P2P Lending & Crowdlending Glossary

Every term a European P2P investor meets, in plain English. Definitions are short on purpose; where a term has a deeper guide or platform example, we link to it. Use Ctrl+F, or link straight to any term.

Accrued interest

Interest a loan has earned but not yet paid out to you. On the secondary market, the buyer usually pays the seller the accrued interest as part of the price.

Auto-invest

A tool that automatically places your money into new loans matching rules you set (rate, term, originator, country). It removes idle cash but can also spread you into weaker loans if the filters are loose.

Available liquidity

The cash on a platform you can withdraw immediately, as opposed to money locked in active loans. Low available liquidity is an early warning sign a platform is under stress.

Buyback guarantee

A promise by the loan originator to repurchase a loan (usually principal plus accrued interest) if the borrower is late by a set number of days, often 60. It is only as strong as the originator behind it, not a government guarantee.

Cashback / welcome bonus

A one-off incentive a platform pays you for signing up or funding an account. Treat it as a small bonus, never as part of the expected yield.

Collateral

An asset (property, equipment, receivables) pledged against a loan that can be sold to repay investors if the borrower defaults. Recovery depends on how enforceable and liquid the collateral really is.

Compound interest

Earning interest on your reinvested interest, not just on your original capital. Reinvesting monthly P2P interest is what turns a headline rate into a materially higher effective return over years. See our passive-income guide.

Concentration risk

Too much of your money exposed to one borrower, one loan originator, or one country. A platform where a single originator funds most loans carries structural concentration risk even if each loan looks fine.

Crowdlending

Lending money to businesses or projects through an online platform, in exchange for interest. It is the debt side of crowdfunding. See what crowdlending is and how it differs from crowdfunding.

Default

When a borrower stops repaying and the loan is formally treated as non-performing. What matters is not just the default rate but the recovery rate and how long recovery takes.

Default rate

The share of a portfolio (by count or by value) that has defaulted. Compare it against realised recovery, not in isolation. See realistic returns.

Diversification

Spreading money across many loans, several platforms, and different loan types so no single failure hurts much. The single most effective defence in P2P. See how to build a diversified portfolio.

Due diligence

The checks you (and the platform) do before investing: regulation, financials, track record, ownership, collateral. See how to spot a risky platform.

ECSP (European Crowdfunding Service Provider)

The EU licence (Regulation 2020/1503, in force since November 2023) that business-lending crowdfunding platforms need to operate across the EU. It sets conduct and disclosure rules but does not include an investor-compensation scheme. See the regulation explainer.

EFSA / national regulator

The financial supervisor that authorises and oversees a platform in its home country (for example EFSA in Estonia, Latvijas Banka in Latvia, CMVM in Portugal). Who regulates a platform, and how strictly, is a core scoring dimension.

Factoring / invoice financing

Lending against a company’s unpaid invoices: the business gets cash now, investors are repaid when the invoice is settled. Short-term and self-liquidating, but exposed to the invoice payer’s reliability.

Fill rate

How quickly loans on a platform get fully funded by investors. A very high fill rate can mean strong demand, or too little supply of loans for the money flowing in.

Grace period

Extra time a borrower is given to pay before a loan is marked late or in default. Long or repeated grace periods can hide a deteriorating loan book.

Gross vs net return

Gross return is the headline advertised rate; net return is what you actually keep after defaults, fees and idle cash. The gap between them is the real measure of a platform. See realistic returns.

Loan originator

The lending company that issues loans to borrowers and then lists them on a marketplace platform (for example on Mintos) for investors to fund. On marketplaces, your risk is really the originator’s solvency.

Loan-to-value (LTV)

The loan amount as a percentage of the value of the collateral securing it. A 60% LTV property loan has more cushion than a 90% one; lower is safer for the investor.

Marketplace vs direct lender

A marketplace (like Mintos) lists loans from many third-party originators; a direct lender (like Maclear) underwrites and funds the loans itself. Direct lenders own the credit decision; marketplaces depend on their originators.

MiFID II

The EU rulebook for investment firms. Platforms licensed as MiFID II investment firms (for example Mintos, Nectaro, Twino) can offer up to EUR 20,000 of investor-compensation cover in qualifying scenarios, which pure ECSP or SRO platforms do not.

Net annual return (NAR)

A platform’s own figure for the average yearly return actually delivered to investors after losses. Useful, but always check how the platform defines and calculates it.

Non-performing loan (NPL)

A loan where the borrower has missed payments for long enough (often 90+ days) to be classed as at serious risk. A rising NPL share is one of the clearest health warnings.

Originator group

The parent company that owns a loan originator (and sometimes the platform itself). When the platform, the originator and the group share owners, that is a related-party conflict of interest to weigh.

P2B (peer-to-business)

Individuals lending to small and medium businesses, as opposed to consumer P2P. Business loans are often larger, secured, and higher-yield, with different risks. See investing in SME loans.

P2P (peer-to-peer) lending

Lending money to other people or businesses directly through a platform, cutting out the bank, in exchange for interest. See the beginner's guide.

Primary market

Where you buy loans as they are freshly issued by the platform or originator, at face value. Contrast with the secondary market.

Provision fund

A reserve pot a platform builds (usually from its own fees) to cover some investor losses when borrowers miss payments. A buffer that can be exhausted, not a guarantee.

Recovery rate

The share of a defaulted loan’s value that investors eventually get back after collection or collateral enforcement. A platform with high defaults but high, fast recovery can be safer than one with low defaults and slow recovery.

When a platform lends to businesses connected to its own owners or group. It creates a conflict of interest, because the party approving the loan benefits from it being approved.

Secondary market

A marketplace inside a platform where investors buy and sell existing loans to each other before maturity. It is how you exit early, but liquidity can dry up exactly when you need it.

Skin in the game

The originator or platform keeping a slice of every loan on its own books, so it loses money if the loan goes bad. Alignment of interest, and a positive signal.

SRO (self-regulatory organisation)

A body that supervises a platform’s anti-money-laundering duties, recognised by a national regulator (for example PolyReg under Swiss FINMA oversight). It is AML supervision only, not investor protection. See the Switzerland guide.

Term (tenor)

How long a loan runs before the principal is due back, from a few weeks to several years. Longer terms usually pay more but lock your capital up for longer.

Trustpilot / reviews signal

Public review scores are a rough, lagging indicator of investor experience. A collapse from 4 stars to below 2, with recurring themes about withdrawals, is worth more than the raw number.

Withdrawal delay

When a platform takes longer than usual to pay out cash you have requested. Recurring withdrawal delays, especially on uninvested cash, are among the strongest red flags of platform stress.

XIRR

Extended internal rate of return: your true annualised return accounting for the timing of every deposit, interest payment and withdrawal. The honest way to measure how a real portfolio actually performed.

Yield

The annual income a loan or portfolio pays, as a percentage of what you invested. In P2P, always distinguish the advertised yield from the realised, after-default yield.