Prosper, another player in the online lending world, grew at an extremely respectable pace in 2014. It lent $1.6 billion in 2014, up from $357 million from the year prior.

The increasing popularity of online lending is eating into the mega-profits of brick-and-mortar financial institutions. The question is, why?

Accounting for its appeal
According to Mason Estep, a serial entrepreneur and co-founder of Sech's, an alcohol beverage aimed at the college set, online lending has a natural appeal for millennials. First, the average millennial is “going to have a hard time” securing a business loan from a bank, he says. In general, a college student isn’t going to have the business savvy to have built up a portfolio a bank would lend money to, making financing alternatives appealing.

“Banks look purely at the numbers and if they don’t add up, you won’t get the loan. But in peer-to-peer lending, money is invested in people and ideas,” says Estep.

Online lending platforms are also drawn to creative ideas, while banks tend to favor safer investments, he says. And, because millennials grew up with the Internet, they are familiar and comfortable with it. Conversely, brick and mortar institutions are less approachable to the average millennial.

Seeking funding online is somewhat of a throwback to the days, 30 to 40 years ago, when people would often business loans from family or friends, says Estep. When a person is dealing with someone they know, like in those situations, the lender is more likely to take a chance on a creative or less-certain investment than a bank would be.

“Online lending is the modern version of hearkening to the old days and opens business lending to more people,” says Estep.

Still, he cautions, people seeking online lending shouldn’t think just any idea will prompt those organizations to open up their wallets. The concept must still be viable, says Estep.

“You still need to be credible and do your due diligence to have a fighting chance” to securing online lending, says Estep.

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Tami Kamin Meyer is an Ohio attorney and writer. She may be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. or @girlwithapen.