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A Timeline of Modern Peer to Peer Lending

by Prosper on 07/10/08

Peer to peer lending is possibly the oldest form of financing in the world, and although some aspects of it have changed throughout the centuries, the basic concept remains the same and it remains strong. Peer to peer lending is often at the forefront of helping those in developing communities around the world, as well as helping the world’s poor get the leg up that they need. In modern times, peer to peer lending moved to the forefront as it became harder for some consumers to get loans from banks and as more third world nations began making their way into the 21st century.

Mohammed YunusIn 1984, Mohammed Yunus founded the Grameen Bank  (more info from wikipedia: Grameen Bank) in Bangladesh. This became a cornerstone of the p2p lending community and has helped thousands get the funds they need to start their own businesses and feed their families. Professor Yunus got his inspiration after watching the poor women of the city try to scrape together a living, and often falling prey to insidious loan sharks that took advantage of them.

Yunus started with loans to a group of 42 women in the late 1970’s and his efforts gradually took shape and made history. Suddenly, people in this developing community had access to funds where they didn’t have to worry about being enslaved to a loan shark. They were able to put these funds to good use and start their own thriving businesses, which meant that they could feed their families and find financial security.

As the Internet became available on a world wide basis, Kiva.org became one of the first peer to peer lending sites. This company operates on a non-profit basis and provides third world residents the ability to get the funds they need without having to worry about making interest payments on their loans. A similar site, Microplace, would launch soon after and, although it is technically a non–profit organization, investors can earn a small return. Microplace has the backing of the auction giant eBay, and remains a top choice for many of the world’s poor.

In the for-profit peer to peer lending world, Prosper.com became one of the first sites that allowed prospective borrowers to post their requests for funds and set how much interest they are willing to pay. Prosper revolutionized online peer to peer lending, and recently announced that they were expanding into Japan.

Zopa.com is a UK based peer to peer lender that is now making inroads into the US as well as Italy. They entered the market in the UK a few years ago, and started their US branch shortly after Prosper launched.

One thing remains clear – peer to peer lending is a vital part of any society. As we continue throughout the 21st Century, there is no doubt that it will continue to grow and help millions of people throughout the world.

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Notice: Blogs and other materials posted on or linked from this page that use the name "Prosper" generally use that name to refer to Prosper Marketplace, Inc. if published before January 31, 2013 and to refer to Prosper Funding LLC if published on or after February 1, 2013.