Peer-to-peer finance and its impact on entrepreneurship is a topic that has gained significant traction in recent years. While it hasn’t been a frequent subject in past IELTS exams, its growing relevance in the global economy suggests it could become more prevalent in future tests. Based on analysis of past IELTS Writing Task 2 questions, we can anticipate potential prompts related to this theme. Let’s explore one such question:

Some people believe that peer-to-peer finance platforms are revolutionizing the way entrepreneurs access funding. Others argue that these platforms pose significant risks to both lenders and borrowers. Discuss both views and give your own opinion.

Analyzing the Question

This question requires candidates to:

1. Discuss the positive aspects of peer-to-peer finance for entrepreneurs
2. Explore the potential risks associated with these platforms
3. Provide a balanced argument considering both perspectives
4. Express a personal opinion on the matter

Let’s examine three sample essays addressing this prompt, each targeting a different band score.

Sample Essay 1 (Band 8-9)

Peer-to-peer (P2P) finance has emerged as a disruptive force in the entrepreneurial landscape, offering new avenues for funding that bypass traditional financial institutions. While proponents herald this as a democratization of finance, critics warn of inherent risks. This essay will examine both perspectives before presenting a nuanced view on the matter.

Advocates of P2P finance platforms argue that they are transforming entrepreneurship by providing unprecedented access to capital. Traditional banks often have stringent lending criteria that exclude many promising startups, particularly those in emerging markets or unconventional sectors. P2P platforms, however, connect entrepreneurs directly with individual lenders, facilitating funding for ventures that might otherwise struggle to secure investment. This democratization of finance fosters innovation and economic growth by enabling a diverse range of business ideas to flourish.

Conversely, skeptics highlight the significant risks associated with P2P lending. For borrowers, the ease of accessing funds may lead to over-indebtedness, particularly if their ventures fail. Lenders, often lacking the sophisticated risk assessment tools of traditional banks, may underestimate the likelihood of default. Moreover, the relative lack of regulation in many jurisdictions leaves both parties vulnerable to fraud or platform collapse. These risks could potentially destabilize local economies if P2P lending grows unchecked.

In my opinion, while P2P finance undoubtedly presents challenges, its potential to drive innovation and economic inclusion outweighs the risks. However, a balanced approach is crucial. Governments and financial authorities should implement robust regulatory frameworks to protect both lenders and borrowers. This could include mandatory risk assessments, caps on lending amounts, and stricter vetting of both entrepreneurs and platforms. Additionally, financial literacy programs could help participants make informed decisions.

In conclusion, peer-to-peer finance platforms are indeed revolutionizing entrepreneurial funding, but not without significant risks. With appropriate regulation and education, these platforms can become a powerful tool for economic development, complementing rather than replacing traditional financial institutions.

(Word count: 309)

Explanation of Band 8-9 Score

This essay demonstrates several key features that contribute to a high band score:

1. Coherent structure: The essay follows a clear four-paragraph structure, addressing both sides of the argument before presenting a balanced conclusion.

2. Sophisticated vocabulary: The writer uses a range of advanced vocabulary accurately, such as “disruptive force,” “democratization,” and “stringent lending criteria.”

3. Complex sentence structures: The essay employs a mix of simple and complex sentences, demonstrating a high level of grammatical control.

4. Clear progression of ideas: Each paragraph develops logically from the previous one, creating a cohesive argument.

5. Balanced argument: The essay presents both perspectives fairly before offering a nuanced personal opinion.

6. Specific examples: While not extensive, the essay provides relevant examples to support its points, such as mentioning emerging markets and unconventional sectors.

7. Task response: All parts of the question are fully addressed, including both views and a personal opinion.

Sample Essay 2 (Band 6-7)

Peer-to-peer finance platforms have become increasingly popular in recent years, changing the way entrepreneurs can get funding for their businesses. While some people think this is a great development, others are worried about the risks involved. This essay will discuss both sides of this issue.

On the positive side, P2P finance makes it easier for entrepreneurs to get money for their ideas. Traditional banks often have very strict rules about who they will lend to, which can make it hard for new businesses to get started. P2P platforms allow entrepreneurs to connect directly with people who want to lend money, which can be faster and more flexible than going through a bank. This means more people can start businesses, which is good for the economy.

However, there are also risks to consider. For the people borrowing money, it might be too easy to get into debt if their business doesn’t succeed. For the lenders, there’s a risk that they might lose their money if the borrower can’t pay it back. Also, these platforms are not always well-regulated, which means there could be problems with fraud or the platform itself failing.

In my opinion, while P2P finance does have some risks, the benefits for entrepreneurs and the economy are more important. I think governments should create better rules to protect both lenders and borrowers, but not so many rules that it stops these platforms from working well. It’s also important to educate people about the risks and benefits of P2P lending so they can make good decisions.

To conclude, P2P finance platforms are changing how entrepreneurs get funding, which has both good and bad aspects. With the right rules and education, I believe these platforms can be a positive force for economic growth and innovation.

(Word count: 293)

Explanation of Band 6-7 Score

This essay demonstrates several features that place it in the Band 6-7 range:

1. Clear structure: The essay follows a logical structure, addressing both sides of the argument and providing a conclusion.

2. Adequate vocabulary: The writer uses some less common vocabulary appropriately, though not as sophisticated as in the Band 8-9 essay.

3. Mix of sentence structures: There is some variation in sentence structure, though less complex than in higher band essays.

4. Task response: The essay addresses all parts of the question, discussing both views and offering a personal opinion.

5. Cohesion: Ideas are generally well-linked, though transitions between paragraphs could be smoother.

6. Limited depth: While the main points are covered, the essay lacks the depth and nuance of higher band responses.

7. Some grammatical errors: There are a few minor grammatical errors, but they do not impede understanding.

Peer-to-peer finance connecting entrepreneurs with investors

Sample Essay 3 (Band 5-6)

Nowadays, many people use peer-to-peer finance platforms to get money for their business ideas. Some people think this is very good, but others think it is dangerous. I will talk about both ideas in this essay.

First, P2P finance helps entrepreneurs get money easily. Banks are sometimes very strict and don’t give money to new businesses. But with P2P platforms, entrepreneurs can ask many people for small amounts of money. This is good because more people can start businesses.

But there are also some problems with P2P finance. Sometimes people borrow too much money and can’t pay it back. This is bad for the people who lend the money because they might lose it. Also, some P2P platforms are not safe and people might get cheated.

I think P2P finance is mostly good for entrepreneurs. It gives them a chance to start their business when banks say no. But I also think the government should make rules to make it safer. People should also learn more about P2P finance before they use it.

In conclusion, P2P finance has good and bad points. It helps entrepreneurs but can be risky. With better rules and education, I think it can be a good way for people to get money for their business ideas.

(Word count: 214)

Explanation of Band 5-6 Score

This essay demonstrates several features that place it in the Band 5-6 range:

1. Basic structure: The essay follows a simple structure addressing both sides of the argument and providing a conclusion.

2. Limited vocabulary: The writer uses mostly common vocabulary, with few attempts at more sophisticated language.

3. Simple sentence structures: Most sentences are simple or compound, with few complex structures.

4. Task response: The essay addresses the main points of the question, but lacks depth and detail.

5. Limited cohesion: Ideas are presented in a list-like manner, with basic linking words.

6. Grammatical errors: There are several noticeable grammatical errors, though they don’t significantly impede understanding.

7. Lack of development: Ideas are presented but not fully explained or supported with examples.

Key Vocabulary to Remember

1. Peer-to-peer (P2P) finance (noun phrase) – /pɪər tə pɪər ˈfaɪnæns/ – A method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.

2. Entrepreneur (noun) – /ˌɑːntrəprəˈnɜːr/ – A person who sets up a business or businesses, taking on financial risks in the hope of profit.

3. Disruptive (adjective) – /dɪsˈrʌptɪv/ – Causing or tending to cause disruption; innovative or groundbreaking.

4. Stringent (adjective) – /ˈstrɪndʒənt/ – (Of regulations, requirements, or conditions) strict, precise, and exacting.

5. Democratization (noun) – /dɪˌmɒkrətaɪˈzeɪʃən/ – The action of making something accessible to everyone.

6. Over-indebtedness (noun) – /ˌəʊvər ɪnˈdɛtɪdnəs/ – The state of having taken on more debt than one can reasonably pay back.

7. Regulation (noun) – /ˌreɡjʊˈleɪʃən/ – A rule or directive made and maintained by an authority.

8. Financial literacy (noun phrase) – /faɪˈnænʃəl ˈlɪtərəsi/ – The possession of the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.

In conclusion, the topic of peer-to-peer finance and its impact on entrepreneurship is a complex and relevant issue for IELTS Writing Task 2. As demonstrated in the sample essays, candidates should strive to present a balanced argument, use sophisticated vocabulary, and provide specific examples to support their points. To further improve your writing skills, try crafting your own essay on this topic and share it in the comments section for feedback and discussion. Additionally, you may want to practice with related topics such as the role of technology in finance, the challenges facing small businesses, or the impact of alternative funding sources on traditional banking systems.