Frequently Asked Questions

What types of institutions can become lenders on Prosper?

Institutional investors of all types, including pension funds, trusts, non-profit and for-profit corporations, and hedge funds can participate on Prosper’s platform. Prosper welcomes Corporations, Limited Liability Companies, and Partnerships with a valid Employer Identification Number (EIN). For more information, click here.

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How does Prosper work?

Prosper offers institutional investors a new way to invest in the consumer lending market, through selection of individual loans rather than participation in opaque securitization vehicles. Investors bid on borrower listings and purchase Notes from Prosper that are dependent for repayment on payments Prosper receives on the corresponding consumer loans. Lenders review the listings using credit data provided by Prosper and other information provided by the borrower, and select the loans they want to invest in. Learn more.

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Does Prosper underwrite the borrower loans?

At Prosper we believe that investors should be provided in-depth data regarding investment opportunities, and then allowed to make their own decisions regarding the risk and return characteristics of the loans they invest in. Investors have visibility into the loans that underlie their investments, and do not need to rely on third party control of pricing risk. For Prosper borrower listings, Prosper has established minimum credit scores to ensure borrowers meet certain credit standards.

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Does Prosper verify a borrower's identity?

Ensuring that Prosper is private and safe is our highest priority.

For Prosper borrower listings, we verify the borrower's identity against data from a consumer reporting agency and utilize other identity and anti-fraud verification databases. In addition, we offer lenders a 100% Identity Theft Guarantee. If a loan is charged-off due to identity theft, Prosper will repurchase the loan for the unpaid principal amount of all Notes that correspond to that loan. Learn more.

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How can our organization build and manage a large portfolio on Prosper?

Investors can select loans one-by-one from our borrower listings. Investors can also make use of custom technology to create and manage their portfolios. Prosper offers two powerful technology solutions for investment management and automatic bidding: portfolio plans and our API infrastructure. These tools allow institutional investors to maximize capital deployment and loan funding.

Portfolio Plans

Portfolio plans are automated bidding tools that allow you to place bids efficiently using criteria you set, without having to look through every listing or worry about listing end dates. You specify the amount of money and minimum yield percentage to bid on listings that meet your criteria, such as Prosper Rating, number of current delinquencies or other listing features. You can have as many plans as necessary to adequately capture risk preferences and return requirements.

API

Developers may access a WSDL based web-service that can be called to get public information about Prosper. It allows real-time querying of market data so you can develop rich, powerful tools for bidding and portfolio analysis. Once established, bidding through Prosper's API runs automatically and does not require interaction with our web portal. Learn more.

In addition, we provide a daily data export to provide a complete snapshot of all listings, bids, and loans ever created on Prosper. These downloads enable the transfer of loan level data to a third party application for analysis.

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How can our company track and account for a loan portfolio on Prosper?

Prosper provides monthly and yearly statements electronically. Investors have access to payment history, including principal, interest, and fees paid by borrowers. We are also working with select technology providers to develop a robust third-party platform for integration.

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Are notes originated on Prosper transferable?

Yes. In the near future, lenders will have the opportunity to buy and sell Notes through the Trading Platform, operated by a registered broker dealer. Learn more.

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What if Prosper were to go out of business?

Payments to Prosper lenders are dependent upon payments made by borrowers on individual borrower loans. In the event of a bankruptcy by Prosper, the trustee will have a security interest in all present and future rights of Prosper to payment under the corresponding borrower loans and all moneys and property received by Prosper thereon, for the benefit of the trustee and the holders of the Notes.

Borrowers would still be legally obligated to make the payments on their loan. This obligation would still be enforced, even if Prosper were to go out of business. Prosper has entered into a backup servicing agreement with an experienced financial services company to assume servicing of Prosper borrower loans if Prosper were to go out of business. All lender funds not actively associated with a loan would be returned to the lenders and no new loans would be created.

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Who is behind Prosper?

Prosper's CEO and co-founder, Chris Larsen, was formerly the CEO, Chairman and Founder of E-LOAN, an online consumer lender dedicated to providing consumers with a fast, transparent, and low cost way to obtain mortgage, auto and home equity loans. Under Mr. Larsen's leadership, E-LOAN originated over $27 billion in consumer loans. In June 2004, an independent study conducted by TRUSTe and The Ponemon Institute ranked E-LOAN as one of the top 20 most trusted companies for privacy in America. And in March 2005, E-LOAN received the overall highest rating in the independent Online Customer Respect Study of North America's largest financial services firms.

In 1996, Mr. Larsen founded E-LOAN based on the belief that by leveraging the Internet and building a company on a foundation of pro consumer values, the consumer lending experience could be completely revolutionized. In addition to using the Internet to make the lending process more favorable for consumers, Mr. Larsen has drawn upon pro consumer values to build E-LOAN into a trusted brand by taking radically pro consumer actions.

For example, E-LOAN became the first company to provide consumers with access to their credit scores and to advocate credit score disclosure laws. In addition, Mr. Larsen and E-LOAN co-founded and financially backed Californians for Privacy Now (CFPN), a coalition credited for the passage of the strongest consumer financial privacy protection law in the nation. More recently, Mr. Larsen has been advocating that financial institutions disclose their offshore outsourcing programs to consumers and enable them to opt-out of them.

Prosper has raised $40 million in funding. We are supported by an expert Board of Directors including Paul Hazen, former Chairman and CEO of Wells Fargo, Jim Breyer, Accel Partners, investor in Facebook and Walmart, and Bob Kagle, Benchmark Capital, investor in eBay, Jamba Juice and E-LOAN. To review our Board and Management profiles, please click here.

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Are lenders' deposits insured?

When preparing to post a bid, a Lender transfers funds electronically, in an amount at least sufficient to cover the bid, into a funding account maintained by Prosper at an FDIC-insured depository institution, for the benefit of Lenders. Amounts in the funding account are insured by the Federal Deposit Insurance Corporation, or FDIC, for the benefit of individual Lenders on a pass-through basis (i.e., up to $250,000 per investor).

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Do lenders earn interest on deposits?

Lenders do not currently earn interest on deposits to their Prosper account. Because of rules associated with pooled accounts (such as the ones that we use to hold your money), we are not allowed to earn interest on those accounts. However, Prosper is actively looking into ways that will allow interest to be earned on amounts deposited.

Prosper enables lenders to transfer money to Prosper as needed to bid on loans. How much cash you keep in your Prosper account will depend on how frequently, and in what amounts, you want to bid.

Additionally, using portfolio plans and API bidding tools can significantly improve the pace at which you acquire loans and will allow you to move more money faster. Because portfolio plans are automated, they can minimize the amount of time your money sits idle. Learn more about portfolio plans.

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How is Prosper regulated?

Lending and loan servicing activities on the Prosper marketplace are subject to state and federal regulation.

Loans originated through the Prosper marketplace to California residents are made by Prosper Marketplace CA, Inc., a California corporation, under a California Department of Corporations Finance Lenders License. Loans made to residents of all other states are made by WebBank, a Utah-chartered Industrial Bank, which is regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC).

Both Prosper Marketplace CA, Inc., a California corporation, and Prosper Marketplace, Inc., a Delaware corporation,are subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer credit, trade and commerce, and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws, trade and commerce.

Prosper and the loans originated through the Prosper marketplace must comply with applicable state and federal lending laws such as the federal Consumer Credit Protection Act, including, as applicable, the Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act and Electronic Fund Transfer Act, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and other federal and state laws governing privacy and data security and prohibiting unfair or deceptive business practices.

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Where can I read more about Prosper?

Prosper has been written about in numerous national and international publications, including The New York Times, The Wall Street Journal, American Banker, Newsweek, Kiplinger's and Business Week. Read more about Prosper in the press.

To read more about Prosper for institutional investors, click here.

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