Peer-to-peer lending: exploring borrowers’ motivations and expectations

This paper explores the motivations, expectations and satisfaction of small businesses using peer-to-peer lending platforms in five different European countries. We address a gap in the recent literature, which examines platforms and investments through the lenses of risk management, but often neglects the perspective of entrepreneurs. Our findings indicate that borrowers are primarily motivated by the need for immediate and flexible financial solutions and by the desire to diversify their funding sources and reduce reliance on traditional banking channels. Notably, our research reveals a significant lack of awareness among borrowers regarding the specific financial instruments they use to raise debt. Although we explore variations across countries and firm characteristics, our results do not show any significant differences. Future research could further investigate these issues, with a particular emphasis on the financial literacy of entrepreneurs, which policymakers suggest is crucial for fostering the orderly and sustainable financial development of small businesses.