Become a Lender

Who can become a lender?

On Prosper, any individual can become a lender. Set up your account to get started.

Do I need to be licensed?

You do not need to be licensed to be a lender on Prosper. Although we refer to you and other individuals as "lenders", the loans are being made by Prosper and then sold to you, making you a loan purchaser. So you don't need a lending license because you're not making any loans, you're buying them. The term "lender" is used through the site for the sake of simplicity.

Your role as a Prosper "lender" is that of a loan purchaser, and your rights and obligations as a purchaser or prospective purchaser of Prosper loans are set forth in the Lender Registration Agreement. Although you are referred to on the Prosper website as a "lender," you are not actually lending your money directly to Prosper Borrowers, but are, instead, purchasing loans from Prosper. All loans originated through Prosper are made by Prosper Marketplace, Inc. from its own funds, and then sold by Prosper to the winning bidder or bidders on the listing. Prosper is the originating lender for licensing and regulatory reasons and is licensed in all states where licensing is required. Prosper uses the term "lender" instead of "loan purchaser" for the sake of brevity and simplicity, and for the convenience of Prosper users who appropriately view Prosper as a marketplace for connecting individuals who wish to borrow money, with people who have money and the desire to fund loans to other individuals.

How much can I lend?

You can lend up to $2,000,000 (two million dollars) at Prosper. Because borrowers can only borrow up to $25,000 at a time, $25,000 is the most you can lend to one borrower at a time (although we encourage you to make much smaller loans to diversify your portfolio). However, you may make as many loans to as many people as you want, as long as you don't exceed the $2 million limit.

Is anyone guaranteeing these loans?

No one guarantees the loans at Prosper. These are unsecured loans, and sometimes people default. We encourage lenders to diversify their portfolio (like you would with a stock portfolio) and understand their tolerance for risk before lending.

If a borrower is more than one month late on a payment, Prosper engages a collection agency on the lender's behalf and dings the borrower's credit score. Learn more about late borrower payments.

How do I decide whom to lend to?

As a lender, it is your responsibility to follow some basic lending guidelines when making decisions about whom to lend your money to:

Diversify: If you place many small bids among many borrowers, the risk that you will lose all of your money on one borrower is much lower than if you place one large bid with one borrower. Prosper makes diversification easy with "portfolio plans". Portfolio plans place bids on your behalf based on the criteria you've selected so you don't have to search for borrowers and place all the bids manually, one at a time. Learn more about portfolio plans.
Know the risks and bid accordingly: On all of the bidding pages, you will be shown the historical default rate of borrowers on whom you are about to place your bid, and you should factor that into your bid. For example, if you are placing bids on C-rated borrowers whose default rate is typically 3%, and you want to make a net rate of return of 8%, you should consider placing your bid at 11.00% interest (including Prosper's 1% annual servicing fee). You should also view the marketplace performance page to see performance, delinquency, and default data on Prosper loans.

Do I have to pay taxes on the money I make at Prosper?

Your income from loan interest is normally classified as taxable income. Every tax year that you earn more than $600 in interest, Prosper will send you tax forms summarizing your taxable interest income earnings, and report your earnings to the IRS. Group leaders also have to pay taxes on their earnings at Prosper. Learn more about lender tax reporting.

Prosper does not provide tax advice. Please consult your tax advisor for more information.

How do I get started as a lender?

Before you get started, view a tutorial on becoming a lender.

To become a lender, you must be registered with Prosper. If you are not registered, you will be asked to fill out a quick registration form. Registration is free. Register now.

Once registered, click the "Become a lender" link, and you will be asked to provide your social security number and a few other personal details so that we can check your identity. (No, this won't affect your credit score.) There is no fee for becoming a lender. Become a lender now. Learn more about identity verification for lenders.

To place bids on the marketplace, you will have to first transfer money to Prosper from your bank account. You'll be asked to enter the account details for the bank account you want to use as a funding source for any loans you offer. You can transfer money between Prosper and your bank account (in both directions) at any time at no cost. Learn more about transferring funds to Prosper.

You will also need to choose a default collection agency. If one of your borrowers is more than one month late on their monthly payment, the debt will be transferred to a collection agency to assist in recovering outstanding funds. You may select a different collection agency for each new bid, but you will choose one collection agency as your default. Learn more about collection agencies.

I got through the lender account setup, what's next?

Once you've set up your account for lending, you will need to transfer funds to Prosper, and then you can start bidding.

Lending help

Getting started

Understanding listings

Finding listings

Bidding on listings

Listings become loans

Managing your loans

Delinquencies and defaults

Statements and taxes

Lending tutorials

Other resources

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