P2P (peer-to-peer) loans: How do they work?

The world of investing is constantly evolving, transforming in search of continuous improvement or new opportunities for investors. In recent years, we have seen new ways to put money to work beyond traditional channels. One of the most popular comes in the form of P2P loans, also known as peer-to-peer loans, loans between individuals, or crowdlending.

But what are they, and what are their characteristics? At Inversa, we want to explain what they are, how they work, and what you should consider before investing in them.

What are P2P loans?

The term peer-to-peer describes a transaction in which money goes directly from a lender—in this case, an investor—to a borrower, who can be an individual or a company. This money moves through a platform that acts as a technological and administrative intermediary, without banks or any traditional intermediary.

Unlike bank loans, P2P democratizes access to financing:

• The borrower gets competitive conditions without going through the bank filter.
• The investor accesses higher returns than traditional products such as deposits or savings accounts.

In Spain, these types of operations are regulated and must be carried out through participative financing platforms (PFP), supervised by the CNMV and the Bank of Spain.

How does investing in P2P loans work?

Although the process may vary depending on the platform used, the usual steps are:

• Platform registration - The investor signs up, verifies their identity, and deposits funds into their account.
• Loan selection - They can choose from different financing requests published on the platform, evaluating data such as profitability, term, and risk level.
• Investment - The investor decides how much to contribute to each loan. Some platforms allow investing very small amounts, which facilitates diversification.
• Interest collection and capital repayment - The borrower pays interest periodically and returns the principal at the end of the term.

In some cases, it is possible to activate automatic investments so that available capital is continuously reinvested according to the investor's criteria. However, it is always recommended that the investor maintains control over their investment and, therefore, its profitability.

What returns do P2P loans offer?

Returns depend on factors such as the borrower’s profile, the loan term, and risk. In general, they can offer higher returns than traditional bank products, although higher returns also imply higher risk.

In models like the one we use at Inversa with P2P crowdlending, we rely on operations backed by commercial documents such as invoices or promissory notes. With this, returns usually range between 5% and 9% annually, with short maturities that reduce risk exposure.

What risks do P2P loans have?

Although technology has made this model safer and more accessible, it is not risk-free. After all, we always like to emphasize that there are no investments without risk. The main ones are:

• Borrower default - If the borrower does not repay, the investor may lose their money. However, many platforms establish recovery mechanisms.
• Lack of liquidity - The capital is blocked until the loan matures.
• Platform risk - It is extremely important to review the platform before investing, as well as its reliability. It is important to choose regulated operators with experience.

At Inversa, for example, we filter and evaluate each operation before publishing it, analyzing the solvency of the applicant as well as the validity of the guarantees.

How to invest in P2P loans safely

To minimize risks and optimize returns, it is recommended to follow these steps:

• Diversify among several loans and borrowers.
• Choose operations backed by documentary guarantees.
• Always review the information and payment history of each operation.
• Invest only capital that you do not need in the short term.

If you want to learn more about diversification, on our blog we have explored how to diversify investments intelligently, which is especially useful for this type of investment.

Invest in the real economy and earn returns

P2P loans are not only a good opportunity to earn income but also a way to support projects and companies that need financing. If you choose the platform well and diversify your investments, you can achieve attractive returns with controlled risk.

At Inversa, we always aim to provide opportunities to finance Spanish companies with short terms, competitive returns, and complete transparency. Do not hesitate to take advantage of the opportunity and maximize your returns with us.