Institutional investors are beginning to see new investment opportunities in consumer and small business loans. These opportunities are driven by innovations in online direct lending, including “peer-to-peer” (“P2P”) lending. By developing online platforms and automating borrower on-boarding and loan underwriting procedures, a growing field of direct lenders is generating ever-increasing numbers of small loans for investment. As they enter the P2P and online direct lending market, investors and their legal counsel should be aware of the channels for investing in loans generated by the platforms and the due diligence concerns this type of investing raises.
In this memorandum, Richards Kibbe & Orbe LLP attorneys Jahangier Sharifi, John A. Clark and Victor V. Ludwig survey growth trends in the P2P and direct lending industry, summarize the primary methods for gaining direct lending exposure, and highlight key risks (and mitigation strategies) for those investing through direct lending platforms.
Please click here to read "Good Things Come in Small Packages: An Investor's Guide to Buying Peer-to-Peer Loans"