Ever since Lending Club's wildly successful IPO in December of 2014, peer-to-peer lending has been thrust into the forefront of the financial world in regards to alternative lending options. Even though more and more people are becoming aware of this disruptive alternative lending option and financial experts often recommend p2p loans as a debt consolidation option, many still remain in the dark. So we will get a clear view of what peer-to-peer lending is in this series of articles. Let's get started, shall we? Firstly, I don't want you to be confused by the different names it may go by. Peer-to-peer lending goes by several titles. Its been called person-to-person lending, p2p lending and social lending. It can clearly be described in this manner: money being lent by people without a financial middleman to other people in need of loans. The established classification from Wikipedia is "the practice of lending money to unrelated individuals, or 'peers', without going through a traditional financial intermediary such as a bank or other traditional financial institution." Fundamentally, it involves people who have cash (investors) lending directly to people that need cash (borrowers). Clearly this is something that's occurred between people ever since money existed. But now,with the explosive development of internet websites aimed at filling consumer needs, this lending theory has been introduced and implemented on the web now. Because of these technological advancements, borrowers can get loans from people they've never met before and retail investors are able to lend to anonymous borrowers according to their credit info. The individual lenders choose what level of risk to assume according to each borrowers creditworthiness and other factors, even the story behind why the loan is needed can come into play. You'll find a multitude of lending platforms around the globe that are making peer-to-peer lending available. In America there are two widely-recognized p2p lending firms: Prosper and Lending Club. In addition, there are several businesses that do what is seen as "direct peer to peer lending". These companies are different in the sense that they mainly formalize financing agreements between two parties that personally know each other like family and friends. Businesses in the US doing this now are LendingKarma, Nationwide Family Mortgage, ZimpleMoney and several more. They handle the funding procedure for you and assist with setting up the contracts between the two parties. While these firms supply an invaluable service, the emphasis of this article will focus on the mass-market peer-to-peer lending platforms like Prosper, OnDeck & Lending Club. In addition, I need to high a differentiation between peer-to-peer lending and micro-finance. Microfinance generally handles quite small loans measurements (under $1,000) and are often run by nonprofit companies. I'm a huge supporter of micro-finance companies like Kiva, however, they serve another function and also have different goals from peer-to-peer lending platforms like Lending Club and Prosper.