What are the downsides to P2P lending?

1 downside which is the greatest fear by all, DEFAULTS.

P2P is counted unsecured loans. In the event that the company goes bankrupt, there goes your money. 100% loss on your capital.

Many have argued that you can try to claim whatever assest are left in the company, but those valuable assest will most likely be taken away by the banks first. Given any choice, the company will first seek loans from banks due to the lower rates. P2P interest is usually around 10% p.a.