Illegal. P2P is a third-party financial intermediary, which has no fund pool and is suspected of illegal fund-raising. It is obviously illegal to use P2P financing for microfinance.

Regulations:

The Guiding Opinions on the Pilot Project of Small Loan Companies (No.23 [2008] of the Banking Regulatory Commission) stipulates that small loan companies do not absorb public deposits.

Working principle:

Small loan companies shall not absorb social deposits or engage in any form of illegal fund-raising. The CBRC pointed out three sources of funds for microfinance companies: capital paid by shareholders, donated funds, and integrated funds from no more than two banking financial institutions.

Definition:

Microfinance companies are limited liability companies or joint stock limited companies established by natural persons, corporate legal persons and other social organizations that do not absorb public deposits and operate microfinance business.

Common financing methods of microfinance:

1.

2. Increase capital and share.

3. Financing from the bank.