What Is A Loan Originator And How Do They Work? (Plus, 3 Ways They Benefit Investors)

Ever wondered how P2P platforms offer such high returns?

Where they find the right borrowers?

Or even how borrowers are vetted and managed?

The key to answering these questions is first understanding the role of P2P loan originators.

Loan originators are the foundation of the P2P investing model, and the key to making sure your returns are high enough so you can retire early, save up for that house deposit, or simply, make more money.

So, let’s lift the lid on what a loan originator is, how they work and the role they play in helping you maximise your returns.

What is a loan originator?

A loan originator is effectively the “middle man” in the P2P lending process.

As an investor, you are lending your money online to strangers. Someone needs to find these strangers, credit check them and manage their payments.

Enter: loan originators.

Borrowers apply and get their loan from a loan originator. They submit information such as work history, tax returns and credit information. The loan originator will then take this information and use it to find and secure the best loan available for them, effectively “originating” the loan.

One well-known type of loan originator is a mortgage broker, for example, which helps buyers find a mortgage that suits them best.

In P2P investing, a loan originator helps people find loans that meet their needs and correspond to their profile.

Loan originators will then sell these loans to investor platforms, such as Swaper.

How does a loan originator work?

There are several players in the P2P lending ecosystem, and loan originators are one of the main ones alongside borrowers, lenders and P2P platforms.

There are two main ways a loan originator operates:

  1. By brokering a deal between the lender and borrower. They find the best conditions available for the borrower, while also convincing the lender to offer funding (or funding it themselves, in some cases).
  2. By partnering with a P2P lending platform and therefore minimising risk. This helps P2P platforms focus on lenders, while loan originators focus on borrowers.

There are two main benefits of operating with the second method:

Firstly, crowdsourcing funding is more efficient and often easier than becoming a larger entity such as a bank. This marketplace model makes it easier to fund loans and allows everyday investors to access high-returning investments without requiring any specific lending knowledge.

Secondly, loan originators can minimise risk by outsourcing investor management to a third party. P2P platforms are the ones that have to verify investors’ identity, manage investments and encourage investors to add more funds to the platform.

How does a loan originator make money?

Some loan originators will charge a set fee up front for their services, while others will take a percentage of the returns they make.

Our loan originator, Wandoo, makes money using the latter strategy.

Wandoo makes a 200% return on the unsecured consumer loans it offers in several countries in Europe. This high interest is what allows them to offer investors high returns while also making money for themselves.

Loan originators also make money by selling their loans to several P2P platforms, generating an additional stream of income. Each P2P platform and loan originator operates differently, and it really depends on their own model and contract agreement.

3 Benefits of investing in a P2P platform that uses loan originators

1. More variety of loans

P2P platforms that work with loan originators have access to a higher variety and consistent stream of loans. This helps spread the risk, and also means investors can allocate more of their money to P2P investments – while always receiving a consistently high return.

Since loan originators take care of borrowers, P2P platforms only need to focus on supplying investors. In Swaper’s case, this means we can offer loans faster  and at a larger rate.

It also allows us to stabilise our cash flow and offer some of the highest returns on the market: 14% per year, and 16% with our bonus

2. Better protection

Due to the high interest loan originators make on their loans, many can afford a buyback for investors and protect them if a borrower defaults on their loan.

What is P2P buyback, you ask?

The loan originator is often contracted by the P2P platform to offer compensation in order for them to have some ‘skin in the game’ and make sure each investment is a success. This is what regulates the quality and trust in the loan.

At Swaper, we refund both the principal and interest accrued during the late repayment. This means that as an investor, you won’t lose money if a borrower takes too long to pay, and your returns will therefore be more consistent over time.

3. Higher returns

With loan originators, investors have access to a large variety of loans from different countries, backgrounds and profiles. This allows investors to be exposed to loans that offer higher returns, while maintaining a good diversity of investments.

At Swaper, we only work with one loan originator for the time being. This allows us to have access to a higher number of loans, while making sure each loan is vetted and of high quality.


Loan originators are key players in the P2P investing scene.

They’re also the reason P2P platforms offer higher returns than the market average (especially when compared to the stock market).

So, if you want to give P2P investing a try, make sure you choose a platform that has a loan originator. You can usually find this out on their about page.

And when you’re ready, sign up, add funds and start investing! Easy, right?