Frequently Asked Questions
How does Prosper work?
What types of institutions can become lenders on Prosper?
Does Prosper underwrite the borrower loans?
Does Prosper verify a borrower’s identity?
How can our organization build and manage a large portfolio on Prosper?
How can our company track and account for a loan portfolio on Prosper?
Are notes originated on Prosper transferable?
What if Prosper were to go out of business?
Are lenders’ deposits insured?
Do lenders earn interest on deposits?
How is Prosper regulated?
Where can I read more about Prosper?
Prosper offers institutional investors a new way to invest in the consumer lending market—by selecting and investing in individual loans rather than participating in opaque securitization vehicles. Investors purchase Notes that are special, limited obligations of Prosper. These Notes are then dependent for repayment on payments Prosper receives on the corresponding consumer loans. Investors can review the listings using credit data provided by Prosper and detailed information provided by the borrower, and then select the loans they want to invest in. Contact us to learn more.
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.
At Prosper we believe that investors should be provided in-depth data regarding investment opportunities in order 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. All of our borrowers are pre-screened.
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.
Investors can handpick loans individually from our borrower listings, or make use of our customized Advanced Investing Tools to create and manage their portfolios. Prosper offers two powerful technology solutions for hassle-free investment management: Quick Invest and our API infrastructure. These tools allow institutional investors to maximize capital deployment and loan funding.
Developers may access a WSDL-based web service that can be called to get information about Prosper. It allows real-time querying of market data so you can develop rich, powerful tools for portfolio analysis. Once established, Prosper’s API does not require you to interact with our web portal.
In addition, we provide a daily data export to provide a complete snapshot of all listings and loans ever created on Prosper. These downloads enable the transfer of loan level data to a third party application for analysis.
Prosper provides monthly and yearly electronic statements. Investors always have access to payment history, including principal, interest, and fees paid by borrowers.
Yes, they are. We partner with FOLIOfn Investments, Inc. to allow investors to buy and sell Notes purchased through Prosper.
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 under the Note indenture 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 holders of the Notes.
Borrowers would still be legally obligated to make the payments on their loan. Prosper has entered into a backup servicing agreement with an experienced financial services company to assume servicing of Prosper borrower loans in the event that 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.
To invest through Prosper, lenders electronically transfer funds into a funding account maintained by Prosper at an FDIC-insured depository institution. Amounts in the funding account are insured by the Federal Deposit Insurance Corporation (FDIC) for the benefit of individual investors on a pass-through basis (i.e., up to $250,000 per investor).
Investors 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 for investments. The amount of funds you keep in your Prosper account will depend on how frequently, and in what amounts, you want to invest.
Lending and loan servicing activities on the Prosper marketplace are subject to state and federal regulation.
Loans originated through the Prosper 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).
Prosper Marketplace, Inc., a Delaware corporation, is 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.
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.