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Online lending is scarily accessible right now, right from your phone or desktop.

The banks and credit unions now have online competition for online loans and more. Thanks to fintech, everything related to money is now online.

One of the new online lending resources is peer-to-peer (p2p) lending. If you have debt or you need a loan, these platforms are a good place to find a loan that fits your situation. Get your credit score ready, because we are bringing you the best P2P lenders right now.

What Is A Peer-To-Peer Lender?

A Peer-to-Peer lender (P2P) is a lending company that facilitates a marketplace for lenders and borrowers to come together and conduct business. The P2P lender does not directly act as an intermediary but instead helps match borrowers with lenders through an online platform.

Best Peer-to-Peer Lenders In Canada

AmountInterestTerm (months)Best For
Lending Loop$1k – $500k4.96% – 24.93%Business loans
GoPeer$1,000 to $25,0007.5% – 31.5%36 or 60 Unsecured personal loans
Up to $1,000variesvariesSmall short-term loans

Lending Loop

Founded in 2014, Lending Loop has the distinction of being Canada’s first P2P lending platform for small businesses. They are based in Toronto and are regulated in all Canadian provinces and territories.

Small businesses can borrow up to $500,000 on the platform, and rates range from 4.96 % to 24.93%. Business owners wishing to gain access to loans on the platform must meet specific criteria, including earning $100,000 in yearly revenue and a 600 or greater credit score.

Lending Loop offers many options for lenders as well. Those looking to invest can use the platform’s Auto-Lend feature to automatically invest in a group of loans based on risk attributes they pre-select. The platform also provides considerable transparency regarding the number of loans issued per quarter, loan default rates, and the types of businesses borrowing funds.


GoPeer is a P2P platform that connects borrowers looking for personal loans with investors looking for an attractive return. 

The Toronto-based firm serves borrowers with credit scores of 600 or higher and a credit history that spans at least 36 months. Applicants can borrow between up to $25,000, with terms ranging from three to five years. 

GoPeer’s lending criteria are more stringent than other P2P lenders, so they may not be the best option if you have a substandard credit score.

Reddit (r/borrow)

Though known primarily as a news aggregator and discussion website, Reddit contains a subreddit called r/borrow that facilitates borrowing and lending. It’s used mostly by individuals who need small short-term loans but are struggling financially and have limited means to obtain credit.

Loans available on r/borrow are smaller than those of other P2P platforms, with the limit capped at $1,000. The approval process is informal, with no credit checks conducted. However, getting a loan can be a lengthy endeavour. You must be a member of the subreddit for 90 days before making a request. You must also have 1000+ karma points, which are part of a scoring system unique to Reddit that measures your contribution to the community.

Types of Loans You Can Access Using Peer-to-Peer Lending

You can access a variety of loans through a P2P platform:

Peer-To-Peer Personal loans

These are probably the most popular types of loans available from P2P platforms. You can choose between a secured loan and an unsecured loan. Secured loans require you to put up collateral, while unsecured loans don’t. You can usually borrow between $1,000 and $40,000, though large sums are typically offered only to the most qualified applicants.

Peer-To-Peer Business Loans

P2P platforms have recently expanded to offering business loans. If you’re looking to start or grow a business, P2P lenders can be a great alternative to traditional financial institutions.

Peer-To-Peer Loans For Debt Consolidation 

You can use P2P lenders to consolidate your personal loans, credit cards, and other unsecured debt into a single loan with an affordable interest rate.

Peer-To-Peer Auto Loans

If you’re in the market for a new vehicle, but your poor credit score prevents you from obtaining financing, P2P lenders can help fill the gap. With a wide variety of lenders available on P2P platforms, you may have an easier time finding an auto loan with reasonable terms and a manageable interest rate.

How Does Peer-to-Peer Lending Work?

The P2P lending process typically works in the following way:

  1. The borrower completes an online application on the P2P platform.
  2. The platform reviews the borrower’s application, assessing their risk profile and credit rating. Once complete, the platform assigns the borrower an interest rate.
  3. When the borrower is approved, they gain access to the lenders that operate on the platform. They can evaluate loan options and choose the one that’s most appropriate for them.
  4. Once the borrower selects their desired loan, they are responsible for making periodic interest payments and repaying the loan in full at maturity.

Pros And Cons Of Peer-To-Peer Lending In Canada

Though P2P lending can be an excellent way to gain credit access, it may or may not be the right option for you. Ensure you examine both the pros and cons of this method of borrowing.

Pros Of Peer-To-Peer Lending

  • Easy application process – The application process on a P2P platform is fast and convenient compared to a bank or credit union. You can potentially have a loan in minutes, as the entire process is completed online with no need to meet face-to-face with loan underwriters.
  • Lower interest rates – P2P loans usually come with a lower annual percentage rate (APR) than what’s offered by traditional financial institutions. The low rates are due to the low overhead costs of the P2P platform and the competition between the lenders.
  • Lower origination fees and prepayment penalties – P2P platforms typically charge low origination fees (the fees charged for issuing a loan) and don’t penalize you for paying off a loan early.
  • More accessible than traditional lending sources – Unlike conventional lenders, P2P platforms use other factors besides your credit score to assess your creditworthiness. You can apply with poor credit and still be approved for a loan. P2P platforms are also a great alternative if you require a typical loan that a bank, for example, may be hesitant to issue. 
  • Less impact on your credit score – Most P2P platforms only conduct a soft credit check when you apply for a loan, so your credit score will not be affected. The platform will usually assess your age, income, financial history, and employment status.

Cons Of Peer-To-Peer Lending

  • Fees – P2P platforms usually charge set-up or administrative fees.
  • Lack of regulation – P2P lending is a new and fast-growing industry and is not subject to the same regulatory oversight as traditional lending institutions. Risks exist, as the platforms operate under fragmented and ever-changing regulations. Suppose you’re concerned about privacy and security. In that case, you should do your research and seek legal advice before signing up to use a P2P platform.
  • Slow Funding – You may have to wait for as long as a week before receiving funding for your loan – not ideal if you have an emergency and need access to cash fast.
  • Not ideal if you’re heavily in debt – While P2P platforms can help you arrange a consolidated loan, it won’t be of much use if your debt load is already hampering your ability to make repayments. A financial counsellor or mentor from a non-profit agency may be a better option in this case.

Factors To Consider When Choosing A Peer-To-Peer Lender

  • Fees – If fees make you apprehensive, ensure you’re aware of what you might expect to pay before applying. The most common fees charged by P2P platforms include set-up fees, administrative fees, and origination fees.
  • Interest rate – investigate what interest rate you’re likely to be assigned. Each platform has its own set of standards for assessing borrowers’ risk category and credit score.
  • Minimum eligibility requirements – Check the minimum criteria before starting your application and ensure you meet them. The criteria will differ depending on the platform – you want to be sure the one you select caters to your credit profile and can provide you with the loan you require.

P2P Lending FAQs

What happens if I miss a payment with a Peer-to-Peer loan?

You’ll have to pay late payment fees if you miss a payment on a P2P loan, usually 5% of the unpaid amount. As with other loans, interest will also accrue. 

How do Peer-to-Peer investors benefit from Peer-to-Peer lending? 

P2P platforms offer the following benefits to investors. 
  • The opportunity to generate lucrative returns, usually between 5% and 9%
  • The ability to diversify a loan portfolio across multiple borrowers of varied risk
  • The ability to generate a steady income stream regardless of what occurs in the broader economy.

Can I get a loan through Peer-to-Peer lending if I have bad credit?

Yes, it’s entirely possible to be approved for a loan with bad credit, as P2P platforms cater to a wider variety of borrowers than traditional lenders, such as banks. However, the lower your credit score, the higher the interest rate you’ll be assigned.

Is Peer-to-Peer Lending Right For You

If you’re in the market for a loan, P2P platforms are a noteworthy alternative to banks and other traditional lenders. They offer competitive interest rates, lower overall fees, no prepayment penalties. They can be the place to turn to when you have no other options at your disposal. Though they are not as heavily regulated as banks and can charge you a high rate if your credit standing is low, it could become the new way you do your borrowing if you find one that works for you.

Mark Gregorski avatar on Loans Canada
Mark Gregorski

Mark is a writer who specializes in writing content for companies in the financial services industry. He has written articles about personal finance, mortgages, and real estate and is passionate about educating people on how to make smart financial decisions. Mark graduated from the Northern Alberta Institute of Technology with a degree in finance and has more than ten years' experience as an accountant. Outside of writing, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.

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