So you have money sitting in your bank account earning a paltry 3% interest and if you are fortunate, you may even earn 5% per year. In the meantime, your bank is lending out your money to borrowers and making a profit off of your deposits by charging a higher interest rate to the borrower.

Isn’t it time for you to get a share of what the banking industry has been doing for years? Why not make your hard earned money work even harder for you by lending out your money and earning the interest yourself? Prosper has built the first people to people lending marketplace where you can lend to borrowers and make an above average return on your money. This can be a lucrative business if you can manage it correctly; like the banks do.

Although we refer to you and other individuals as “lenders”, the loans are being made by Prosper and then sold to you, making you a loan purchaser. The term “lender” is used through the site for the sake of simplicity. – Prosper

As a Lender this is how it works:

• Browse through the marketplace of loan listings to find attractive borrowers and good rates.
• Check the borrower’s credit grade and history.
• Bid the amount and rate you are willing to lend.

Is it risky and what if the borrow defaults?

• If a borrower doesn’t pay, Prosper will ding his credit score and assign a collection agency. In the worst case scenario, if he defaults, his credit rating will fall and you will receive the proceeds of the loan’s sale to a debt buyer.
• This is why lenders should make smaller loans to many people. On Prosper, you can make loans as small as $50 to a borrower.
• Spreading many small loans across more people means less risk and a better return.

How much interest can a lender earn?

This depends on several factors. Borrower’s credit rating, the legal interest rate cap by state and what the lender can negotiate during the bidding process.

Company Overview:

Prosper, America’s first people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone.

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform.

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using “standing orders”, which automatically make many small loans to different borrowers.

Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as people who lend bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrower and lenders.

Prosper’s rigid privacy policy reflects co-founder and Chief Executive Officer Chris Larsen’s longstanding history as an advocate of stringent consumer financial privacy protection laws and practices. Prosper does not sell, rent, or share members’ personal information with third party marketers. Prosper members are in control of how much personal information—if any—is revealed on the website and with other members. Prosper’s security and identity verification systems are state of the art, and consistent with those used by banks, brokerages and institutional creditors.

Prosper generates revenue by collecting a one-time 1% or 2% fee on funded loans from borrowers, and assessing a 0.5% or 1% per annum loan servicing fee to lenders. Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital Partners, and Omidyar Network, Prosper has raised $40 million. Prosper’s marketplace platform is patent pending.

Contacting Prosper:

Prosper Marketplace, Inc.
111 Sutter Street, 22nd Floor
San Francisco, CA 94104

Email us: Send an email
Call us: 1-800-208-0103 (Weekdays 9-6 PT)

Note that participating in the Prosper P2P Lending marketplace is currently restricted to only residents of the United States at this time.

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