Prosper

Prosper is a people-to-people lending marketplace that attempts to make consumer lending more financially and socially rewarding.

At Prosper, people list and bid on loans using Prospers online auction platform. Prospective lenders set their minimum interest rate and bid in increments of $50 to $25,000 on loan listings they select.

In addition to criteria commonly used by institutional lenders, such as credit scores, people who lend can consider borrowers group affiliations. Groups functionality brings people together for the common goal of borrowing at better rates. Groups earn reputations according to their members repayment records. Groups with successful repayment histories should attract more lenders offering lower rates.

Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. 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 generates revenue by collecting a one-time 1% or 2% fee on funded loans from borrowers, and assesses a 0.5% or 1.0% annual loan servicing fee to lenders.