Looking to diversify your investment portfolio beyond traditional stocks and bonds? Peer-to-peer (P2P) lending platforms offer an innovative way to generate passive income by connecting investors directly with borrowers. In 2025, these platforms have evolved to provide better security, higher returns, and more diverse investment options than ever before.
14 Best Peer-to-Peer Lending Sites for Investors in 2025
This guide explores the top P2P lending sites where you can start investing with as little as $25 and potentially earn returns ranging from 5% to 12% annually. Let's dive in!
P2P lending cuts out traditional financial institutions, allowing investors to fund loans directly to individuals or small businesses. By removing the middleman, both parties can often benefit from better rates. As you'll discover in this comprehensive guide, this alternative investment avenue has become increasingly mainstream as more people seek to build passive income streams in today's economy.
1. Prosper
As one of the pioneers in P2P lending, Prosper has facilitated over $22 billion in loans since 2005. The platform offers a straightforward approach to investing with a minimum investment of just $25 per loan note. Investors can expect average returns between 5.5% and 9%, depending on the risk grade of loans they choose. Prosper assigns each loan a rating from AA (lowest risk) to HR (highest risk), allowing you to build a diversified portfolio based on your risk tolerance. The platform's Auto Invest feature lets you set specific criteria and automatically invests funds when matching loans become available.
2. LendingClub
LendingClub remains one of the largest P2P platforms in the United States with over $70 billion in loans issued. While they've shifted their business model somewhat since going public, they still offer solid investment opportunities with annual returns averaging 3-8%. The platform requires a minimum investment of $1,000 to get started and focuses primarily on personal loans and auto refinancing. LendingClub provides detailed statistics about borrowers and assigns grades (A-E) to help investors assess risk factors before committing funds.
3. Fundrise
While traditionally known for its real estate investments, Fundrise has expanded into P2P lending opportunities that combine elements of crowdfunding and lending. With a low $10 minimum investment, the platform offers an accessible entry point for beginners. Returns typically range from 8-12% annually, with the added benefit of being backed by real estate assets. Fundrise's automated investment options allow you to choose between income-focused, growth-focused, or balanced strategies based on your financial goals, making it particularly attractive for investors who appreciate simplicity alongside other passive income methods.
4. Upstart
Upstart distinguishes itself by using artificial intelligence and machine learning to evaluate borrowers beyond traditional credit scores. This innovative approach has resulted in 75% fewer defaults compared to traditional lending models. Investors can expect returns ranging from 6.5% to 10%, with loans primarily focused on personal loans, education financing, and debt consolidation. The minimum investment is $100, making it accessible for most investors. Upstart's technology-driven approach makes it particularly appealing for tech-savvy investors who appreciate data-driven lending decisions.
5. Peerform
Peerform offers a marketplace lending platform that uses a proprietary algorithm called Loan Analyzer to evaluate borrower creditworthiness. The platform focuses exclusively on personal loans and requires a minimum investment of $1,000. Investors can expect returns between 5% and 12% depending on loan grades (AAA through D). Peerform stands out for its transparency, providing detailed borrower statistics and loan performance metrics to help investors make informed decisions. The platform is particularly suitable for investors who value detailed analytics when selecting investment opportunities.
6. Groundfloor
Groundfloor specializes in short-term, high-yield real estate loans with an impressively low $10 minimum investment. The platform allows non-accredited investors to access real estate debt investments previously available only to the wealthy. Returns range from 7% to 14% annually on loans with typical terms of 6-12 months. Each loan is secured by the property itself, providing an additional layer of security compared to unsecured P2P loans. For investors looking to diversify their portfolio with real estate-backed investments without the hassle of property management, Groundfloor offers an accessible entry point similar to REITs but with more direct control.
7. SoFi
SoFi has evolved from a student loan refinancing company to a comprehensive financial platform that includes P2P lending opportunities. Their minimum investment is $1,000, and investors can expect returns between 4% and 7%. What sets SoFi apart is their focus on "prime" borrowers with strong credit histories and high incomes, potentially reducing default risk. The platform also offers unique perks like career coaching, financial advising, and exclusive member events. SoFi's loan offerings include student loan refinancing, personal loans, and home mortgages.
8. MeridianLink (formerly StreetShares)
MeridianLink focuses specifically on small business loans with a particular emphasis on veteran-owned businesses. The platform requires a $25 minimum investment and offers returns between 5% and 9% annually. What makes MeridianLink unique is its "Veteran Business Bonds" product, which allows you to invest in a diversified portfolio of loans to veteran-owned small businesses. The platform also employs a social component where borrowers can share their stories, allowing investors to connect with the businesses they're funding on a more personal level.
9. Mintos
For investors looking to diversify internationally, Mintos offers access to loans across multiple countries, currencies, and loan types. With operations primarily in Europe, the platform requires a minimum investment of €10 and provides average returns between 9% and 12%. Mintos has facilitated over €8 billion in loans and offers auto-invest functions that allow for portfolio diversification across different loan originators. The platform's secondary market also provides liquidity options for investors who may need to access their funds before loans mature.
10. Crowdestate
Another European option, Crowdestate specializes in real estate development and business loans across several European countries. The platform requires a minimum investment of €100 and has delivered average historical returns of 11.5%. Each project undergoes rigorous due diligence, and the platform provides detailed information about the projects, including business plans, financial forecasts, and collateral assessments. Crowdestate is particularly attractive for investors seeking exposure to European real estate markets without directly purchasing property.
11. RateSetter
RateSetter distinguishes itself with its Provision Fund model, which helps protect investors against borrower defaults. The minimum investment is £10, and the platform offers returns between 3% and 5%. While these returns are lower than some competitors, the added security makes it an attractive option for risk-averse investors. RateSetter also offers various term options ranging from rolling monthly investments to five-year fixed terms, allowing investors to match their liquidity needs with their investment strategy.
12. Yieldstreet
Yieldstreet offers alternative investments including litigation finance, commercial real estate, and marine finance through their P2P platform. While the minimum investment is higher at $2,500, the platform provides access to unique asset classes that typically offer returns between 8% and 15%. These investments were traditionally available only to institutional investors and ultra-high-net-worth individuals. Yieldstreet's offerings typically have 1-3 year terms and are secured by collateral, providing an additional layer of security for investors exploring these niche markets.
13. Bondora
Operating primarily in European markets, Bondora offers P2P lending with a minimum investment of just €1, making it one of the most accessible platforms for beginners. The platform's automated Portfolio Manager and Go & Grow products simplify the investment process, targeting returns around 6.75% annually. Bondora provides detailed loan origination statistics and has a track record dating back to 2009, giving investors plenty of historical data to evaluate. For those interested in European consumer lending markets, Bondora offers an easy entry point with good liquidity options.
14. Funding Circle
Funding Circle specializes in small business loans and has facilitated over $18 billion in lending worldwide. The platform requires a minimum investment of $500 and offers projected returns between 4.5% and 7%. Funding Circle stands out for its rigorous vetting process—only about 10-15% of business applicants are approved for loans. The platform also offers an auto-invest tool that automatically diversifies your investment across multiple businesses. For investors specifically interested in supporting small business growth while earning passive income, Funding Circle provides a focused approach.
Historical Returns of Top P2P Lending Platforms (2021-2025)
| Platform | 2021 | 2022 | 2023 | 2024 | 2025 (YTD) | 5-Year Average |
|---|---|---|---|---|---|---|
| Prosper | 6.8% | 5.9% | 7.2% | 8.1% | 8.5% | 7.3% |
| LendingClub | 5.6% | 4.8% | 5.3% | 6.2% | 6.7% | 5.7% |
| Fundrise | 9.2% | 8.1% | 10.5% | 11.2% | 10.8% | 10.0% |
| Upstart | 7.5% | 6.2% | 8.1% | 9.3% | 9.7% | 8.2% |
| Groundfloor | 10.2% | 9.5% | 11.3% | 12.1% | 11.8% | 11.0% |
| Mintos | 9.8% | 8.7% | 10.2% | 11.5% | 11.9% | 10.4% |
| Funding Circle | 5.8% | 5.2% | 6.1% | 6.8% | 7.2% | 6.2% |
| Yieldstreet | 10.5% | 9.3% | 12.2% | 13.8% | 13.2% | 11.8% |
Note: Returns are average reported returns across all risk grades. Individual investor returns may vary based on loan selection, portfolio composition, and timing. YTD figures represent returns through February 2025.
How to Choose the Right P2P Lending Platform
When selecting a P2P lending platform, consider these key factors:
- Minimum Investment: Platforms range from $1 to $2,500 minimums, so choose one that fits your budget.
- Expected Returns: Higher returns typically come with increased risk—balance your return expectations with your risk tolerance.
- Loan Types: Decide whether you prefer personal loans, business loans, real estate-backed loans, or a mix.
- Platform Fees: Compare fee structures, which typically range from 0.5% to 1% annually.
- Secondary Market: Platforms with secondary markets offer better liquidity if you need to exit investments early.
- Auto-Invest Features: These tools can save time and help maintain diversification automatically.
- Geographic Focus: Some platforms operate only in specific countries or regions.
Remember to start small and diversify across multiple loans and platforms. Many experienced P2P investors recommend allocating no more than 5-10% of your total investment portfolio to this asset class, especially when you're just starting.
For those looking to build a comprehensive investment strategy, it's worth exploring the best investment apps that can complement your P2P lending activities with traditional investment options.
Tax Implications of P2P Lending
In most countries, income earned from P2P lending is typically taxed as ordinary income rather than capital gains. This means:
- You'll need to report all interest income on your tax return.
- Platforms generally provide year-end tax statements (like 1099-INT in the US).
- Some expenses related to your P2P investments may be tax-deductible.
- Bad debt from defaulted loans may qualify for tax write-offs in some jurisdictions.
It's advisable to consult with a tax professional familiar with P2P lending to optimize your tax strategy, especially if you're investing significant amounts.
Risks and Challenges of P2P Lending
While P2P lending can offer attractive returns, investors should be aware of these potential risks:
- Default Risk: Borrowers may fail to repay loans, resulting in partial or complete loss of capital.
- Platform Risk: If the P2P platform itself fails, recovering investments can be complicated.
- Liquidity Risk: Many P2P investments are locked in for specific terms without early withdrawal options.
- Regulatory Risk: The regulatory environment for P2P lending continues to evolve and may impact returns.
- Economic Sensitivity: Economic downturns typically increase default rates across P2P loans.
To mitigate these risks, experienced investors recommend diversifying across many loans (at least 100 for personal loans), starting with smaller amounts, and only investing money you can afford to lose or lock up for the loan term.
Getting Started with P2P Lending in 3 Steps
- Research and Select a Platform: Based on your investment goals, risk tolerance, and available capital.
- Create and Fund Your Account: Complete the registration process and transfer funds to your investor account.
- Build a Diversified Portfolio: Start with small investments across multiple loans to spread risk.
Many platforms offer educational resources to help new investors understand the nuances of P2P lending. Take advantage of these materials before making significant investments.
If you're interested in building a broader passive income strategy, consider combining P2P lending with other methods like dividend investing for a more resilient income portfolio.
Final Words
Peer-to-peer lending represents an interesting alternative asset class that can provide competitive returns and portfolio diversification. The best P2P platforms of 2025 offer improved security measures, more sophisticated risk assessment tools, and greater transparency than earlier generations of these services.
As with any investment, the key to success lies in thorough research, proper diversification, and aligning your investment choices with your financial goals and risk tolerance. Start with a small allocation to learn the nuances of this investment type before committing larger portions of your portfolio.
For entrepreneurs looking to start their own online businesses, Shopify offers powerful e-commerce solutions starting at $39 per month, which could be another avenue to consider alongside your P2P lending investments.
Whether you're seeking to generate passive income, diversify your investment portfolio, or simply explore alternatives to traditional banking products, P2P lending platforms provide accessible options worth considering in today's financial landscape.
Related Articles
Frequently Asked Questions About Peer-to-Peer Lending
Is peer-to-peer lending safe?
Peer-to-peer lending carries risks like any investment. The primary risk is borrower default. To mitigate this, diversify across many loans (ideally 100+), start with small amounts, choose platforms with solid track records, and only invest money you can afford to lose. Some platforms offer provision funds or insurance to help protect against defaults, but these aren't guarantees. Overall, P2P lending should be considered a higher-risk investment compared to savings accounts or government bonds.
What returns can I expect from peer-to-peer lending?
Returns from peer-to-peer lending typically range from 3% to 15% annually, depending on the platform, loan type, and risk level. Personal loans usually offer 5-9% returns, while business loans or real estate-backed options might offer 7-12%. Higher-risk loans (to borrowers with lower credit scores) can yield 10-15%, but come with increased default risk. After accounting for defaults and fees, most investors report net returns of 4-8% annually when properly diversified.
How much should I invest in peer-to-peer lending?
Financial advisors typically recommend limiting P2P lending investments to 5-10% of your total investment portfolio, especially for beginners. Start with small amounts ($500-$1,000) spread across multiple platforms and dozens of loans to learn the process and diversify risk. As you gain experience and comfort with P2P lending, you can gradually increase your allocation based on your risk tolerance and investment goals.
Are peer-to-peer lending returns taxable?
Yes, income earned from peer-to-peer lending is generally taxable. In most countries, P2P lending income is taxed as ordinary income rather than capital gains. Platforms typically provide annual tax statements (such as 1099-INT forms in the US). Some expenses related to your P2P investing activities may be tax-deductible, and in some jurisdictions, you may be able to claim tax relief for defaulted loans. Consult with a tax professional familiar with P2P lending for specific advice for your situation.
How liquid are peer-to-peer lending investments?
P2P lending investments are generally less liquid than stocks or mutual funds. Most loans have fixed terms ranging from 6 months to 5 years, and your investment is typically locked in for that period. Some platforms offer secondary markets where you can sell your loan investments to other investors, but these can have fees and there's no guarantee you'll find a buyer, especially during market downturns. For best results, only invest funds you won't need access to during the loan term.
