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Alan Browne

Prosper (http://www.prosper.com/) is a person-to-person lending web site. It was launched in February 2006 by co-founders CEO Chris Larsen (former CEO of E-Loan) and CTO John Witchel.

People who need a loan ("borrowers") have their identity and credit checked, and create a "listing" so that people who are willing to lend money ("lenders") can review their requests.

Lenders bid in fractional loan amounts (as little as $50) to participate in borrowers loans (maximum of $25,000). The standard loan term is 3 years, but borrowers may pay sooner without penalty. For loan requests to those with good credit histories and an appealing reason to lend them money, lenders can bid lower rates to get in on the action. So, if an appealing borrower has his request fully subscribed and the bid period has not run out, you can bid a lower interest rate against the incumbent lenders and the last bidders at the higher rate lose part or all of their position in the loan.

Prosper handles identity verification, funds transfers, loan administration, delinquent collections and servicing.

Currently (Jan 2008) Prosper has over $36M in outstanding loans. The better risk categories return on the order of 7 to 9% after fees and defaults.

British Zopa provides a similar system in the UK, Italy and now in the US. Canadian communitylend.com should start in Q1 or Q2 of 2008.