Investments seem pretty simple: one buys shares from a company so the company can use that money to expand their company, increase their income and, hopefully, make more profit. Peer-to-peer investment is not as simple as that. It requires commitment from both sides. Iuvo P2P Inve4stment is one of the companies that offer this kind of investment. You can read honest reviews of Iuvo P2P investment here. But first, we like to tell you something about what peer-to-peer investment is and how it differs from regular investments.
What is Peer-to-peer Investment?
Peer-to-peer investment is an investment that is done via notes. These notes are issued by borrowers. Peer-to-peer investment is also called debt financing because the borrower has a dept that has to be paid back to the money lender. The notes dealt with in peer-to-peer investment are, in fact, a kind of loan requested by the borrowers. It differs from peer-to-peer lending because peer-to-peer lending focuses on the other side, the side of the borrower of the money. The notes that are nought by the investors can be sold as a security. That also means that investors can choose to exit the investment even before the borrower has been able to repay the debt.
Who is the Borrower in Peer-to-peer Investment?
In the case of peer-to-peer investment, the borrower is the person or company that has issued the note. Vis this note, they request a loan that can be used for any kind of aspect of the company. Maybe they want to expand their company and buy more supplies or hire more people. It’s also possible that they want to open up a new department or hire a larger warehouse to improve their profit.
How Does Peer-to-peer Investment Work?
Often, there is no previous connection between the two sides: lender and borrower. Peer-to-peer lending works through intermediation from a peer-to-peer lending company. This company works as an in-between company between the money lender and the money borrower. Still, buyers of a note are able to decide what kind of company you buy a note from. Therefore, you can decide which company you as a buyer invest in. So you don’t have to fear that your investment will go to a company that you don’t want to support for some reason or another. The reason for not wanting to support a company might be a financial or moral one.
The investments made via peer-to-peer investment have the same kind of risks as any other investment. There is a chance that you won’t get back the money that you paid for your note. The financial intermediary might not be trustworthy and, therefore, you should investigate the financial intermediary that you want to use to buy a note from.
So you can work with peer-to-peer investments both as a money lender and a money borrower. As a lender, you lend money via a note to a company that you feel comfortable with. As a borrower, you issue a note and hope for someone to invest in your company.