2P lending, leading to an expansion of this industry segment.

In the future, if suitable regulations are put in place to allow for more investors while maintaining investor protections, the expansion of peer-to-peer lending could provide small business owners an additional opportunity to finance growth, allowing them to spend their time and effort running their firms as opposed to seeking capital.


The issue brief can be found here



The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. For more information, visit, call (202) 205-6533 or get updates on Twitter (@AdvocacySBA) or Facebook at