Peer-to-peer lending platforms are a potential disruptor to a long-established industry

For small businesses – and aspiring businesspeople -- banks have been a financial gatekeeper. Without assets and a business credit profile, businesses are often out of luck. But peer-to-peer lending services are beginning to disrupt an industry that is very set in its ways. Fintech lending platforms like October assign businesses a credit score based on a company’s financial history, default probability, and projected profit margin. Then, they allow their users to participate in lending to the companies – and collecting interest. “We’ve been lending the same way for decades,” says Paul Beaumont, Associate Professor at Desautels. “It’s good to have this emergence of new actors in the small business lending markets—actors that are less regulated and expand the set of products that firms can access.”