--- title: Why Consider Marketplace Lending? description: It’s no secret that the key to sound long-term investing is proper diversification. Although investors have many more choices today than in years past, savvy investors are always on the lookout for additional ways to boost returns and increase income all while managing risk. Marketplace Lending has emerged in recent years as a strong alternative ... Read More --- [![Prime Meridian Capital Management](https://www.pmifunds.com/hubfs/Branding/pmifunds-logo.svg)](https://www.pmifunds.com/) [![Prime Meridian Capital Management](https://www.pmifunds.com/hubfs/Branding/pmifunds-white-logo.svg)](https://www.pmifunds.com/) - About Us - [About Us](https://www.pmifunds.com/about) - [Recognition & Awards](https://www.pmifunds.com/awards-recognition) - [Team](https://www.pmifunds.com/team) - Our Strategies - [Investment Strategies](https://www.pmifunds.com/strategies) - [Special Opportunities Fund](https://www.pmifunds.com/special-opportunities-fund) - [Income Fund](https://www.pmifunds.com/income-fund) - [Non-Performing Loan Fund](https://www.pmifunds.com/npl-fund) - Insights - [Insights](https://www.pmifunds.com/insights) - [Events](https://www.pmifunds.com/events) - [Videos & Podcasts](https://www.pmifunds.com/video-podcast-resources) - [Contact Us](https://www.pmifunds.com/contact) [Contact Us](https://www.pmifunds.com/contact) # Why Consider Marketplace Lending? November 4, 2016 It’s no secret that the key to sound long-term investing is proper diversification. Although investors have many more choices today than in years past, savvy investors are always on the lookout for additional ways to boost returns and increase income all while managing risk. Marketplace Lending has emerged in recent years as a strong alternative investment for investors seeking various sources of income. Consider this for starters: In the current low interest rate environment, fixed income investors face an interesting challenge. Investors continue to be subject to low-yielding debt instruments while trying to maintain their purchasing power for general goods and services. Why is this? The Federal Reserve continues to monitor domestic inflation and the general health of the US economy. In their eyes, there still isn’t a compelling enough case to increase rates. Therefore, fixed income investors remain subject to almost non-existent yields. This conundrum puts investors between a rock and a hard place. Either keep cash on the sidelines earning zero yield, allocate more to the equity markets, or remain subject to low-yielding debt instruments. If you are exhausted with low rates and you no longer want to increase your equity exposure, then marketplace lending is worth your consideration. ## How Peer-to-Peer (P2P) / Marketplace Lending (MPL) Works P2P/Marketplace Lending is simply people and institutions lending money to others. What has traditionally been performed at brick-and-mortar commercial banks is now being facilitated online. As a potential investor, you have the ability to direct capital to borrowers based off of credit criteria used by commercial banks. Given your tolerance for risk, you can allocate capital across a diversified pool of borrowers in order to help meet your income needs. San Francisco-based ​Lending Club (symbol: LC)​ is probably the most well-known marketplace lending platform today because it is publicly traded. Prosper was the first player in the space with a 2006 inception year. ## Loan Selection and Borrower Types Like any other type of investing, marketplace loans are a matter of risk and reward. You will want to think long and hard about the amount of risk you are willing to accept and weigh the potential returns accordingly. You will also want to formulate an investment plan. This plan will cover such issues as: - Risk levels - Loan durations - Individual or pooled loans - Interest and principal reinvestment - Charges and fees - Liquidity ## Getting Started in Marketplace Lending Just as you would take time and care choosing a stockbroker, investment advisor or real estate agent, you will want to spend time researching and comparing different lending platforms. Some of the main points of comparison should be: - Length of time in business - Total loan originations - Fees - Underwriting Criteria - Delinquency and default rates - Liquidity Make no mistake. Marketplace Lending has the potential to provide great returns but it does come with its own set of risks including complete loss of principal. To help manage default risk and in order to exploit the benefits of investing, accredited investors should consider speaking with a professional marketplace lending fund manager for further information. [Return to Insights](https://www.pmifunds.com/insights/) ## Subscribe today to receive our latest News & Insights! Receive our latest stories delivered monthly directly to your inbox. [Subscribe](https://www.pmifunds.com/insights/why-consider-marketplace-lending#popup-00) ## Subscribe Now **Please fill in the required fields below.** ![Prime Meridian Capital Management](https://www.pmifunds.com/hubfs/branding/pmifunds-gray-logo.svg) 2121 N. California Blvd, Walnut Creek, CA 94596 - [About Us](https://www.pmifunds.com/about) - [Our Team](https://www.pmifunds.com/team) - [Recognition & Awards](https://www.pmifunds.com/awards-recognition) - [Investment Strategies](https://www.pmifunds.com/strategies) - [Income Strategy](https://www.pmifunds.com/income-fund) - [Special Opportunities Fund](https://www.pmifunds.com/special-opportunities-fund) - [Non-Performing Loan](https://www.pmifunds.com/npl-fund) - [Insights](https://www.pmifunds.com/blog) - [Press Releases](https://www.pmifunds.com/blog) - [Contact Us](https://www.pmifunds.com/contact) © 2026 Prime Meridian Capital Management - [Privacy Policy](https://www.pmifunds.com/hubfs/Resources/pmcm-privacy-policy.pdf) - [Japan Regulatory Disclosures](https://www.pmifunds.com/japan-regulatory-disclosures) This material is being provided for information and discussion purposes only and any discussion of any funds is qualified in its entirety by the information included in the confidential offering documents and supplements (collectively, the “Memorandum”) of Prime Meridian Income Fund, LP, Prime Meridian Special Opportunities Fund, LP, and Prime Meridian NPL, LLC (the “Funds”) described herein, and is not intended to be, nor should it be construed or used as investment, tax or legal advice or an offer to sell, or a solicitation of an offer to buy, an interest in the funds, or any other security. 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Any performance information shown on this website is presented net of all expenses, including management fees, performance fees and other expenses including portfolio-related expenses. Returns assume the reinvestment of all capital (including distributions where applicable) on a monthly basis. The performance data represents composite fund returns, and individual investor returns may vary higher or lower from the composite return due to timing of an investment and actual fees being charged. Past performance is not indicative of future returns. Any awards or other rankings listed on this site are not indicative of future performance.  These awards or any other rankings and/or recognition by unaffiliated rating services and/or publications should not be construed as a guarantee that an investor should or will experience a certain level of results or satisfaction if they invest with Firm, nor should it be construed as a current or past endorsement by any of our investors. 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There can be no assurance that the assumptions made in connection with any projections will prove accurate, and actual results may differ materially, including the possibility that an investor may lose some or all of any invested capital. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Prime Meridian Team", "url" : "https://www.pmifunds.com/insights/author/prime-meridian-team" }, "dateModified" : "2024-07-19T17:54:00.970Z", "datePublished" : "2016-11-04T04:00:00.000Z", "headline" : "Why Consider Marketplace Lending?", "mainEntityOfPage" : { "@id" : "https://www.pmifunds.com/insights/why-consider-marketplace-lending", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.pmifunds.com/hubfs/Branding/pmifunds-logo.svg" }, "name" : "Prime Meridian Capital Management" } } ```