Why P2P Lenders Are Leaving SoLo Funds (And Where They're Going)

What Actually Happened with SoLo Funds

SoLo Funds launched as a peer-to-peer lending marketplace that positioned itself as a community-based alternative to payday lenders. The pitch was compelling: regular people could borrow small amounts from other regular people, and lenders could earn returns by funding these micro-loans.

The mechanism that made SoLo different from traditional P2P platforms was its "tip" system. Borrowers would voluntarily offer a tip to attract lenders — higher tips meant faster funding. On the surface, it sounded like a marketplace dynamic. In practice, the CFPB alleged, it worked very differently.

For borrowers, this meant taking on loans whose real cost was never clearly communicated. For peer-to-peer lenders, the implications were different but equally significant: the platform's economics were built on opacity, not trust — and high default rates were quietly eroding lender returns.

Why Lenders Are Walking Away

The CFPB action was a confirmation of what many experienced SoLo lenders had already suspected. Forum threads and app store reviews had long documented the frustration: lenders were losing money they expected to recoup, default rates felt higher than advertised, and the accountability system wasn't strong enough to filter out risky borrowers.

Peer-to-peer lending works when both parties have aligned incentives: lenders want returns, borrowers want fair access to capital. SoLo's marketplace model — connecting strangers at scale — created structural problems:

• No real interest rates. Tips aren't interest. They can't be negotiated, tracked as yield, or properly risk-adjusted. A lender has no meaningful way to price risk.
• Limited accountability signals. Without a robust, verifiable reputation system, lenders had to make decisions with incomplete information.
• Strangers by design. The marketplace model optimizes for volume, not quality of relationships. Most real P2P lending happens between people who have some basis of trust — friends, family, colleagues, community members.

When the CFPB action made headlines, it wasn't the catalyst for lenders leaving — it was confirmation. Many had already started looking for a better SoLo Funds alternative.

What Good P2P Lending Actually Looks Like

Before evaluating alternatives, it helps to define what a well-designed peer-to-peer lending platform should actually do. The core requirements are straightforward:

1. Transparent fee disclosure

Every party should know, before agreeing to anything, exactly what fees they'll pay and what they'll receive. This isn't optional — it's the foundational requirement for any lending platform operating in good faith. The CFPB's issue with SoLo wasn't that it charged fees; it was that the fees were disguised.

2. Real interest rates you control

Lenders should be able to set a real annual interest rate and have it factored into the repayment schedule. This allows proper risk pricing, fair returns, and clear expectations on both sides. Tips are not interest rates. Tips are not a substitute for interest rates.

3. Structured repayment terms

A pact with no agreed schedule is just an informal transfer. P2P lending platforms should enforce structured monthly (or periodic) repayments, track what's been paid versus what's outstanding, and make that data visible to both parties.

4. A credible reputation system

Trust scores only mean something if they're built on verifiable payment history over time. A borrower's on-time rate, number of completed pacts, and total amount repaid should be public signals that lenders can use to make informed decisions.

The Best SoLo Funds Alternatives in 2026

With those criteria in mind, here's how the main peer-to-peer lending app alternatives compare:

Platform	Transparent Fees	Custom Rates	Trust Score	Lend to People You Know
SoLo Funds	No (tips disguised as fees)	No	Basic	Marketplace only
Zirtue	Yes	0% only	No	Yes
Venmo / Cash App	Yes (for transfers)	No lending	No	No repayment tracking
PayPact	Yes — flat 2%	Yes — you set them	Core feature (0–100)	Yes

Zirtue

Zirtue is the closest analog to PayPact in the market: it focuses on lending between people who know each other, with structured repayments. The main limitation is that it only supports 0% interest loans. That's fine for simple friend-to-friend arrangements, but it doesn't work for lenders who need a return to justify deploying capital. If you want custom interest rates, Zirtue isn't the answer.

Venmo / Cash App / Zelle

Great for transfers, not for lending. None of these platforms track repayments, enforce terms, or build any kind of borrower reputation. They solve the "send money" problem, not the "structured lending" problem.

PayPact

PayPact is built specifically to address what SoLo Funds got wrong. It's a peer-to-peer lending platform with transparent fees (flat 2%, disclosed upfront), real custom interest rates that lenders set themselves, and a Trust Score system (0–100) built on verifiable payment history.

The key differences from SoLo:

• No tips, no disguised fees. The 2% platform fee is calculated into the pact terms from day one.
• Lenders set the interest rate. Borrowers agree or don't. Transparent.
• Every completed payment raises the borrower's Trust Score — a persistent, verifiable record that lenders can inspect before agreeing to terms.
• Multi-party agreements let you structure pacts with more than two parties, enabling group lending or shared goals.

How to Protect Yourself as a P2P Lender

Regardless of which platform you use, there are principles that make P2P lending safer for lenders:

Always verify the effective APR

Before funding any loan, calculate what you'll actually earn after fees. If a platform uses tips, add up all the amounts a borrower is expected to pay and divide by the loan principal. If that number is dramatically different from what's advertised — or if you can't calculate it at all — that's a red flag.

Require structured repayments

A loan without a repayment schedule is just an optimistic transfer. Insist on platforms that track monthly payments, send reminders, and show both parties the outstanding balance in real time.

Look for trust signals you can verify

Generic "lender score" badges aren't sufficient. You want to see specific data: on-time payment rate, number of pacts completed, and total amount repaid. These are the signals that actually predict whether someone will pay you back.

Lend within your network first

The default rates on marketplace platforms — where you're lending to strangers — are structurally higher than lending within a network of people you have some relationship with. Start with people you know. Use the platform to formalize what would have been an informal arrangement, and let the Trust Score accumulate from there.

The Bottom Line

The CFPB action against SoLo Funds wasn't the end of peer-to-peer lending. It was a correction. The demand for P2P lending is real — $200 billion changes hands informally between friends and family in the US every year. What the market needed was a platform built on the right principles: transparency, real interest rates, and accountability systems that actually work.

That's what PayPact was built to be. If you're looking for a SoLo Funds alternative that doesn't require you to trust a platform's opaque fee structure, the answer is a platform that makes the terms clear from the start — and lets you set them yourself.