Here’s why 2021 is a great time for developing a money lending app. With the world in turmoil, economies across the globe took a hit. Many investment projects were canceled, but these funds can still be invested. And we’re not just talking about institutional investors — many individuals can lend money to people or businesses in need. This is called P2P lending.
Peer-to-peer (P2P) lending apps connect people who are willing to loan money with the people that want to borrow money.
Keep reading to discover the important aspects about how to create a loan app, how peer-to-peer money lending apps work, and how much it costs to develop a loan lending mobile app. We’ll also cover the features such apps must have and showcase the stages of money lending mobile app development for iOS and Android.
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When you decide to build a money borrowing app, legal concerns and financial permissions must come first.
Start with selecting a legal entity form. The most popular ones are a Limited Liability Company (LLC) and corporation. Both will protect you from creditors in case of force majeure or bankruptcy, but they are taxed differently.
By default, an LLC is taxed as a pass-through entity, which means all profits and losses are reported on individual tax returns for its owners. On the other hand, a corporation is taxed as a legal entity that can generate income. Besides taxes on profits (corporate tax), there’s also a tax on dividends, which are, by the way, not tax-deductible (double taxation). With an LLC, the profits are accrued based on the agreement, while the corporation pays based on the number of shares of every individual shareholder.
Once you’re ready to proceed, you must register a business name within the country of your choice. Follow all the law requirements and pay the necessary fees, and, of course, think of a catchy name. If you decide to register your legal entity in the USA, make sure your trademark name differs from the legal name and is available at uspto.gov register of trademarks.
On top of that, you must secure the initial capital. This will be necessary for both peer-to-peer money lending app development and the first loans. Usually, investors are attracted to platforms like these only when they see users actually looking for loans there, so you need to have some funds to operate before the investor money kicks in.
There are three popular ways to secure the initial capital:
Lastly, you will have to select the bank that will store your operational capital for P2P lending.
Now, it’s time to answer the next question: How do money lending apps work? The mechanics are straightforward. All users have to do is:
Voila, all is set! iOS or Android fintech apps will automatically notify users before they deduct payments or accrue funds to their account to avoid late fees, overpayment, and other issues.
One of the biggest benefits of P2P money lending is that there are no intermediaries like loan brokers or banks. Both the lenders and the borrowers act as equal parties, so they can negotiate loan rates and repayment conditions directly with each other.
The borrower issues a loan application, and the platform approves it after a security check. Then the lender can manage the list of loan applications and approve the ones they wish. The platform gains profit as a percentage of every loan, or as a subscription fee, or in any other way, but the absence of intermediaries ensures the interest rates and terms are suitable for all users.
To be successful, your product has to be an app like Lending Club — simple-to-use, user-friendly, with sleek UI and transparent interactions. It must provide a seamless journey both for admins and users, lenders, and borrowers.
Let’s take a look at the must-have features of fintech apps.
These are just several features of a loan app, but the list can go on.
Chatbots, reporting, user and loan management statistics, admin actions, and many other features are essential for a smooth and convenient money lending journey for all parties.
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The more advanced features you implement, the better you stand out among competitors. Determining which features are must-have and which are just nice to have is crucial for launching a successful MVP that will generate profit.
Speaking of an MVP, how much does it cost to develop a loan lending mobile app? Let’s take a closer look!
To create an app like Possible Finance, you need to know the current market expectations, make a list of MVP features to meet them, and select a proven technology stack to build these features cost-efficiently and within the expected time frames.
Here are the stages you will have to go through before engineering.
By all means, do market research first. Find out what popular apps are out there, download a few (they are usually free), analyze their features, see where they excel and where they fall short. Read the comments and pay attention to the negative ones as they might show you room for growth and a Unique Selling Proposition (USP) for your product. Gather opinions of the target audience through focus groups and questionnaires, and then form a list of app features based on this preliminary research.
Talk with your team and discuss the features you want to have implemented in the app. Work with a business analyst, team lead, and project manager to select the features most valuable to your potential users and prioritize their development within the MVP scope. This stage should end with a Scope of Work (SoW) document and a roadmap with project deliverables, cost, and time estimates.
Select the most appropriate tech stack for developing fintech apps. Leverage the tech expertise of your team and the previously gathered data from competitor analysis. Consider aspects like security, performance, future scalability, ease of integrations, ease of adding new features, etc.
Depending on the final scope and the technology stack, you may need to put together a team that consists of a team lead, UI/UX designers, front-end developers, back-end developers, iOS and Android developers, QA specialists, and a project manager.
Once the technology stack is selected, and the team is assembled, they can start prototyping to deliver a clickable and interactive prototype of your future app. When you are satisfied with its look and feel, the team can build an MVP based on the SoW document.
You don’t have to build an MVP, but we recommend doing it to release the app faster and gather user feedback sooner. This helps avoid investing in an app users don’t really need or like.
Depending on the scope of work, the development model, the technology stack, and the team size selected, you can roughly estimate the cost of developing a payday loan app or a P2P money lending platform. These are the cost ranges of hiring a team in various regions across the globe:
The quality of services varies on the location, too. While top talent is hired by US-based startups and corporations, the demand is still much higher than the supply. So, bold entrepreneurs prefer to look for loan lending app development services offshore. Most of them find that outsourcing to Eastern Europe offers the best price/quality ratio.
Selecting the correct development model ensures the best cost-efficiency of your app development. What will it be?
This one works best when you have the idea and the investments but lack the team to turn the concept into a working product. In the case of product development, the technology partner you choose will have to provide a full cycle of product development: from ideation to design, coding, release, and ongoing product support.
Sometimes, you have enough in-house expertise to start building an app but struggle to scale fast enough or attract the specialist needed to advance the development under tight deadlines. This is why hiring a dedicated team is the best way to get instant access to the necessary talents and ensure software development and scaling go according to the approved roadmap.
Relevant is a technology partner with ample expertise in building fintech apps. We know what technology stack to choose, what features to implement, and how to deliver an MVP on time. Here are some examples of our successful fintech cases:
2020 felt like the whole world had stopped. But students around the globe still need to pay their student loans, patients have to pay the medical debt, and businesses have to manage their finances with the utmost efficiency to stay afloat. All this contributes to making fintech apps a prominent financial instrument, and many startups and entrepreneurs are looking for loan lending app development services right now. Are you one of them?
Whether you need a full-cycle peer-to-peer money lending app development or simply want to expand your team quickly, Relevant can help you do that. Contact us today, and our experts will be working on your app in no time!