P2P lending is a process in which you lend money or invest money in "notes" aka loan's which is paid back with interest from the borrower. LendingClub.com is a great way to invest in loans or as low as $25. You can invest in multiple loans in order to diversify and limit your exposure to a bad borrower. Lets say for example you invest $100 if you invest your $100 into one "note" and that note defaults on their payment you can kiss our investment goodbye. If you invest $25 into 4 different notes at $25 each your minimizing your risk. Notes range from A-G where A (6.81% average) is the least amount of money you will return on your investment, but is the safest investment due to the borrowers FICO score and history. G would be a riskier investment, but yields high returns (28.97% average). You can go to the "Browse Notes" and filter and select the loan you would like to invest in.
The best way to minimize your risk is to use filters. On the left hand side you will see a table where you can filter. Under Deliquencies you want to select "0" Which indicates the borrower has not defaulted of missed any payments in the last two years. You also want to exclude any loans that have public records and no more than 5 inquiries in the last 6 months. Once all these filters are in place you can browse through the loans (36 or 60 months) and select the one that fits your investing strategy. You also have the option to have your funds reinvested automatically based on your selected investing strategy. Me personally I do things manually because I enjoy it. If you don't have the time you can auto invest. You get paid a percentage of your investment every month so make sure your funds are always fully invested and don't have more then $25 dollars sitting there doing nothing!
I highly recommend investing in lendingClub.com. But please not that money invested cannot be taken out immediately you have to wait the full length of the term in order to receive your full investment plus interest back, but you do get paid small increments each month which in turn buy more notes creating a snowball effect. But again, please don't invest if you don't have an emergency fund.
Discolsure: Invest at you own risk :)