Archive for October, 2008

Prosper, America’s largest people-to-people lending marketplace for personal loans, released results for September 2008.

Chris Larsen, discusses what role Prosper will play and what trends we are seeing in the wake of this full blown crash of the global financial system.

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

In the midst of one of the greatest economic crises America has ever faced, and on the heels of last week’s Federal Reserve report indicating that for the first time in over a decade consumer borrowing significantly contracted, people are naturally asking what role Prosper will play and what trends we are seeing.

Although it’s a bit too soon to point to Prosper data that correlates directly with the financial meltdown that has only begun to unfold, there are some noteworthy trends that have accelerated since the credit crunch began 14 months ago that are relevant to the current environment.

The biggest trend that continues in the Prosper marketplace since the credit crunch began last summer is that the percentage of borrowers with sterling credit that are listing and getting funded on Prosper remains at record levels (See “Mix of Funded Borrowers” Table). We expect this trend to continue particularly as more lenders on Prosper have become more conservative in their bidding strategies; and as more people, even those with the very best credit, are having their credit card limits reduced and home equity lines cancelled, and are being turned down for auto loans and other personal loans.

Another key trend we’re experiencing is that as consumer borrowing from traditional financing sources is shrinking, Prosper is experiencing solid growth. Year-to-date, the number of loans in terms of units is up 24% over the same time period last year, and up 37% in September 2008 compared to September 2007. At the same time, loan originations year-to-date in terms of dollars have increased 8% over the same period last year, and are up 7% in September 2008 compared to September 2007.

At a time when every sector in the economy seems to be under pressure and shrinking, the growth Prosper has experienced is very respectable. However, some may wonder why there is a disparity between unit growth and loan dollar volume growth. The answer lies in the average loan amount being funded on Prosper. Year-to-date the average loan amount is $6,047, down 13% or $925 compared to the same period last year. In September 2008 the average loan amount was $5,544, down 23% or $1,631 from September 2007. This indicates that lenders on Prosper are being more cautious by directing their bids toward listings with lower requested loan amounts.

All of these trends on Prosper are significant and interesting, but far more important in this time of economic upheaval is the opportunity for Americans to revitalize the spirit of It’s A Wonderful Life; to channel the essence of Bedford Falls and George Bailey; and to “do well by doing good.”

September 2008 Prosper People-to-People Lending Market Survey

Hello and good morning to all our readers. Welcome to another edition of the Prosper Roundup. We have lots in store for you today, including a large section for our small business entrepreneurs and for those looking to create their own start-up during this economic situation. Drop us a line when you’re through to tell us what worked for you!

Peer-to-Peer Lending:
• Business Network blogs tips peer to peer lending to have a bigger impact on financial services than file sharing has had on the music industry.

Stock Market and Banking Industry:
• What a tumultuous year – Market Watch says don’t panic and batten down the hatches.
• Wall Street Journal writes Wachovia talks snag over assets.
• Forbes focuses on some of the fastest-growing industries.
• Would split of Wachovia really work, asks the American Banker? (subscription)

Auto, Home, College:
• Tire Track blogs how to finance a car.
• CNN Money proclaims pending home sales rise.
• Students face steep lending curve announces Smart Money.

Small Business:
• Economy stalling your small business? Shift gears with these 4 tips from NYT.
• Kiplinger presents the Small Business Survival Guide.
• Business Week writes Starting a Business in a Downturn.
• Start your own ‘hot’ business says Hattiesburg American.
• Calgary Sun declares business success bolstered by planning.
• Check out the good and bad of unsecured business loans by Global Finance.
• There are three things you must have to have a chance at building a successful business says California Construction Loans.
• Los Angeles Times presents looking for loans in new places.

Prosper Gets Mentioned:
• CNN Money Special Report: America’s Money Crisis - Cash crunch: small businesses get creative
• Prosper.com in New York Times Small Biz Special Section - Likes Taking Risks, Profitable Returns
• New Age Borrowing: Peer to Peer Loans
• Prosper on US News & World Report Blog - Credit Crunch? Your Move, Peer Lending

Photo Credit: 1

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RateLadder is a Prosper lender and has been since July, 2006. He has a passion for p2p lending. He owns RateLadder — My Prosper.com Journey and other P2P Lending Adventures, P2P No Bank the P2P Blog Aggregate, and ProProsper — Professional Tools for Prosper Lenders featuring SQL access to Prosper data.

It’s not surprising that lenders have recently been calling and emailing us to find out if their Prosper cash balances are FDIC insured. We want to take this opportunity to let our lenders know that their cash balances are, in fact, FDIC insured.  Prosper is not a bank, does not take deposits, and is not FDIC insured. But the funds that Prosper lenders place with Prosper to make bids on borrower listings are maintained at Wells Fargo Bank, which is FDIC insured, and those funds get pass-through FDIC coverage up to $100,000 (note that this amount may increase to $250,000 after the passage of recent legislation).

So during these challenging economic times, you can be comfortable knowing that the funds you place with Prosper have this protection.

Call or email us questions. We’re here to help you.

The collection of links this week comprises a list of reads for small businesses and those looking to start a small business. Several articles discuss investors and start-up money. Browse the other categories to read about lending, banking, and stocks.

Peer-to-Peer Lending:
• Learn how P2P lending’s popularity surges over at Seo(X)Factor.
• Tiny Crunch Newswire writes Washington Mutual Bites The Dust. Will The Financial Crisis Lead To An Increase In P2P Lending? What do you think?
• Building of Banks, by Lending Club, in which bank building sounds like Starbucks buildings.

Stocks and the Banking Industry:
• Forbes presents The Bailout: An Owner’s Manual.
• Fear Factor Slams Stocks says Yahoo! Money.
• Read Business Week’s article BofA to Lehman: Where’s Our Money?

Small Business:
• CNN Money writes about where you can find investors.
• Are You Ready to Start a Business? Try Small Business Administration’s tool to find out!
• Here are 3 Honest Ways to Raise Startup Money written by Entrepreneur.com
• New York Times’ asks Betting Your Retirement on Your Start-Up?
• US Senate Committee on Small Business and Entrepreneurship says SBA Administration Creates Roadblocks for Women-Owned Businesses.

Prosper Gets Mentioned:
• The Arizona Republic in stave off money panic by helping the needy.
• Looking for a loan? Try peer-to-peer network, at The Economic Times.
• The Wall Street Journal under Small Business Financing in how to cope with the credit crunch.
• Red Orbit with Web Communities for Money Management, Borrowing Gain Currency Net Gains.
• WCBSTV.com mentions Prosper in peer-to-peer lending growing in popularity on web.
• Get fast money in a slow economy by ABC’s Michael Finney.
• TV Commercial for Prosper Borrower and Lender at Bliptv.

Photo Credit: 1

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RateLadder is a Prosper lender and has been since July, 2006. He has a passion for p2p lending. He owns RateLadder — My Prosper.com Journey and other P2P Lending Adventures, P2P No Bank the P2P Blog Aggregate, and ProProsper — Professional Tools for Prosper Lenders featuring SQL access to Prosper data.

Like any good neighbor, we need to be on the lookout for predators in the community.

Recently, a fellow community member was approached (via a Prosper Message) by a “potential lender” interested in supporting their listing. The lender requested additional information on the borrower’s business, including their website and/or yellow page link. Shortly after providing the requested company information, our borrower received a phone call at their business asking details about their Prosper listing. The purpose of the call soon became apparent. After inquiring about the interest rate our borrower achieved through the bidding process, he suggested his company could offer a “better deal”. Our community member immediately recognized this as a “shady offer” and ended the conversation.

When Prosper learned about the incident, an investigation was launched and the offender’s marketplace access was terminated.

Prosper is committed to ensuring and maintaining the integrity of the marketplace. We want both borrowers and lenders to feel confident that transactions within the marketplace adhere to all of the policies and protections afforded community members. These policies, such as not disclosing personal identification information and not communicating or soliciting communication outside of the site, are there for your protection and the protection of your community neighbors. After all, even if the deal offered in this situation had been a good one, acting on it would have been breaching the trust of the community lenders who “followed the rules” and, in good faith, bid down the interest rate of the loan.

Feedback from community members is one of the best sources of identifying inappropriate activity. You are, after all, the only one aware of communication exchanges outside of the marketplace. We want to know about it (call or email us), investigate it and prevent future occurrences. Rest assured, we will terminate the offender’s access and end their prowling. Your vigilance will contribute to the security of our neighborhood.

Thank you for participating in our Neighborhood Watch.