Jim Miller

We have all needed a quick bit of money every now and then and it’s no surprise that borrowing the money is one of the most popular ways to get money quickly. With the banking meltdown that has hit this country in the past 12 months it’s been much more challenging to get an direct loan from a bank. Most banks have lessened the amount of money they have been lending to people who don’t have an excellent credit score.

We are used to turning to banks for all our loan needs today, but the act of borrowing money has existed long before there were banks. Before banks existed there were wealthy nobles who would lend out money to people who wanted it. When money were first created you’d have to borrow money from several wealthy people if you wanted a large sum of money for any reason. The act of loaning money a straight-forward process, but it was complicated to administer loans to many different people. In the past whole communities sometimes loaned money to a poor individual. Eventually, these rich people put their money together and made a financial institution which would handle the details of lending and collecting money on its own.

There is now a way of borrowing cash no longer involves a bank at all. With the advent of the Internet there’s been a change in the way people are able to borrow money and lend it to others. The most recent method of borrowing money more closely resembles how loans were handled in the past: social lending between two parties.

If you need to borrow $2000 for a house improvement then you might really end with one big loan that’s funded by several dozen different people! This new way of loaning money is called “peer-to-peer” lending or crowd sourced financing. Peer-to-Peer lending lets multiple people lend their money to a solitary individuals or many of different people. So you could borrow cash for a big home upgrade from a peer-to-peer lender and really be getting money from dozens of different lenders. In a crowd sourced lending arrangement a single party may end up borrowing cash from dozens of different lenders.

Clearly, this sort of borrowing is not good for every situation. Crowd sourced financing is often a useful method to borrow cash for a house improvement project, expanding a business, purchasing a new car, paying down student loans or even paying for a wedding or big event. Loans made through a peer-to-peer lending institution can be relatively small or moderately big with most offering a max amount of $25,000 and a low amount of $1,000. You do generally have to have a pretty good credit score with a certain debt-to-income balance to qualify for many of these loans.