The lending between individuals , also community credit (in English peer-to-peer lending , P2P lending or sometimes social lending ) is a financial activity which consists of lending money between individuals, in the form of remittance with commitment reimbursement.
This system, similar to that of the microcredit developed by Muhammad Yunus , Nobel Peace Prize , aims to allow anyone wishing to lend or borrow to do so directly between individuals, with or without banking intermediaries.
The simplicity of this system allows anyone to search for credit without going through credit institutions ( banks ) or credit agencies.
This credit creation and distribution circuit is based on direct private-to-peer lending. The goal is to reduce the cost of distribution, high in the bank, and to have a different risk analysis. The individual borrower therefore seeks a loan that will be financed by multiple lenders (several micro-loans); each lender may entrust capital to several borrowers, to divide its counterparty risk by spreading the risk of default. Potentially a lender therefore lends to several hundred different individuals.
This device operates with or without intermediary. In practice, it is often necessary to organize the meeting between requests and offers of capital. On the other hand, these intermediaries do not depend on credit institutions .
There are two main ways to make these loans:
- from one to one ( or by mutual agreement ): someone lends money to another person. In France , if this operation is carried out as usual by the lender, it requires registration as an intermediary in crowdfunding ; otherwise, it is prohibited as usual because it is part of the banking business; however, a natural person can not hold a banking license ( authorization ). The notion of “usual title” according to the terms of the Monetary and Financial Code, characterizes the repetition or the professional nature of the operations. A transaction OTC can be done with an acknowledgment of debt and it is more cautious as well.
- several to one: it is then for several people to finance one. It is an extension of the first form of loan. The organization can be materialized by a website , of the “marketplace” type, allowing these people to meet if they do not know each other. In this case, such a site acts as an intermediary, usually as an intermediary in crowdfunding , for example, for France .
Operation for the borrower:
- The borrower specifies the amount he wants to borrow, provides information on his solvency (debts, income, current job, information on the use of credit and personal information eventually)
- The intermediary, where applicable, produces and disseminates a solvency and risk analysis
- Lenders lend -or not to the borrower according to their criteria
- When enough lenders have offered to finance the borrower, he is given his loan and the money is transferred to him. He then reimburses the loan according to the general principles of depreciation.
Operation for the lender:
- The lender indicates the amount he wants to lend and informs his investment criteria (risk associated with a borrower, community of borrowers, social or solidarity dimension, for example)
- These loans meet the demands of the borrowers. Each loan that will be offered by a lender will be called when the borrower concerned has collected the entire loan
- Once the funds are transferred, the lender receives the repayments, monthly.
The financial crisis started in 2008, but also the limitations of client repayment capacity analysis methods ( scoring ) of banks , excluding credit a large part of the population. Although solvent, these individuals do not access forms of purely bank loans. On the other hand, the expansion of social networks has made it possible, with the help of social applications, to set up these types of loan platforms, to the limits imposed by law.
For individual borrowers, these channels provide alternative lending opportunities outside the dominant, dominant banking system . Borrowers have various profiles. They can borrow on a professional basis, to set up a business for example, or private, to finance work or consolidate their debt at a more advantageous rate. The use of P2P lending sites can allow “atypical” profiles to formulate credit requests usually rejected by organizations because their risk is less easily measurable: young employees, entrepreneurs, for example.
For individual lenders (or investors), the interest lies in the fact that these loans, riskier by nature, are often better paid. Other investments with ethical, solidarity or social dimensions are also underlined.
This personal lending activity started around the world in the mid-2000s, around 2006/2007. The loan between individuals is involved in the emergence of bank 2.0 . Indeed, it is a banking service whose marketing and the concept are based on the development of new models related to the Internet community and the disintermediation of banking networks.
The purpose of this system is to significantly reduce the interest rates charged, by limiting the costs of bank intermediation and refinancing.
The second objective is to ensure gains for lenders that are much higher than those offered by traditional banking investments. In addition, this system presents a fairly low risk due to the separation of loans in “pool” of lenders. As a result, the loss due to the non-repayment of a loan is spread over all creditors, which greatly reduces the final loss.
The third objective is to put the human at the heart of the logic of credit . The banks offer efficient rates in terms of profitability. This system aims to open the manna of credit for people who can not access it today.
The last objective of this system is to provide financing to entrepreneurs.
Different legal frameworks
There are also personal lending platforms in the United Kingdom , Germany , France , the United States , Australia and New Zealand .
The loan between individuals in France [ change | change the code ]
Since 2014, the loan between individual develops in France, which is experiencing a boom in many European countries as well as in the United States and Japan [ref. necessary] . In France this system still poses legal difficulties [ref.necessary] . Since May and November 2014 1 , the crowdfunding (or, in English, crowdfunding ) granted France a legal framework authorizing subject to conditions, the direct loans between individuals 2 .
Fiscally, individuals loans have a specific plan 3 .
In France, several sites offer intermediation of loans between individuals 4 . These sites are generally registered with ORIAS .
Others also offer loans between individuals, lenders, and businesses, borrowers or project holders 5 ; they are thus similar to a form of microfinance . Entrepreneurs can be in developing countries.
The loan between individuals around the world
The loan between individuals ( P2P lending in English) has developed mainly in the Anglo-Saxon world but is now present in many countries: USA, UK, Germany, Spain , Japan , Italy , Eastern Europe ‘Is …
Credit scams between individuals
The development of banking intermediation as the crowd funding expands the possibilities of access to credit .
Given the mass market game, many types of scams and scams have implemented 6 .
Among them, a variant of the 4-1-9 fraud : the lender, still based in a third country and recruiting mainly on blogs and forum talking about money, claims to be able to lend large sums at unbeatable rates. Taking advantage of the credulity of his victim, who is sometimes in a desperate situation, he asks for a modest sum in exchange for the transfer. Once the sum is sent, the lender disappears without a trace (see also the Spanish prisoner ).
Social networks are particularly easy tools and used by “credit scammers”, given their high capacity for private contacts.
Financing, credit or loan operators necessarily hold either an authorization issued by the Prudential Control and Resolution Authority or a registration entered in the register of intermediaries held by ORIAS . The verification of the registration number or registration number (www.orias.fr) makes it easy to verify that the credit intermediary is exercising within a legal framework. On the contrary, the absence of authorization or registration in the register kept by ORIAS reports an illegal proposal and encouraged not to enter into a relationship 7 .
Stream Monetization or “Bank 2.0”
With the development of loans between individuals, many platforms appear. Some do not offer credits directly, but links to credit sites.
Their only source of revenue is to have visitors click on the Google Adsense links to earn money ( Google Adsense links in the finance industry can earn up to € 0.80 or € 1 per click , that is, more than 10 times the value of most other words [ref. necessary] ).
- Types of bank credits
- intermediary in crowdfunding
- Bank Distribution Law
Notes and references
- ↑ Laurent Denis | Crowdfunding http://www.village-justice.com/articles/Crowdfunding-Port-by-follow,17057.html [ archive ]
- ↑ http://www.economie.gouv.fr/facileco/frame-reglementaire-financement-participatif [ archive ]
- ↑ Taxation of loans between individuals | http://www.impots.gouv.fr/portal/dgi/public/popup?espId=1&typePage=cpr02&docOid=documentstandard_2943 [ archive ]
- ↑ http://financeparticipative.org/what-we-members/members-association/the-platforms-of-giving-with-on-without-party/ [ archive ]
- ↑ http://www.apce.com/pid14215/crowdfunding.htmlsee [ archive ]
- ↑ Laurent Denis | Credit scams http://www.village-justice.com/articles/Escroqueries-credit-how-to avoid.20743.html [ archive ]
- ↑ ABE Info Service | http://www.abe-infoservice.fr/banque/credits-aux-particuliers/attention-aux-offres-de-credit-frauduleuses.html [ archive ]