Quarterly Investor Update – Q1 2021

Continued Resilience and Strong Credit Performance

Prosper’s Q1 2021 Quarterly Update provides our investor community the latest information on the performance of loans on the Prosper platform as well as our view of the macro environment. Overall, we have continued to see improvement in credit performance on the Prosper platform driven primarily by our disciplined underwriting approach over the past several years. We believe this is also a testament to the strength and resilience of Prosper’s platform, which leverages over 10 years of proprietary data along with sophisticated AI-driven models using traditional and alternative data sources to evaluate credit and fraud risks.

Current macro-economic environment

Due to unprecedented government stimulus over the last year, the overall macro environment is showing ongoing signs of improvement. Additionally, due to reduced consumer spending, consumer finances for middle and high-income borrowers appear to be in better shape today vs pre-pandemic, as demonstrated by the following data:

  • The unemployment rate in February 2021 was at 6.2%. While current unemployment rate is still high relative to February 2020 unemployment rate of 3.5%, it has improved materially since the peak unemployment rate of 14.8% in April 2020[1].
  • Employment rates among workers in the top wage quartile (those making greater than $60K annually) is better than pre-pandemic levels[2].
  • Revolving balances on credit cards and other revolving plans in February 2020 are down by 13% ($114B) year-over-year due to reduced consumer spending[3].
  • Personal savings rate, defined as personal saving as a percentage of disposable personal income (DPI), is at 20.5% in January 2021 vs. 7.6% in January 2020, amounting to over $2.6 Trillion in higher savings year-over-year, mostly concentrated in middle- and high-income households[4].

Outstanding Portfolio Performance

Overall, performance of our outstanding portfolio is trending better than pre-pandemic levels.

  • 30+ Days Past Due (DPD) rate for our outstanding portfolio is 35% favorable to February 2020 levels and overall payment rate on the portfolio is 13% higher compared to the prior year.
  • As of February 2021, 3.8% of outstanding receivables are enrolled in a Prosper COVID-19 relief program. Almost all of these borrowers are enrolled in a payment reduction program.
  • 80% of borrowers graduating from their payment reduction period are staying current by either making new higher payments or enrolling in a second stage of the payment reduction program, which provides an additional six-month payment reduction period.
  • Performance of borrowers who did not enroll in any of our COVID-19 hardship relief programs continues to trend favorably; 30+ DPD rate for these borrowers is 44% lower than pre-pandemic levels.

New Originations Credit Quality and Early Performance

  • Early delinquency rate for vintages underwritten just before the pandemic (2019H2, 2020Q1) as well as vintages underwritten during the pandemic (2020Q2, 2020Q3) is trending favorably.
  • Credit quality of new originations continues to be strong year-over-year. Repeat borrowers, who have historically demonstrated significantly better credit performance than new borrowers, made up 53% of originations in February 2021 vs. 45% in February 2020.
  • Compared to pre-pandemic levels, borrower rates on the platform remain higher to help provide enough cushion to platform investors against volatility in the macro environment.
  • Median monthly loan payment to income ratio (PTI) was 5.08% in February 2021 vs. 5.31% in February 2020.

We believe our consistent focus over the last several years on higher credit quality and higher income borrowers has contributed towards the resilient credit performance we’re seeing on the Prosper platform and helped us deliver solid risk-adjusted returns for our investors.  We continue to remain disciplined in our approach in a dynamic credit environment.


[1] https://fred.stlouisfed.org/series/UNRATE
[2] https://tracktherecovery.org/
[3] https://fred.stlouisfed.org/series/CCLACBW027NBOG
[4] https://fred.stlouisfed.org/series/PSAVERT

All data on this blog post is presented for informational use only. This data is impersonal and is not directed to the specific investment objectives, financial situation or investment needs of any particular person, and should not be considered investment advice. This information is not intended to be, nor should you interpret it to be, a prediction of how any particular portfolio will actually perform. You should always carefully consider investments in any security and you should be comfortable with your understanding of the investment prior to investing. Actual results may vary.

This blog post includes forward-looking statements.  Forward-looking statements may include financial and other projections; statements about  the impact of our credit and underwriting initiatives and our ability to successfully navigate the current macro-economic environment; statements regarding investor returns, loan performance, and the impact of the current pandemic; as well as the assumptions underlying any of the foregoing.  Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations in these statements, and there can be no assurance that the expectation or plan will result or be achieved or accomplished.  All forward-looking statements speak only as of the date of this blog post and are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise forward-looking statements that may be made in this blog post to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

Prosper’s borrower payment dependent notes (“Notes”) are offered pursuant to a Prospectus filed with the SEC.  Notes are not guaranteed or FDIC insured, and investors may lose some or all of the principal invested. Investors should carefully consider the risks, uncertainties, and other information described in the Prospectus before investing.

Quarterly Investor Update – Q3 2020

Continued Resilience and Stable Credit Performance

As we begin the fourth quarter of what has been an unprecedented and challenging year, we would like to provide our investor community an update on the performance of the Prosper portfolio, as well as our view of the overall macro environment. Since our last investor update in July, we continue to see gradual recovery in the macro-environment. In September, the unemployment rate was at 7.9% compared to 11.1% in June[1].  Household spending on goods and services, which accounts for more than two-thirds of GDP, rose 2.5% in August from June[2].  These improving trends, combined with our disciplined underwriting approach over the last 3 years, have led to resilient and stable credit performance on the Prosper platform.

Existing Portfolio Performance

Overall, performance of our outstanding portfolio is trending favorable relative to pre-pandemic levels.

  • 30+ Days Past Due (DPD) balances for our outstanding portfolio are trending 16% favorable to January 2020.  In addition, overall payment rates on the portfolio are trending favorable year-over-year
  • As of October 13, 3.8% of borrowers are enrolled in a COVID-19 relief plan. 95% of these borrowers are in a payment reduction program; the remaining 5% are in a payment deferral program. 
  • 98% of the loans originally enrolled in a payment deferral program have graduated. 92% of borrowers graduating from the payment deferral program have either made a payment or have enrolled in the payment reduction program by their payment due date
  • 97% of borrowers on a payment reduction program are making a payment upon their due date. 

New Originations Credit Quality and Early Performance

  • Early delinquency rate for the vintages underwritten just before the pandemic (2019Q4, 2020Q1), as well as the vintages underwritten during the pandemic (2020Q2), is trending favorable.
  • Loan weighted average FICO for Q3 2020 originations was 729, improving 10 points year-over-year and 21 points vs Q3 2017.
  • In Q3 2020, 17.4% of originations were from C-HR rated loans vs. 33.5% in Q3 2019 and 58.4% in Q3 2017.
  • Median monthly loan payment to income ratio (PTI) was 5.0% in Q3 2020 vs. 7.0% in Q3 2017.
  • In Q3 2020, the mix of repeat borrowers increased 38% year-over-year.  Historically, repeat borrowers have demonstrated significantly better credit performance than new borrowers.
  • Compared to pre-pandemic levels, borrower rates on the platform remain higher to help provide enough cushion to platform investors against volatility in the macro environment.

The performance and data shared above for the Prosper platform reflects our deliberate and focused approach to managing credit performance, as well as our focus on delivering solid-risk adjusted returns for our investors. While we are encouraged by the trends, we continue to operate in a dynamic environment due to the ongoing pandemic. As such, we remain disciplined and cautious in our approach. We are actively monitoring the evolving economic environment and taking actions as necessary.


[1] https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm
[2] https://fred.stlouisfed.org/series/PCE

All data on this blog post is presented for informational use only. This data is impersonal and is not directed to the specific investment objectives, financial situation or investment needs of any particular person, and should not be considered investment advice. This information is not intended to be, nor should you interpret it to be, a prediction of how any particular portfolio will actually perform. You should always carefully consider investments in any security and you should be comfortable with your understanding of the investment prior to investing. Actual results may vary.

This blog post includes forward-looking statements.  Forward-looking statements may include financial and other projections; statements about  the impact of our credit and underwriting initiatives and our ability to successfully navigate the current macro-economic environment; statements regarding investor returns, loan performance, and the impact of the current pandemic; as well as the assumptions underlying any of the foregoing.  Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations in these statements, and there can be no assurance that the expectation or plan will result or be achieved or accomplished.  All forward-looking statements speak only as of the date of this blog post and are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise forward-looking statements that may be made in this blog post to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

Prosper’s borrower payment dependent notes (“Notes”) are offered pursuant to a Prospectus filed with the SEC.  Notes are not guaranteed or FDIC insured, and investors may lose some or all of the principal invested. Investors should carefully consider the risks, uncertainties, and other information described in the Prospectus before investing.

Quarterly Investor Update – Q2 2020

Since the last investor update in April, the overall macro-economic environment has shown signs of improvement. In June, the unemployment rate was 11.1% compared to 16.9% predicted at the beginning of May[1]. Household spending on goods and services, which accounts for more than two-thirds of GDP, rose a record 8.2% in May[2] compared to April. While these were encouraging signs, at the same time, a recent resurgence in COVID-19 cases[3] and subsequent shutdowns by several states[4] along with the upcoming expiration of federal unemployment benefits under the CARES Act pose a risk to the ongoing recovery.  At Prosper, we remain disciplined and cautious with respect to the current environment and we continue to take actions on both the current servicing book as well as new originations to help actively manage investor returns.

Existing Portfolio Performance

Overall, we are encouraged by the credit performance of borrowers graduating out of our payment relief programs as well as borrowers who are not on any relief program.  We continue to focus on providing payment relief options to our borrowers as well as adding collections and customer service capacity to effectively manage portfolio performance. 

  • As of July 12, 10.6% of Prosper borrowers have enrolled in COVID-19 related payment relief programs that we first began offering in March. 
  • 87% of borrowers graduating from skip-payment programs have either made a payment or have enrolled in the Payment Reduction program by their payment due date. Prosper began the Payment Reduction program in May, which allows eligible borrowers to reduce their minimum monthly payment for up to 6 months and extend the maturity of the loan for up to 11 months. 
  • Our focus is to transition borrowers graduating from skip-payment programs to either making a full payment or making a partial payment through the Payment Reduction program.
  • As of July 12, borrowers who have not enrolled in any relief programs are performing favorably compared to historical trends.

New Originations Credit Quality

Overall, the credit quality of new originations continues to be strong. This reflects both the credit actions taken in response to COVID-19 and, more broadly, over the last three years.

  • Loan weighted average FICO for Q2 2020 originations was 730, improving 13 points year-over-year and 27 points vs Q2 2017.
  • In Q2 2020, 11% of originations were from C-HR rated loans vs. 35% in Q2 2019 and 63% in Q2 2017.
  • Median monthly loan payment to income ratio (PTI) was 5.1% in Q2 2020 vs. 7.2% in Q2 2017.
  • Over the years, we’ve seen that many borrowers return to Prosper for a second loan. Historically, these repeat borrowers have demonstrated significantly better credit performance than new borrowers. In Q2 2020, the mix of repeat borrowers increased roughly 375 basis points year-over-year.
  • Our verification strategies continue to be more stringent post COVID-19 and focused on stability and consistency of income in the current environment.
  • Compared to pre-pandemic levels, borrower rates on the platform remain higher to help provide sufficient cushion to platform investors against overall higher level of risk. 

The trends above reflect our disciplined approach to managing credit performance on the Prosper platform under the current environment and over the last three years. We remain committed to delivering solid risk-adjusted returns for our investors and also helping borrowers who are facing financial hardship as a result of COVID-19.  We will continue to actively monitor the evolving economic environment and take actions as necessary.


[1] https://www.wsj.com/graphics/econsurvey/

[2] https://www.bea.gov/news/2020/personal-income-and-outlays-may-2020

[3] https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html

[4] https://www.nytimes.com/interactive/2020/us/states-reopen-map-coronavirus.html