Is Peer-To-Peer Lending Better Than an Online Commercial Lending Service?

Banks are not always the solution when it comes to borrowing money. Whether you’ve got a bad credit score or simply do not have a bank office nearby, getting loans online can be just as easy as borrowing money from a physical location.

This having been said, there are two main types of platforms that you can use in order to get loans, and each of them works differently. Choosing the right one can make a big difference in terms of what taxes and fees you have to pay, but also when it comes to what happens if you miss a monthly payment or need an extension on your loan.

What is peer-to-peer lending?

Peer-to-peer lending platforms are essentially websites that put borrowers in contact with lenders. They act as enforcers, protecting the interests of all users and ensuring that the transactions go smoothly and that everyone follows the terms that they agreed to.

Unlike how a bank offers a loan, these platforms have a minimal set of rules and regulations that affect how money is borrowed. Users who need loans simply submit their request and wait to be paired with a lender. Once this happens, both discuss the terms and conditions of the transaction and the money transfer is handled by the platform.

When it comes to credit score checks, peer-to-peer lending platforms do not usually perform them, nor do they report the loans to any of the national credit registers. Keep in mind that lenders may request that a credit score check be performed if they are unsure if they should offer a loan, but this does not mean that the money that you borrow will affect your permanent financial records in any way.

What is online commercial lending?

Online commercial lending websites are very similar to banks in terms of how they give out loans. The platforms pool the money that is offered by a large number of private creditors and offer loans or lines of credit to anyone who meets their requirements. Being organized as a singular platform, all transactions follow the same algorithms and rules.

Users who wish to get loans must create a user account, as with any other website and submit various personal and financial documents. In some cases they may also require you to submit your credit score, however, this information is usually only used for marketing purposes.

Commercial lending platforms can approve a loan request in under 24 hours, and transfer the money to the bank account of your choice in only a couple of minutes. These platforms are also the only ones that you can borrow large amounts of money from without having a guarantor. The downside is that they often have higher penalties if you miss a monthly payment or use a large amount of money out of your line of credit.

Peer-to-peer vs. online commercial lending – Which one is better?

Choosing between the two is more a matter of personal preference, but is should also depend on how much money you need to borrow. Here are the main things that you should keep in mind when it comes to these two types of platforms:

Peer-to-peer lending platforms


  • They offer more flexibility – You can get in contact directly with the individual that is giving you the loan, which means that you have much more freedom when it comes to coming to an understanding. Furthermore, interest rates are usually lower than on other platforms;
  • Less stressful – Missing a monthly payment does not have serious repercussions, for the most part. The majority of lenders can be reasoned with, giving you a few more days to return their money;
  • No credit checks – These platforms do not typically ask for your credit score nor do they perform any checks. This makes them ideal if you have a poor credit score that would prevent you from getting a loan from your local bank;


  • Only good for small loans – Peer-to-Peer platforms are generally used for borrowing small amounts of money (under 1000 pounds). Most lenders may not agree to give you larger sums unless you have a longer financial history with them;
  • Difficult to find long-term lenders – The standard period for borrowing money using these platforms is one month. It can be difficult to find lenders who will agree to give you money for longer periods;

Commercial lending websites


  • Great for large loans – Online lending websites can allow you to borrow up to 5000 pounds for periods that are greater than 24 months;
  • They offer lines of credit – These are the only online platforms that offer lines of similarly to how banks do;
  • Fast approval and transactions – The approval process for a loan request takes under 24 hours and the money is transferred in a matter of minutes;


  • Strict agreements – The agreements for most loans are strict and cannot be negotiated. While this is not necessarily a bad thing, it does make the platforms less flexible than others.


Overall, both platforms are as safe to use as regular banks. They are heavily regulated by the UK government and choosing one or the other is more a matter of how much money you need to borrow. Peer-to-peer lending platforms are more useful if you need small, short-term loans, while online commercial lending websites are more suited for borrowing larger amounts of money or requesting lines of credit.