Peer-to-peer lending platforms are online intermediaries that match lenders with borrowers. We use data from the two leading online lenders, Prosper and Lending Club, to explore main drivers of their expansion in the United States. We exploit the heterogeneity in local lending markets at the county level to analyze three hypotheses for the penetration of online lenders: 1) crisis-related; 2) competition-related; and 3) Internet-related. Our findings support the competition-related hypothesis as online lenders have expanded more in areas with lower density of branch network and lower bank concentration that we interpret as weaker brand loyalty. We also document that spatial, socio-economic and demographic characteristics determine the expansion of online lenders.