When T.J. Clayton and his wife were looking to adopt, they thought they'd have at least a year to save up. But when they got the good news their baby was coming in a matter of weeks, they needed funds fast.
"My first reaction was, 'Wow we don't have the time to save and to plan that I thought we were going to have,'" Clayton explained.
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He says because of the quick timeline traditional adoption grants and loans weren't an option for him, so he went online for a marketplace loan.
"It was a pretty simple process," Clayton added.
Once known as peer-to-peer lending, now more institutional investors are putting money into these types of consumer loans. Experts say that means there is more cash available for borrowers like the Clayton's who apply online. And experts say this alternative form of borrowing is becoming more mainstream.
"We're seeing that as far as the growth goes, as, as the number of loans that are out there, the number of people that are knowledgeable of it. The growth in the marketplace lending has been almost exponential," said Bob Gerstemeier, Chair of the National Association of Personal Financial Advisors.
That exponential growth includes the launch of new lending platforms as well as dramatic increases in the number of loans originated. In 2014, Prosper originated $1.6 billion in loans on the platform, up from $369 million in 2013.
And, industry experts say some consumers are now coming to marketplace lending to fund big purchases you might not typically think of getting a loan for including home repair, elective medical procedures, even adoption. The benefits of this type of loan, according to the companies, are lower interest rates, speed and borrowers can log on from anywhere.
"From their home, from their desktop, and from a mobile device, 24 hours a day. They can share information with us, we can make offers for credit and we can often fund their request for a loan in three or four days," said Rob Suber, President of Prosper.
"Investors that are funding loans are directly connected to the borrowers in terms of the funds, so it's an incredibly efficient system and the net result of that is borrowers get far lower rates," added Dave Girouard, founder and CEO of Upstart.
As with any loan though, Gerstemeier says it's important to read the fine print in the contract, and understand the risks of borrowing money. Also, do your research.
"If a company hasn't been around and is just starting, look closely and make sure that that's the type of company you want to be working with," he explained.
Clayton says he did plenty of research before signing on the dotted line, and he's grateful he was able to get a marketplace loan.
"Knowing that that was behind us and we could now focus on all the other important things was, was really nice," he said.
Experts say, in terms of fees an interest rates, most of these markeplace lenders have a loan origination fee that can be about 1% to 6% and interest rates can range from about 5% to 30% depending on the borrower and the particular platform.
Gerstemeier also points out that the economy has been strong as marketplace lending has been growing. If the economy slows that could lead more people to default on loans, and mean less of a return for investors.