Network of private investors
Network of private investors connect a private investor to a borrower. Due to the fact it is a private investor and are not backed by collateral it usually has to be a personal loan and not a business loan.
The reverse auction model or other companies rates gives the lender an interest rate number that the company can use to stay competitive. Usually fixed income rate. Higher risk clients are given higher rates.Lower risk clients are given lower rates. Many lenders to maximum returns loan money to many type of clients ranging from low to high risk.
These companies generate income by collecting a service fee. Usually a one time fee or annual percentage for servicing the account.
Many of the services do not have any representatives due to the automated services, Since there are no commissions, salaries, benefits, or office rent they can afford to lend funds at a lower rate.