Estimated average annualized loss rates are based on the historical performance of Borrower Loans originated through our marketplace with similar characteristics and are primarily determined by Prosper Scores and credit scores. The starting point for this determination is the base loss rate table, shown below, which was created by dividing the range of Prosper Scores and credit scores into multiple segments and combining them into a single grid. A base loss rate is estimated for each cell in the table, based on the historical performance of Borrower Loans originated through our marketplace that occupied the same cell (i.e., that had the same point of intersection for their Prosper Score and credit score). Cells may be given the same loss rate due to small volume, similar behavior or both. We review loan performance on a monthly basis to see how the loss rate estimates compare to the actual performance of Borrower Loans, and make adjustments as necessary based on such reviews. Estimated base loss rates for the cells in the table below correspond to those in effect as of September 13, 2019.
| Prosper Score | 639-659 | 659-679 | 679-699 | 699-719 | 719-739 | 739-759 | 759-779 | 779-799 | 799-829 | 829-850 |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% | 22.25% |
| 2 | 17.75% | 17.75% | 17.75% | 17.25% | 16.75% | 14.25% | 14.25% | 14.25% | 14.25% | 13.75% |
| 3 | 16.25% | 15.25% | 15.25% | 12.25% | 12.25% | 12.25% | 12.25% | 12.25% | 11.25% | 10.75% |
| 4 | 12.25% | 12.25% | 12.25% | 11.75% | 11.25% | 10.25% | 10.25% | 10.25% | 9.75% | 9.75% |
| 5 | 11.75% | 11.75% | 10.25% | 9.75% | 8.99% | 8.99% | 8.99% | 8.74% | 8.49% | 8.49% |
| 6 | 10.75% | 9.75% | 8.99% | 8.74% | 8.74% | 7.99% | 7.99% | 7.99% | 7.74% | 7.74% |
| 7 | 8.99% | 8.49% | 8.24% | 6.74% | 6.74% | 6.24% | 6.24% | 5.99% | 5.99% | 5.99% |
| 8 | 7.99% | 7.74% | 6.24% | 6.24% | 5.99% | 5.74% | 5.74% | 5.74% | 5.74% | 5.74% |
| 9 | 6.74% | 6.24% | 5.99% | 5.49% | 3.99% | 3.99% | 3.99% | 3.24% | 3.24% | 3.24% |
| 10 | 5.24% | 5.24% | 4.74% | 3.99% | 3.74% | 3.49% | 3.49% | 3.24% | 2.74% | 2.24% |
| 11 | 4.49% | 3.49% | 3.24% | 2.74% | 2.24% | 1.99% | 1.24% | 0.99% | 0.74% | 0.74% |
The table above applies to borrowers seeking their first Borrower Loan through our marketplace. For example, we make adjustments for whether the borrower has already been a borrower through our marketplace and for the term of the Borrower Loan. The final loss rate determines the Proper Rating. The value of the adjustments are based on historical data, where available, as well as observed industry performance and behavior. An example of a potential adjustment is shown below:
Here is an example of how the final loss rate and Prosper Rating for a loan listing would be calculated:
| Base Loss Rate: | 5.99% |
| Adjustments: | |
| Loan Term: | 2.25% |
| Final Loss Rate: | 8.24% |
| Prosper Rating: | C |