Find the latest business news on Wall Street, jobs and the economy, the housing market, personal finance and money investments and much more on ABC News.A loan shark is a person or body who offers loans at extremely high interest rates usually without holding relevant authorisation from the local financial regulator.Learn about real estate education, schools, training, laws, license requirements and more in the state of Massachusetts.Peer to peer lending Wikipedia.Peer to peer lending, also abbreviated as P2.P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.Since peer to peer lending companies offering these services generally operate online, they can run with lower overhead and provide the service more cheaply than traditional financial institutions.As a result, lenders can earn higher returns compared to savings and investment products offered by banks, while borrowers can borrow money at lower interest rates,123 even after the P2.P lending company has taken a fee for providing the match making platform and credit checking the borrower.There is the risk of the borrower defaulting on the loans taken out from peer lending websites.Also known as crowdlending, many peer to peer loans are unsecuredpersonal loans, though some of the largest amounts are lent to businesses.California Finance Lenders Law License Search' title='California Finance Lenders Law License Search' />Secured loans are sometimes offered by using luxury assets such as jewelry, watches, vintage cars, fine art, buildings, aircraft and other business assets as collateral.They are made to an individual, company or charity.Other forms of peer to peer lending include student loans, commercial and real estate loans, payday loans, as well as secured business loans, leasing, and factoring.The interest rates can be set by lenders who compete for the lowest rate on the reverse auction model or fixed by the intermediary company on the basis of an analysis of the borrowers credit.The lenders investment in the loan is not normally protected by any government guarantee.On some services, lenders mitigate the risk of bad debt by choosing which borrowers to lend to, and mitigate total risk by diversifying their investments among different borrowers.Other models involve the P2.P lending company maintaining a separate, ringfenced fund, such as Rate.Setters Provision Fund, which pays lenders back in the event the borrower defaults, but the value of such provision funds for lenders is subject to debate.The lending intermediaries are for profit businesses they generate revenue by collecting a one time fee on funded loans from borrowers and by assessing a loan servicing fee to investors tax disadvantaged in the UK vs charging borrowers or borrowers either a fixed amount annually or a percentage of the loan amount.Compared to stock markets, peer to peer lending tends to have both less volatility and less liquidity.CharacteristicseditPeer to peer lending does not fit cleanly into any of the three traditional types of financial institutionsdeposit takers, investors, insurers1.Slide1.jpg' alt='California Finance Lenders Law License Search' title='California Finance Lenders Law License Search' />Typical characteristics of peer to peer lending are it is sometimes conducted for profit no necessary common bond or prior relationship between lenders and borrowers intermediation by a peer to peer lending company transactions take place online lenders may often choose which borrowers to invest in, if the P2.P platform offers that facility the loans can be unsecured or secured and are not normally protected by government insurance but there can be protection funds like those offered by Zopa and Rate.Setter in the UK loans are securities that can be transferred to others, either for debt collection or profit, though not all P2.P platforms provide transfer facilities or free pricing choices and costs can be very high, tens of percent of the amount sold, or nil.Early peer to peer lending was also characterized by disintermediation and reliance on social networks but these features have started to disappear.While it is still true that the emergence of internet and e commerce makes it possible to do away with traditional financial intermediaries and that people may be less likely to default to the members of their own social communities, the emergence of new intermediaries has proven to be time and cost saving.Extending crowdsourcing to unfamiliar lenders and borrowers opens up new opportunities.Most peer to peer intermediaries provide the following services online investment platform to enable borrowers to attract lenders and investors to identify and purchase loans that meet their investment criteriadevelopment of credit models for loan approvals and pricingverifying borrower identity, bank account, employment and incomeperforming borrower credit checks and filtering out the unqualified borrowersprocessing payments from borrowers and forwarding those payments to the lenders who invested in the loanservicing loans, providing customer service to borrowers and attempting to collect payments from borrowers who are delinquent or in defaultlegal compliance and reportingfinding new lenders and borrowers marketingHistoryeditUnited KingdomeditThe first company to offer peer to peer loans in the world was Zopa.Since its founding in February 2.Funding Circle became the first significant peer to business lender launching in August 2.Funding Circle has lent over 1.January 2.Both Zopa and Funding Circle are members of the Peer 2 Peer Finance Association P2.PFA.In 2. 01.Quakle, a UK peer to peer lender founded in 2.Bay the model failed to encourage repayment.By June 2.UK Rate.Setter, Zopa, and Funding.Circle had issued over 2.In 2.In 2. 01. 2, the UK government invested 2.British businesses via peer to peer lenders.A second investment of 4.The intention was to bypass the high street banks, which were reluctant to lend to smaller companies.This action was criticised for creating unfair competition in the UK, by concentrating financial support in the largest platforms.Investments have qualified for tax advantages through the Innovative Finance Individual Savings Account IFISA since April 2.In 2.ISAs,2.P2. P platforms.By January 2.P2. P providers were approved to offer the product.Many more peer to peer companies have also set up in the UK.At one stage there were over 1.FCA authorisation, although many have now withdrawn their applications.Since April 2.Financial Conduct Authority.Peer to peer investments do not qualify for protection from the Financial Services Compensation Scheme FSCS, which provides security up to 7.In 2.UK peer to peer lenders collectively lent over 3bn to consumers and businesses3.United StateseditThe peer to peer lending industry in the US started in February 2.Prosper, followed by Lending Club and other lending platforms soon thereafter.Both Prosper and Lending Club are located in San Francisco, California.Early peer to peer platforms had few restrictions on borrower eligibility, which resulted in adverse selection problems and high borrower default rates.In addition, some investors viewed the lack of liquidity for these loans, most of which have a minimum three year term, as undesirable.In 2.Securities and Exchange Commission SEC required that peer to peer companies register their offerings as securities, pursuant to the Securities Act of 1.The registration process was an arduous one Prosper and Lending Club had to temporarily suspend offering new loans,3.U.K. based Zopa Ltd., exited the U.S. Hack Artmoney Resident Evil 4 . 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