Community Payments

What is a community payment?

If a borrower's loan is more than 1 month late, any Prosper member with money in his or her Prosper account can make what is called a "community payment". You can do this from any group's "Loans" tab, where there is a "Make a community payment" link under each loan which is at least 1 month late. Or, if you are a lender on a late loan, you can click on that loan's title, and there should be a "Make a community payment" link on the loan detail page.

A community payment is a simple act of goodwill, in which the payer can pay as little as $25 and as much as the full payment due towards the late payment due. The payer is not buying the loan, or diluting the ownership of the loan in any way: there is no possibility or expectation of repayment with a community payment.

Please be aware that if payments are made on a member's loan by another party and the member does not repay the other party, the loan payment may be deemed to be a gift for state and federal gift tax purposes and/or be deemed to be taxable income to the member for state and federal income and other tax purposes depending on the relationship of the parties (e.g., family, business, etc.) and the purpose or purposes of the loan payment. In those situations, the parties may be required to file notices or tax returns with tax agencies. Each of those situations may be unique and complex and, accordingly, Prosper cannot provide guidance or prepare any notices or tax returns for the parties. In those situations, we recommend that the parties consult with their professional tax advisors for guidance.

How are community payments applied?

Funds from incoming community payments are applied in the same order of priority as any other incoming payment:

Fees

NSF fees (to Prosper)
Late fees (to lenders)

Interest, divided evenly between:

Bank draft fees (if applicable)
Interest

Principal

Additionally, lenders may incur additional collections fees on funds received through community payments because typically these loans have been assigned to a collection agency. Collection agencies have different fee structures. Learn more about collection agencies.

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