Loan fractionalization: The backbone of P2P lending

The new buzzword in the lending industry is “peer to peer” or P2P lending, also known crowdfunding, person to person lending and social lending. It should hardly be a...

Snehal Fulzele 10th December 2013

The new buzzword in the lending industry is “peer to peer” or P2P lending, also known crowdfunding, person to person lending and social lending. It should hardly be a surprise to anyone who has tracked the tremendous growth P2P lending has witnessed in the over the last year. According to Business Insider, the two biggest players in the segment, Lending Club and Prosper, have seen a stunning 195% growth in the last one year with loan portfolios over $1.5 billion. With P2P lending fast becoming a global phenomenon, it is certainly here to stay. Some even speculate that it may even substitute traditional banking someday.p2p lending

So, how does it all work? One of the driving forces behind the P2P lending industry is the internet, which makes it easier for investors and borrowers to shake hands in an online environment directly or through an intermediary platform. To be successful in the P2P lending world, a lending business must have a sophisticated platform especially to support the back-end operations. What goes on behind the scenes is extremely complex as it involves scenarios such as multiple investors funding a single borrower, a single investor funding multiple borrowers and allocating payment from the borrower to all the investors who funded the loan. In the industry, this is process is referred to as “loan fractionalization” and this module is essentially the backbone of any P2P lending business.

Cloud Lending Inc., recently introduced P2PFlex, a plug-in extension to their core loan management system Lending Core, to support loan fractionalization. Our loan fractionalization module is designed to simplify this entire process and help P2P lending businesses to improve their investor and borrower experience. p2p loan software

P2FFlex’s user interface makes working with complexities of loan fractionalization intuitive and easy.You can then easily allocate funds from investor’s portfolio to the loan application, and set certificate (or interest rate) and service rates (rate that the p2p providers or the platform charge) as shown in the images below: P2P lending software- assign multiple investors to single borrower

assigning investor to p2p loan
 Image: Select the loan to fund->look-up investor account->assign investment amount-> assign certificate rate and service rates->Done!

investor order assignment
 Image: Multiple investment order assignment in a single screen.

P2PFlex is simple to use, and customizable. It enables a P2P lending business respond to changing regulatory and market demands quickly and cost-effectively.

Watch this short video to know how P2PFlex makes the entire P2P lending business’s back end operations simple and streamlined: 

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