Build a Peer-to-Peer Lending Business Platform

Consulting firm PwC estimates that the P2P lending industry will grow to $150 billion by 2025. The peculiarity of transactions on the platform is a simple process and time saving for participants. People do not have to meet in the office and wait for documents to go through nine rounds of approvals.

Often, most business processes are automated, and a small but strong team is working on an investment project. In this article, you'll learn how to capture a share of this rapidly growing market by investing in your own peer-to-peer P2P lending software development.

What is P2P lending platform?

This is a mechanism for lending money, where lenders and borrowers are equal parties (individuals and / or companies) and the process is carried out without the participation of intermediaries in the form of banks, credit brokers and other traditional financial institutions. In most cases, such relationships are built on the Internet on special sites - P2P platforms.

lending software development

P2P Lending Platform Types & Models

There are currently four common business models in peer-to-peer lending:

  1. Standard P2P lending;
  2. P2P lending with a loan originator;
  3. P2P lending bank-funded;
  4. Balance-sheet lending.

In standard peer-to-peer lending (example 1), there is only one intermediary between you and the investor, the platform, which makes both the business model and the incentive of the platform fairly easy to understand. 

In P2P lending with lenders (example 2), there are two independent parties between you and the borrower (platform and lender), making it difficult for investors to understand the incentive of the platform and who is borrowing on the platform. 

The latter two business models are closer to shadow banking and whether or not they should be included among peer-to-peer loans is being debated.

P2P Lending Platform Features

As with any other software, the functionality decides whether your product will be of interest to users. It is of course besides the SaaS tech stack that will affect the quality of your platform.

Therefore, in order to interest the audience, remember the following features.

Loan Origination

The core feature for every peer to peer lending app and loan origination is a well-structured process, where the borrower will apply for a loan, and the lender reverts on the application. You are required to offer the most comfortable loan application. However, it is challenging to create and design such processes, considering the high number of necessary information required from the borrower.

Loan Calculator

The borrowers calculate the loan instalments and interest based on the term period and interest rate. While there are various methods of manually calculating these components, it would be quite difficult to do for most borrowers. To simplify the process, you can implement a loan calculator within your P2P lending app. 

Pro Tip: Even if you add the calculator on the home screen, you need to offer a separate page where users have multiple calculation options to choose from.

Credit Score

Credit scores are numerical figures representing the creditworthiness of an individual based on their credit files. The credit score is what decides in the first place whether the individual is eligible for the loan or not. The user would either enter their credit score during the onboarding process, or do it while applying for the loan, depending on your user experience strategy. The investor would assess the credit score and decide if they want to grant the loan.

Loan Application Matching

Your P2P lending app should also have an automatic loan application matching ability, so that the borrowers’ applications can be automatically matched with the investors’ preferences. It would make your app more effective in terms of quickly finding the perfect borrower-investor matches.

Auto Investment

This is the most advanced feature for P2P lending apps. The AI-powered algorithms would allow investors to diversify their portfolios based on some predefined parameters. It will enable the investors to invest in the areas where there is high yield or where there was a risk level which matched the investor’s defined risk appetite. Investors are very likely to be fascinated by this useful feature.

Document Scanner

The borrowers will have to upload many documents and files to be eligible for a loan and to obtain the loan. Hence it’s convenient for them if you add a document scanner feature into your P2P lending app.

How to Start a Peer to Peer Lending Business

Typically, the regulator needs to provide the following documents:

  • Information about the legal entity that will organize the P2P platform;
  • Information about the board of directors, including their education, work experience and business reputation;
  • Financial reports for the last 3 years;
  • Business plan and organization structure;
  • Business model, description of financial flows and assets;
  • Description of internal anti-money laundering policies and procedures (AML/KYC policies).

This is a basic list of documents, which may vary depending on the requirements of the local regulator.

How To Build a P2P Lending Platform

We’ve already considered this topis in the other article on developing a custom fintech app. But let’s take a closer look at p2p lending platform development.

Step 1: Decide on the business registration form

When choosing a form of registration of a legal entity, you need to consider the following points:
Registration as a corporation or limited liability company will protect against creditors in case of bankruptcy or force majeure.
Corporations are subject to significantly more requirements than LLCs, including requirements for accounting and tax reporting. In addition, corporations must hold shareholder meetings at regular intervals.
Different forms of incorporation imply different tax statuses, however an LLC can choose to pay taxes as an LLC or as a corporation.
The corporation is required to distribute profits and losses according to the share of ownership of each member.In an LLC, the distribution takes place according to an operating agreement, the terms of which are determined by the participants of the company.

Step 2: Register a company name

Usually, you need to register a company (trademark) in the state in which the business will operate. For P2P platforms, this is the location of the main office. At this stage, you need to consider the following points:

  • The name must be free, which can be checked on the website of the US Patent and Trademark Office;
  • The trademark name does not have to be the same as the domain name;
  • Registration rules can vary greatly from state to state;
  • It is desirable that by the name of the company people can understand the field of activity and the form of registration (this is mandatory). For example, "P2P Lending, Inc" if it's a corporation, or "P2P Lending, LLC" if it's a limited liability company.

Step 3: Register the Platform Domain

Domain is the address of your website. It should not be very long and easy to read. Abbreviations are welcome if it is an abbreviated brand name. Important points at this stage are:

  • The domain, like the company name, must be unique. You can check whether a domain is free or not on many sites that are easy to find using Google;
  • Domain registration costs money. As a rule, these are small amounts - up to $20, but there may be exceptions depending on the domain zone - $100 or more;
  • When you register a domain, you don't own it, you rent it.

Step 4: Create a team

This is the main factor in the success of any project, so the choice of a team must be approached with all seriousness. To do this, follow these recommendations:

  • The staff needs to be staffed with people who know how to manage a website and experts in finance, financial law, marketing or advertising;
  • In addition, we need people with banking experience who understand how to build a credit business and assess credit risks;
  • You need to hire people with a long-term focus, that is, immediately offer long-term contracts and social packages with accumulating bonuses.

If possible, it is better to hunt employees from other companies, preferably successful ones. Such people have the experience, the necessary skills and understanding of the task. In addition, this way you at least a little, but shake the position of competitors.

Step 5: Raise money for start-up capital

In addition to the maintenance of the site and other operating expenses, you will need money at the start to issue the first loans. You should not count on the fact that P2P investors will immediately come to your site. You can raise money in the following ways:

  • Initial Coin Offering (ICO/STO). You can create tokens that will generate dividend income or reduce fees;
  • Attracting venture capital. To do this, you need to draw up a detailed business plan and reach out to business angels - people who invest a lot of money in exchange for a share in the business;
  • Bank loan. A solid deposit is required.

The amount of start-up capital depends on the cost of developing the platform, the size of the team, and the marketing strategy. The cost of creating a platform for P2P lending ranges from $20,000 to $100,000. It will take the same amount for marketing promotion, if you use bounty campaigns - a little less.

Step 6: Develop a P2P Platform

The platform can be created from scratch by hiring a team of blockchain programmers or by outsourcing development. However, it is better to use White Label solutions - ready-to-use products that can be customized. When using White Label, it is important to remember:

These are template solutions that are not suitable for unique loan products. You can integrate your own lending scenarios into the White Label, but this will require hiring the appropriate specialists.

Such products contain fewer errors and are more trusted by users. The development time of a P2P platform from scratch is from 8 to 16 months. With White Label, this time can be cut in half. The cost will also decrease.

Step 7: Create a web portal

When creating a high-load site for peer-to-peer lending, it is important to consider the following points:

  • The portal should be integrated with the maximum number of payment gateways;
  • The site interface should be intuitive and support several major languages;
  • Some White Labels include basic website designs.

It should only be used as a draft. The design of your site should be unique and recognizable.

p2p lending platform development

Step 8: Site and platform testing

Each custom use case for the platform needs to be tested to make sure everything works as it should. In this case, the most attention should be paid to:

  • Security. The connection with the user and payment gateways must be encrypted, personal data is hidden behind seven seals, and financial gateways are closed with 1000 and 1 lock.
  • Usability. The user at the first transition to the site must understand how to register, apply for a loan or invest money;
  • performance. You can find out the speed of loading a site on different devices using the PageSpeed ​​Insights service. There are also tools to improve the performance of the portal.

Step 9: Launching the Platform

Before launching the site, you need to conduct a marketing campaign, offering the first users - borrowers and investors - discounts, lower (or higher for investors) interest rates, more loyal loan terms, and the like. But at the same time, you need to remember about:

  • Fraudsters who want to get a loan and disappear. There are a lot of such people at the start, as it is possible to find loopholes in the risk assessment algorithm or user identification;
  • Hackers who can launch phishing resources, try to hack a site or carry out a DoS attack (on order from competitors).

Step 10: Start Help Desk

Despite all the precautions, testing and debugging, the platform after launch is almost guaranteed to contain errors and bugs. And most likely, they will be detected not by regular specialists, but by users. Therefore, it is important to quickly launch a support service, which will work with maximum load in the first few months. Thanks to this, you will be able to:

  • Catch and destroy most of the errors and bugs;
  • Understand what was missed at the time of development, and quickly add the missing features, elements or instructions;
  • Get feedback from users and understand what needs to be improved so that the platform becomes more convenient and understandable.

Cost Analysis For Starting A P2p Lending Platform

The total cost of developing a P2P money lending app depends on a number of factors, such as the overall complexity of the solution, the features required, the tech stack, the hourly rate of the developers, the composition of the team, etc.

On average, p2p lending platform development requires about 2200 development hours, which corresponds to a budget of about $110,000.

How to comply with government regulations

In the modern world, the volume of P2P lending amounts to tens of billions of dollars, and every year they grow. This is especially true for European and Asian P2P lending markets. What jurisdiction to choose to create a P2P platform?

Great Britain

P2P lending is regulated by the Financial Conduct Authority (FCA). The authorized capital is £ 50,000.

Terms, interest rates, marketing materials and information on the website must be completely transparent and not mislead the client. It is also necessary to clearly identify all the risks to the client. P2P platform investors can contact the financial ombudsman service to handle complaints. Borrowers are entitled to a cool-down period within 14 days of taking out a loan. During this period, they may refuse to pay the penalty/fee credit.

Be aware of the exceptions: P2P platforms that operate on a tip or donation model do not require authorization from the FCA.


P2P lending is regulated by the Bank of Lithuania. The authorized capital is EUR 40,000. The Bank of Lithuania is considered one of the most progressive and loyal regulators in relation to the FinTech sphere, therefore it is much easier and faster to obtain a license in Lithuania. The term of receipt is 1 month.

In the future, it will be possible to resort to the possibility of passportization and, together with EMI or PSP licenses, work on the territory of other EU countries.


Since March 2016, P2P lending platforms have been required to obtain a license from EFSA. Companies can obtain a license as a credit intermediary or lender. As an exception, companies that operate on a tip or donation model do not require licensing.


P2P lending is regulated by the Finnish Financial Supervisory Authority (FSA). The authorized capital is EUR 50,000. Any handling of client funds must be carried out jointly with a partner bank or payment system, or the company must obtain a payment system license itself.

p2p lending platform development


In Germany, there is no legislation regarding P2P lending. However, activities related to the issuance of loans fall under the Banking Law. Consequently, market leaders and other platform operators work with partner banks as intermediaries.

Note that a similar regulatory regime is applied in France and Italy.


P2P lending is regulated by the Portuguese Securities Market Commission (CMVM). Both lending-based crowdfunding platforms and investment-based crowdfunding platforms are regulated. The authorized capital is EUR 50,000.

Final Thoughts

When you decide to start peer to peer lending software development, there are many things to consider, from features that will help you stand out in the market to rules and regulations, since you are dealing with other people’s finances. A trusted fintech solution development partner like Ardas will help you sort out all of these issues. Get in touch with us!

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