The Prosper Experiment

Introduction to Prosper is a “micro lending” or “peer-to-peer lending” platform. It allows you to lend money to people in small (or large) amounts. A scenario of how it works is like this…

  • Potential borrowers apply for loans through Prosper.
  • They fill out an application with all their information such as credit history, employment, income, reason for borrowing and more.
  • Prosper gives them a rating of either AA, A, B, C, D, E and HR (High Risk I think)
  • Investors (Lenders) get a Prosper account and fund it with cash.
  • Investors can search for borrowers based on many criteria including employment, income, credit history, Prosper rating and more.
  • Investors typically select many borrowers and commit to loan them each a small amount (about $50 to $100)
  • When a borrowers loan request is completely funded by Prosper investors, the loan goes through and the investors committed amount is transferred to the borrower.
  • The borrowers make payments on the loan and the payments show back up in the investors account over time.

This is basically how it works.

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