Crowdlending (from the English "crowd" for "crowd" and "lending" for "lending" or "granting of credit") refers to loans brokered via the internet that are given by several private individuals or legal entities to other private individuals or to companies. The lenders each contribute amounts of money they have chosen themselves, which are combined into a loan that the borrower receives.
Online credit marketplaces act as intermediaries, checking and evaluating the individual loan applications. Based on the credit rating of the potential borrower, the loan project is evaluated, given a score and a corresponding interest rate is calculated. If the creditworthiness is not given, the loan application is rejected.
If the applicant is "creditworthy", the application is approved and the credit project appears on the platform with the corresponding interest mark-up. Investors can then enter the individual credit projects and later receive interest payments.
Banks are thus left out in the cold. This makes crowdlending (P2P lending) a classic alternative to the traditional bank loan.
Crowdlending is also called "peer-to-peer lending" or "P2P lending" ("peer to peer" = "from person to person").