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Prosper is Back! (We mean it this time)

by Chris Larsen on 07/13/09

Finally… the moment we and so many supportive and loyal Prosper community members have been waiting for…

after nine long months of navigating the rapidly changing regulatory landscape, we are thrilled to announce that Prosper’s registration statement with the SEC has been declared effective. Prosper lenders can once again invest directly in fellow Americans and small businesses!

Although this has been an excruciatingly long and frustrating process, especially considering that it has played out during the worst credit crisis in 70 years, this is a watershed moment. Prosper is the first Internet auction-based P2P loans marketplace and trading platform to have its SEC registration declared effective, which means the SEC is permitting Prosper to facilitate auctions in a way that has never been done before.

Selling securities by auction is not new and critical to greater efficiency in fair price discovery for both sides of the transaction. However, the SEC has never permitted Wall Street investment banks or any other institution to run a true auction where investors could make an irrevocable bid that committed funds prior to the establishment of a final rate. Previously all bids were revocable at any time prior to the establishment of a final price and no funds could be committed prior to this time (e.g. Google IPO). This previous requirement made competitive auctions for small consumer loans like Prosper’s virtually impossible under an SEC regulatory regime.  (Continue reading below the video…)

Trade Existing Notes
We’re also incredibly excited to introduce an Internet auction-priced trading platform for Prosper Notes. As many early Prosper lenders know, we’ve been working on this feature since we first launched in February 2006. We know that financial markets thrive on liquidity, which in P2P lending means lenders will have the opportunity to sell Prosper Notes any time regardless of the loan term. The note trading service is provided by Foliofn Investments, Inc., through their Folio Investing Note Trader platform.

Prosper Ratings
Other significant improvements include a new Prosper Rating system to make bidding easier and more rewarding. The new Prosper rating is built on Prosper’s huge database of approximately 28,000 personal loans. We have also introduced a minimum 640 credit score requirement for borrowers and a minimum bid floor for each Prosper rating to improve and optimize returns. Finally, to improve the ease of diversification, we’ve lowered the minimum bid amount to $25.

All of this translates into more opportunity for average Americans to use Prosper to fund loans directly, earn an attractive return in a new asset class, and help their fellow Americans at the same time.

Perhaps this is why the peer-to-peer lending has garnered such support from financial policy makers. For example, Federal Reserve Chairman Bernanke just said in a speech three weeks ago, “emerging technologies like peer-to-peer lending also show promise.” And California Department of Corporations Commissioner Preston DuFauchard stated in May that Prosper’s P2P lending model is a perfect example of, “the kinds of innovative ideas that can help get credit in the hands of people who need it while instilling in our financial markets desperately needed openness and transparency. We’re proud to take the lead in providing regulatory approval and oversight for Prosper.”

Let’s seize the moment!

  • Eric R Hann

    Welcome back. I was missing this place :)

  • Merv

    Do you loan to people in Maine?

  • http://blog.prosper.com Prosper Blog

    We hope to be lending in Maine very shortly – possibly even by the end of the week.

  • Penny Harris

    I am very disappointed that I recieved a Prosper loan, have paid on time every time to the point that I am nearly paid off and now cannot recieve another loan because my credit score is too low. While I understand the need to make the program better, there should have been some consideration given to loyal and respectable borrowers. My credit score is improving.
    Thank You

  • http://Comcast Thomas E. Anderson

    Welcome back. Looking forward to continuing our business relationship.

  • Chris

    I have asked before, and hereby ask again, for the date we were given ADVANCE NOTICE of the impending “quiet period.” Without it, I can’t imagine trusting your executive management again.

  • http://blog.prosper.com Prosper Blog


    in response to your comment – “I have asked before, and hereby ask again, for the date we were given ADVANCE NOTICE of the impending “quiet period.” ”

    We were not allowed by regulatory rules to give prior notice or comment during the quiet period.

    We apologize for the incovenience.

  • skubwa

    I’m in Florida and waiting to get back to lending in Propser. Can we at least get a ballpark figure about when Florida MIGHT be back? I understand you can’t commit to a date, but even a speculative guess would be welcome, and I promise not to hold you to it.


  • Arnold

    I received an alert that people in Alabama are not eligible to participate. What is going on with that?

  • http://yahoo Thomas Maher

    You really are not back except in a few states.
    I reside both in Alaska and Oregon..

  • Miss Jess

    I am loving what I am reading about this person to person lending/borrowing I live in the Caribbean (trinidad to be exact) I wish thislending network was here – I can only hope that one day this type of lending comes to T&T as there seems to be no option for lending or borrowing across countires.
    This is a fantastic avenue disappointed it is not here in the caribbean

  • http://yahoo Thomas Maher

    Is prosper back for alaska………Thank you…

  • Luzy

    Prosper is not available in NJ. Been with prosper for 3 yrs. Met Chris and others in San Francisco, CA with prosper days. E-mail me back, please what can we do??

  • http://www.kohler-computer-service.com Richard Kohler

    Don’t know why so many people are so anxious to lend money when their state is not included. It sounds like a lot of people are not getting their loaned money back from deadbeats.

  • Mike

    I have moved to MD from a state that has not yet been allowed to lend on prosper. How do I change my information within prosper to my new MD address so that I can lend again?

  • http://sander3433@mac.com Sheri Anderson

    It has been almost 4 months since I last sent a blog to find out when Iowa will be back online. When will our state be allowed to invest in the Prosper system?

  • JAT

    Re: Mike | October 7th, 2009 at 8:58 pm
    Unfortunately lenders from MD are not yet allowed to lend yet either.

  • Pingback: Prosper is back after 9 months – but are investors ready? - Javelin Strategy & Research Blog

  • Annette

    TN is not able to trade again? Will it ever? Please comment on TN Order No. 09-009 SI-2009-005.



  • http://sander3433@mac.com Sheri Anderson

    It is now December, actually almost the end of the month and another year. What is the status for the remainder of the states, like IOWA. I know we can send these blogs, but it would be nice to actually get an anwer. I see there are more members on the system.

  • Keith

    I am so extremely frustrated with the fact that Michigan cannot lend! Thats ridiculous! When will all states be able to lend and why can’t we do it now?

  • http://blog.prosper.com Prosper Blog

    We are actively working securities officials in Michigan to get the state approved for our lenders. We understand your frustration and want to get approval as quickly as you do!

  • Mike

    Why can’t you use the trading platform to buy notes through Folio if your from a “restricted” state, like you can on Lending Club?

  • John

    Prosper remains closed to Michigan lenders and unfortunately Prosper does not choose to give regular feedback as to what is happening and what is the forecasted timeline. What I thought would be a good investment vehicle and a good societal act from the standpoint of fair loan pricing has turned into an annoying failure and a relationship with a company that is largely unempathetic, unresponsive, and uncommunicative.

  • Erich Breuner

    I am an Oregon resident and I have been investing in Prosper for about 9 months. Now, all of a sudden I have been blocked from investing. I meet all of the requirements posted by Prosper for being a lender from Oregon. Why have I been blocked?

  • Pingback: Review of the January Numbers for Lending Club and Prosper

  • John

    I put in about 600 bucks to test this out, I ended up making about 10% over 3 years, which is about the rate of a savings account. I had an A-rated loan default for the whole amount, and my lower -rated loans paid off almost completely. In all I had 3 defaults, 1 A, 1 B and 1 H – so it’s a solid “meh” for me. I’m in Mass, so I can’t invest right now. Not sure why, not that interested.

  • Douglas Ver Mulm

    Hey Prosper,

    What is the status with the three states you currently cannot operate within? Are you working with the securities agencies in these states? Are they ever going to come online? Please provide an update.


posted in Borrowers,Featured,Lenders,Prosper News 128 comments »

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