Being an investor, you are well aware of the marketing terminologies, but many people take them as a simple entity. Most of the people take peer to peer lending similar to crowdfunding. The concept to prosper peer to peer lending is somewhat similar to that of crowdfunding, but in real terms, they both are different. To get the correct knowledge about both of them, let’s run a descriptive analysis of both of them.

What is Peer to Peer Lending?
Peer to peer lending can be demarcated as lending money from one individual to other (unrelated) individual through the traditional banking model. It can also be termed as an online platform where multiple investors come together to invest their money at a flexible interest rate. Every borrower is required to submit some information like credit score, the purpose of your loan, the amount required, your annual income range and some of your personal details (DOB, Address, etc.) before getting your loan approved.

Below are the benefits of P2P lending:
– The P2P loans are easy to apply as they can be applied via online websites.
– Instant approval. Also, the money is credited right into your bank account.
– Auto payment is available. If you want to pay the dues automatically, you can do so.
– Fixed repayment rate makes you comfortable to select the loan. The rate is however much lower than that bank provides.

What is Crowd Funding?
Crowdfunding can be defined as the unity of multiple investors (unrelated) to come together and buy equity shares within a property venture. For that different crowdfunding campaigns are implemented to boost the funding. The campaign for crowdfunding includes a pitch video, campaign text, rewards, and perks, etc.

Below are some benefits of Crowd Funding:
– The crowdfunding enables supporters to gather in a single marketplace.
– No technical knowledge is required to run the crowdfunding campaign.
– No need to surrender the equity of your business.

What makes P2P and Crowdfunding different?
When it comes to differentiating both of them, they both are a bit different. Comparing both the models, you will find that the equity crowdfunding ascertains more risk. Because of that, the crowdfunding is always targeted to limited investors. The crowdfunding is always a good option if you have the detailed knowledge of it.

When we search for the safer aspect for the borrowers, peer to peer lending option gives you a better and convenient platform for repayment of your debts. But P2P lending never offers any equity share to the lender so, no profit is entertained. However, there are cases of becoming a defaulter in tenure. But most of the people should know that, whichever format delivers you maximum profit, it must be chosen without thinking any other plan.

So, if you are running a business, it’s highly important to have detailed knowledge about both these terminologies and understand their working structure. It will help you get the right investment for your business.