Exploring the Role of Peer-To-Peer Lending Platforms in Providing Financial Support to Small and Medium-Sized Enterprises (SME’S) And Evaluating Its Impact on Traditional Lending

Abstract

Financial intermediaries, such as Peer-to-Peer (P2P) lending platforms, are innovative financing tools that provide new solutions for effective financing of small and medium-sized enterprises (SMEs) due to direct cooperation between the borrower and the lender. This paper seeks to analyse how P2P lending can help to fill the funding deficit of SMEs through the relative merits of P2P, including flexible loan terms, shorter loan approval cycles, and wider access to funds compared to conventional banking initiatives. P2P platforms utilise sophisticated technologies as well as big data to evaluate creditworthiness, and they do not always stick to the strict criteria of conventional banks or demand collateral for loans. Peer-to-peer (P2P) lending platforms have emerged as significant players in the financing landscape for small and medium-sized enterprises (SMEs). This paper evaluates the advantages, challenges, and impact of P2P lending on traditional lending practices. Through a quantitative analysis using SPSS, we examine key variables related to P2P lending's effectiveness in facilitating SME financing.