The peer-to-peer lending industry (P2P) has moved at warp speed since inception in 2005, when the first peer-to-peer lender, Zopa, launched in the United Kingdom.

There are now more than 20 firms worldwide offering would-be borrowers solid alternatives to more traditional bank lenders and business loans. Some of these peer lenders specialize in school loans and micro lending, but the largest players — LendingClub and Prosper — will provide funding for any purpose.

Unlike traditional lenders, there are no penalties or higher interest rates to a borrower who wants to use funding for what some might consider more risky reasons like consolidation of debt or to pay off medical expenses.

Why has this industry grown at such a rapid rate? Put simply, it offers both borrowers and lenders significant efficiencies over the traditional banking model. For more history about P2P loans and how it works,