By Mark McFarlane, Ian Edmonds-WilsonKate Jackson-Maynes and Daniel Bragg. King &Wood Mallesons

1. Marketplace lending is…

The practice of connecting consumers and small–medium enterprises (SMEs) wishing to borrow with individuals or institutions wishing to lend. The “marketplace” is facilitated by a financial services provider via an online platform, which aims to deliver a streamlined financing process with low operating costs. Depending on the business model, the platform provider may originate, underwrite, price or service the loans.

2. …more than P2P lending.

P2P lending is a marketplace lending model where the platform matches the borrower with investors without investing in the loan itself. “Marketplace lending” encompasses P2P as well as online lending utilising other funding models that have since arisen such as direct balance sheet origination, whole loan sales and securitisation.

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