Prosper Marketplace
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| Private | |
| Industry | Financial technology, Peer-to-peer lending |
| Founded | California, USA (2005) |
| Headquarters | San Francisco, CA |
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Area served
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United States |
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Key people
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David Kimball, CEO; Ron Suber, President Emeritus |
| Products | Personal marketplace |
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Number of employees
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457 |
| Website | www.prosper.com |
Prosper Marketplace, Inc. is a San Francisco, California-based company in the peer-to-peer lending industry. Prosper Funding LLC, one of its subsidiaries, operates Prosper.com, a website where individuals can either invest in personal loans or request to borrow money.
Prosper Marketplace is America's first peer-to-peer lending marketplace, with over $7 billion in funded loans. Borrowers request personal loans on Prosper and investors (individual or institutional) can fund anywhere from $2,000 to $35,000 per loan request. Investors can consider borrowers’ credit scores, ratings, and histories and the category of the loan. Prosper handles the servicing of the loan and collects and distributes borrower payments and interest back to the loan investors.
Prosper verifies borrowers' identities and select personal data before funding loans and manages all stages of loan servicing. Prosper's unsecured personal loans are fully amortized over a period of three or five years, with no pre-payment penalties. Prosper generates revenue by collecting a one-time fee on funded loans from borrowers and assessing an annual loan servicing fee to investors.
From 2006 to 2009 Prosper operated a variable rate model. Prosper acted as an eBay-style online auction marketplace, with lenders and borrowers ultimately determining loan rates using a Dutch auction-like system. Effective December 19, 2010, Prosper filed a new prospectus with the SEC, changing its business model to use pre-set rates determined solely by Prosper based on a formula evaluating each prospective borrower's credit risk. Under the new approach, lenders no longer determine the loan rate via price discovery in an auction. Instead, they simply choose whether or not to invest at the rate which Prosper's loan pricing algorithm assigns to the loan after it analyzes the borrower's credit report and financial information.
The idea for the service is derived from group banking concepts, such as rotating savings and credit associations. Other motivating ideas derive from the concepts of microlending and microfinance.
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