Blockchain

How to build a P2P lending software?

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The concept of Peer-to-Peer lending (P2P) is not new. When you lend money to a friend, this is an example of a P2P financial transaction. If one of your relatives goes to a lender, promises some of their jewellery, and gets a loan of 50% of the value of the jewelry or equivalent, it’s P2P.

The most common lending process is people applying to the bank for a loan. However, banks are out of reach for many reasons like bad credit, job loss, non-payment of bills, and so on.

However, peer-to-peer lending allows people who do not have a bank to obtain a loan. P2P cryptocurrency lending involves loans with cryptocurrencies as collateral. One of the great advantages of lending through peer-to-peer cryptocurrency lending software is that no credit check is required. This means that even people with a low credit rating can easily get a loan.

Below we will discuss how to create a peer-to-peer lending platform

Peer-to-Peer Lending Software: An Overview

According to statistics from Allied Market Research, the global P2P lending market is expected to reach $ 558.91 billion by 2027, an increase of about 30% compared to 2020. Does this mean that potential borrowers are increasingly choosing web platforms instead of going to public or private banks? Yes, It does.

Indeed, why pay high-interest rates for the services of intermediaries when you can deal directly with the borrower? This is the decisive reason for the growth of P2P platforms. From the point of view of an entrepreneur who will launch a P2P lending platform, it is necessary not only to stay ahead of the competition but also to enter the market as soon as possible.

The peer-to-peer lending mechanism allows creditors and debtors to communicate and negotiate directly, without the involvement of third parties. A platform specially designed for this implementation is called P2P Lending Software. 

Why investing in a P2P lending platform is a good business idea?

A Peer-to-peer (P2P) lending platform is a more convenient alternative to traditional banking services because if you invest your money in the development of a P2P lending website, it usually costs much less than opening physical financial institutions.

Moreover, the relationship between debtor and investor is primitive and financially favorable for both parties to the transaction, as intermediaries (banks) are few or not at all. This means that there are a lot of people interested in using such a platform, at least among those who have a bad credit history and want to save money.

Selecting a Niche to Start a Peer-to-Peer Lending Platform

The peer-to-peer lending industry refers to allowing verified individuals to quickly obtain the amount they need from a lender who can grant a loan without going through a bank. So there are services in which some companies specialize, although not necessarily a niche. 

Here are some popular niches that will likely bring quick profits to your peer-to-peer lending platform.

  • Education and Science

  • Car loans

  • Business loans

  • Debt Consolidation

  • Real Estate 

  • Personal loans

  • Start-up loans

  • Medical loans

  • Commercial lending loan

  • Microloans

More expertise in specific sectors means more financing for lending businesses - and more available lenders willing to part with their money. This is possible for large P2P loan businesses, but a small business can only focus on one or two competencies.

How does P2P lending work?

In P2P lending, the investor has additional money that they are willing to lend. On the other hand, the investor receives interest for repayment of the loan. For starters, they sign up with a P2P lending platform like Prosper or LendingClub. This marketplace connects investors with borrowers who are looking for loans. After the borrower applies for a loan, complete some basic information as in the case of a conventional loan. Most of the financial products offered are personal loans, although the lender can set their criteria. For example, some lenders offer loans specifically designed for debt consolidation. Once a borrower fills out an application, the lender will check their credit score and decide whether to approve them for a loan. Once the borrower is approved, the lender will finance the loan.

How to create a P2P lending software?

Many P2P lending platforms are growing rapidly due to the profitability and success of independent lending models between investors and borrowers. To gain a competitive advantage and have any chance of success, start-ups in the industry must develop reliable, usable, secure, and multilingual peer-to-peer loan programs.

Here are 8 different steps for creating your peer-to-peer lending platform as follows:

1. Do Market Research

Before you start building a P2P loan program, it is important to understand the internal structure of the market. Moreover, the deploying software is aimed to attract the right audience and also focus on features that have to disrupt the market, it is important to understand the internal structure of the market. Explore key influential companies and analyze the traits that made them great. Accurately identifying their weaknesses and innovating to address them in your business will help you create a better P2P lending platform for your customers.

2. Customize your company's registration form

You need to find the form in which you want to register your business as a legal entity. Choosing between an LLC (limited liability company) and a corporation eliminates the established taxes, tax reporting, and accounting requirements, the profit and loss cycle, and your liability as a company to customers in the event of bankruptcy or force majeure.

3. Get a great domain after registering a business name

After obtaining permission from the patent and trademark authorities of your state, register the name to help customers understand the scope and form of your business. Companies need to consider the different registration laws that apply to specific states. After the name, choose a unique domain that can briefly identify your company.

4. Assemble a team of experts, involving Software developers

A strong team is one of the determining factors in the success of your business idea - they are responsible for delivering the best quality product on time. Therefore, try to find the best specialists for the implementation of each stage of project development - from marketers to developers. However, to save money, it makes sense to use the services of employee companies.

5. Allocate capital to a project or raise funds from investors

If you don’t have the budget to build a peer-to-peer software platform, you need to raise third-party capital to pay for your team. In particular, you can launch an ICO by selling the tokens from your platform at a very low price, attracting venture capital from trading angels (find on special websites), or getting a bank loan as collateral.

If your project is in the early stages of development, it is better to immediately apply the classic 3F rules (family, friends, fool) without seeking the support of investors (usually not interested in such projects). These are the people who can give you financial support if you have an idea (usually friends, or relatives). That way, if you have an MVP or a product presentation for your target audience, you can turn to a business angel for help.

6. Creating and implementing a P2P lending platform

When building a lending platform, you can follow two development concepts: build an online product from scratch or use a white label solution customized for your business needs. Usually, custom development gives you more scope to create an innovative solution than modifying an existing template. Note that the final choice of the technology stack — whether a custom development tool or an instant platform — depends on factors such as time to market, need for scale,  the need for budget savings in the early stages of development, etc.

7. Do end-to-end testing

Of course, your site is tested by a team of testers at every stage of development. However, this is not enough, before your business can be fully operational, it must be recognized by your target audience. To do this, you need to create a focus group that will give you effective feedback. Key aspects to control include security, accessibility, intuition, and performance.

8. Provision of technical support

Despite thorough testing, performance issues with your site are initially unavoidable. Therefore, you should cooperate with the service team before starting work. Usually, these services are provided by the same IT specialists who participated in the development of the website.

Traditional P2P platform Vs. Crypto P2P platform

The main difference between traditional P2P platforms and cryptocurrencies P2P platforms is that traditional P2P loans are unsecured, while cryptocurrencies are secured. Because traditional platforms do not require collateral, they more carefully weigh a borrower’s income and credit score to determine their suitability and level of risk for the lender. Bad credit can disqualify you as a borrower on a traditional P2P platform. P2P crypto lenders rarely see a borrower’s finances. Instead, rates depend on the type of collateral, loan-to-value (LTV), and loan period. This opens up crypto loans to people who may not qualify for a traditional P2P loan but have collateral. Traditional P2P loans can also take days to be approved and financed. It may take a few days for the P2P cryptocurrency lender to verify your identity. But if you have already created an account, you will receive an instant confirmation.

Attractive attributes offered in P2P lending software

  • P2P lending software eliminates the need for brokers to reduce transaction costs and reduce waiting times for users.

  • The whole process of P2P lending software is powered by smart contracts designed to manage all transaction flows without losses.

  • P2P lending software is integrated with advanced security protocols such as end-to-end encryption and 2F verification to prevent various hacks.

  • We have built a KYC and AML verification process into our peer-to-peer lending software for user security.

  • There is an integrated wallet activated with peer-to-peer lending software that allows both buyers and sellers to store, send and securely receive all transaction funds.

  • This brings more transparency to the P2P lending platform so that users have full control of their transaction funds.

Why Us to deploy the P2P lending software?

As you can see, creating a peer-to-peer lending platform is a time-consuming process that requires a careful study of the market and existing competing solutions and collaboration with highly professional developers who will save you from problems. Only in this case, you will get a stable income from the project and there will be no losses.

At Clarisco Solutions, we offer white label P2P crypto lending software based on market-leading features such as bank quality control panel, multi-currency wallet, instant KYC and AML control process, LVR calculation, and automatic loan renewal, and so on. In addition to providing a white-label solution, we specialize in building a personalized P2P loan platform from scratch.

You won't become one of many, because you'll stand out in the crowd with something new to offer.

 

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