How Prosper works?
Peer-to-Peer Lending: Prosper is America’s first peer-to-peer lending marketplace—connecting people looking to borrow money with people who have money to invest. Prosper.com handles the servicing of each loan on behalf of matched borrowers and investors1. Peer-to-peer lending gives borrowers low interest rates and an alternative to traditional bank financing while investors benefit from fewer middleman and high yield returns.
Benefits of borrowing from Prosper:
- Easy online application
- Fixed loan rates
- Loans are unsecured—no collateral required
- Multi-year terms
- Easy fixed monthly payments
- Loan sizes from $2,000 to $35,000
- No prepayment penalties
- No upfront fees—closing fees are taken from the loan proceeds
1. Create your loan listing:
Creating a loan listing on Prosper is easy and typically takes only 15-20 minutes.
The steps include:
- Give us some basic information about yourself
- Check your rate and review your loan options
- Finalize your listing with a description of your loan purpose and your financial situation
If you qualify, you will be presented with an interest rate and corresponding monthly payments based on the requested loan amount—plus some alternatives for lower rates or lower payments.
What’s the difference between a listing and a loan?
A listing is your request for a loan and will be viewed by potential investors. You will receive a loan if investors commit sufficient funds to your listing and your information has passed Prosper’s verification process.
2. Investors commit funds to your loan
Once your listing is active on Prosper, investors will be able to view yourlisting and can start investing in your loans. This means depending on your loan amount, you may have dozens of individual investors. You can see the progress of your loan funding commitments at any time, by returning to Prosper and going to My Account.
The listing will stay active until either it has received sufficient investor commitments or the 14-day listing period ends. If it does not receive at least the minimum required level of investor commitments within the 14-day period, no loan will be made. If you want to try again, you can do so by creating a new listing.
What happens while I wait for investors to commit to fund my loan?
You’ll receive an email asking for specific loan verification documents – including your driver’s license, address verification, bank statement, and a W-2, when applicable. Getting these documents to Prosper often speeds up how fast investors commit to invest in your loan.
3. Receive your money
Once your listing has received sufficient investor commitments and the verification process is complete, the loan proceeds will be deposited directly into your bank account. This usually only takes a few days.
How long does the borrowing process take?
The average borrower has the loan proceeds deposited into their account within 8 days of submitting their application.
4. Make monthly payments
Prosper will make monthly automatic withdrawals from your bank account in the amount of your agreed-upon monthly loan payment. If you choose, you may make an optional additional loan payment or pay off your loan early without any penalty fees.
Frequently Asked Questions
What is the difference between Interest Rate and APR?
Your interest rate is based on the percentage of the loan amount and considered to be a base fee for borrowing money, and directly affects monthly payments. APR (Annual Percentage Rate) includes the interest rate as well as fees that are necessary to finance the loan.
What is my Prosper Rating?
Every loan application is assigned a Prosper Rating—a proprietary rating system that allows for consistency in the evaluation of applicants. Potential investors use Prosper Ratings to help decide whether to commit to invest in your loan listing.
Can I withdraw my listing?
You can withdraw your listing at any time until it is fully funded or the 14-day listing period ends, whichever comes first.
Why does Prosper charge fees?
A closing fee is only charged if your loan is funded and money is transferred to you. The closing fee—which is a percentage of the amount borrowed—is taken from the loan, before proceeds are transferred to your account. The closing fee varies from .50% to 4.95% depending on your Prosper Rating and the terms of the loan.
In addition, a $15 fee will be charged upon a failed automatic withdrawal, returned check or bank draft and if a monthly payment is more than 15 days late.
What is Prosper?
Prosper Funding LLC owns and operates an online peer-to-peer marketplace where borrower members may borrow money and investor members may purchase Notes issued by Prosper that correspond to the loans listed on the marketplace.
Peer-to-peer lending gives borrowers an alternative to a traditional bank loan—and fewer middlemen means Prosper investors also benefit.
Important Things to Know About Your Protection
How is Prosper regulated?
Investing and loan servicing activities on the Prosper marketplace are subject to state and federal regulation.
Loans originated through the Prosper marketplace 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 Funding LLC and its affiliate, Prosper Marketplace, Inc., 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 Funding LLC 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.
How are investors in Notes issued before February 1, 2013 affected by the changes described on this website?
There has been no change to the economic terms of Notes issued before February 1, 2013. The principal balance, applicable interest rate and APR, maturity date and other payment terms are unchanged. The most significant change is that these Notes are now obligations of Prosper Funding LLC (Prosper) rather than being obligations of Prosper Marketplace, Inc. (PMI)
Prosper was formed by PMI on February 17, 2012, and is wholly-owned by PMI. On January 31, 2013 PMI transferred to Prosper most of its assets and liabilities. For example, Prosper now owns this website, and all of the software and intellectual property necessary to maintain and operate this website and to allow loans to be made and related Notes issued in the same manner as was occurring when PMI owned and operated this website. PMI also transferred to Prosper all of the loans that were funded through this website prior to February 1, 2013, including the loan relating to your Note.
Prosper assumed responsibility for payment of your Note by becoming a party to the indenture that governs your Note as of January 31, 2013. So Prosper is now the sole Obligor on your Note, not PMI. Prosper also now owns the related borrower loan, not PMI, and will be applying proceeds of that loan to repay your Note in the same manner PMI had committed to do so.
The security of your Note has been improved by an amendment to the indenture that governs your Note. As of January 31, 2013, the trustee under that indenture now has an express security interest in the loan relating to your Note, whereas previously the trustee had an interest only in proceeds of that loan and in certain accounts into which such proceeds were to be deposited.
Where can I find legal terms and policies?
Please view the policies page to learn more about the policies that might apply to you.
Will you sell or make public my personal information?
What are Prosper groups?
Prosper groups are a way for tightly affiliated communities to help their members through peer-to-peer lending. These affiliations can be social, cultural, ethnic, professional, religious, or any other official or unofficial affiliation.
How can I manage my group settings?
Any of the changes you may want to make can be accessed through the “My Account > Group > Group Profile” page.
Group name: This is the name by which your group will be identified on the site and in any search results, and will be the headline of your group home page. In your group name, try to use words that you think investors and potential members might use to find your group. For example, if your group is all dentists, make sure that the word “dentists” is part of the group name.
Shortcut: Think of the shortcut as an abbreviation for your group. Each group has its own web address on Prosper, so giving potential members and investors the shortcut address is the easiest way to send them directly to your group’s home page.
Short description: This is a shorter version of your group description. It’s a quick synopsis that appears with your group name and picture in search results, and at the top of your group home page.
Membership: “Invitation only” membership means only borrowers who are invited by the group leader can join. Other group members cannot invite potential members in an “Invitation Only” group—only the group leader can. If membership is “Open,” potential borrowers can apply for group membership by clicking on the “Join this group” link that appears on the group home page. (Their application to join will still need to be approved by the group leader.)
Group links: If your group has a web site, you can create up to three links to those external web sites. Please be aware that links to sites with explicit or graphic content are not allowed.
Editing your group description: Go to the “My Account > Group > Group Profile” page, and click “Edit description and layout.”
You will be able to choose the layout for your description, with your group’s primary picture placed either above, below, or to the right of the description. In the description field, enter relevant information about your group. Be
sure to include the following details in your group description:
- What is the purpose of this group?
- What is the offline affiliation that ties this group together?
- How did it get started?
- How often do you see each other, or how often do you interact?
- Why should investors commit money to members of this group?
- What are the requirements for joining this group?
Adding pictures to your group page: Go to the “My Account > Group > Group Profile” page, and click “Edit pictures”.
You will then be able to add, edit, and delete any of your group pictures. To add a new picture, click “Add picture”. Use the “Browse” button to choose the picture you want to upload from your computer. Add a short caption. Prosper will take care of resizing your picture for the various places it will appear.
To delete one of your pictures, click “Delete” next to the respective picture. Deleting a picture permanently removes it from your group page.
To change the order of your pictures, use the up and down buttons to move pictures up and down in the list. Note that the first picture in the list is the primary picture; this will turn up in search results and on the group home page.
How can I manage my group members?
Inviting new members to join your group: Go to “My Account > Group”, click on “View members”, and then “Invite new members.”
Prosper provides a pre-written subject and message that you can forward to your invitees, or you can personalize it to meet your needs. A link will automatically be included at the end of the pre-written message, which will start the sign-up process for invitees interested in joining your group.
When you click “Send Invitation,” an email will go out to each invitee separately, inviting him or her to join your group. This means that each invitee will not be able to see the email addresses of the other invitees.
When you invite members to your group using Prosper’s invitation system, they will be automatically approved to join your group.
Responding to “group membership requests”: These are membership requests from borrowers who want to join your group.
You’ll get an email in your inbox and a message in your Prosper “Messages” box each time someone makes a request to join your group.
As a group leader, you have seven days to respond to any group membership request. You may accept or reject the membership request, or you may extend the timeframe to make a decision by another seven days.
Limits on the criteria you can use to accept or exclude people from your group: Prosper is an inclusive credit marketplace that fully supports and promotes equal credit opportunity for all people, regardless of their race, color, religion, national origin, sex, marital status, age, sexual orientation, military status, or source of income.
Because people access Prosper through your group, group membership criteria cannot exclude anyone in these protected classifications. You can use criteria to include people in these protected areas, but not to exclude them. Your criteria must also adhere to the Prosper policies that apply to Prosper members as well as group leaders.
Group leaders may not obtain or use a credit report, require prospective members to provide a credit report, or provide authorization to obtain a credit report as a condition to group membership. Group leaders who want to use creditworthiness as criteria for membership should use the individual’s self-evaluation of their credit grade, in order to avoid running afoul of state and federal credit reporting statutes or restrictions on loan solicitation. When a borrower creates a listing, Prosper obtains their credit report and determines their Prosper Rating, which is displayed in the listing. That is the only credit rating relevant to investors choosing loans to invest in on Prosper.
As long as your criteria meet these standards, you can use any lawful criteria you desire.
How to see all of the members in my group: Go to “My Account > Group” and click on “Members.” You will see a list of the screen names of all your group members.
To view each member’s profile information, click on the respective Screen Name in Group Members table.
To contact one group member, click the “Contact member” link on Member Profile page.
To remove a group member, click the “Remove” link next to their name. Only group members who do not have active listings can be removed from a group.
Contacting all of the members in my group at once: Go to “My Account > Group,” click on “View members,” then “Contact all members.”
You will then be able to compose an email to all of the group members. When you click “Send Message,” an individual message to each group member will be sent.
How do I monitor group borrowers’ listings?
Importance of quality borrowers in your group
Your group’s payment history, funding rate, default rate, loan listings, and member pages will all have an impact on your ability to attract investors to your group’s listings.
If you have delinquencies (borrowers who pay late) and charge-offs (loans that are delinquent for more than 120 days) in your group’s history, investors will think twice before requesting membership or investing in your group’s loans.
How to review you borrowers’ listings before they appear in the marketplace: Go to “My Account > Group”, and click “Edit group profile”, and then “Edit profile”.
If you are editing your group profile, you can set the “Listing review” setting to “Required”, resulting in all of your borrowers’ listings having to be approved by you, the group leader, before they become active on the marketplace.
How to approve or decline your borrowers’ listings: If your group requires listing review (see above for instructions on how to do this), you will receive an email notifying you of new listings that require review.
You will also be able to access a summary of listings requiring review from the “My Account > Group” overview page.
When you receive a request to review a borrower listing, you have seven days to approve or decline the listing. If you do not approve or decline the listing within seven days, the listing will be cancelled and the borrower will be notified. The borrower may withdraw his or her listing at any time, reviewed or not.
When you review a listing, you may approve or decline the listing:
- If the listing is approved, the listing will become live on the marketplace.
- If the listing is declined, the listing will be cancelled and the borrower may create a new listing at any time.
When you review a listing, you will have the ability to add a public endorsement to the borrower’s listing which can be viewed by investors. Additionally, you can add a private message that will be delivered to the borrower along with your decision.