Prosper has just finished its best month ever for loan originations – we have reached $20.2M in loans for April, and $500M since inception. April’s performance was achieved with the largest volume and the highest average loan amount in history with 1,969 loans and $10,277 respectively. This amount is a 34% growth over March, 2013 and 74% year over year from April, 2012.

Over the past week, many of you have asked about the changes in loan volume. We have seen two trends; first, there have been fewer B through HR rated loans available. Second, loan origination volume through Prosper’s platform has actually gone up, as you can see above. To explain these seemingly contradictory trends, I’d like to start by saying that I believe the industry has reached an inflection point. Peer-to-peer lending is increasingly accepted as a viable investment class. Both retail and institutional lenders are realizing that peer-to-peer loans represent a very interesting and potentially profitable way to obtain unprecedented access to investing in consumer loans. As a result, the industry (not just Prosper) is experiencing a spike in demand. We are aggressively ramping borrower marketing campaigns to generate more loan inventory to meet that lender demand. We are also looking closely at the borrower user experience and application process over the coming months.

All in all, these short term challenges are a positive development for the industry. As we grow, we will help more consumers get their loans funded and therefore offer our lenders more opportunities to expand their investments in consumer loans.

As I mentioned in my April update, we introduced a whole loans program in a beta period for our institutional investors. This has been going well – over $5.8M in loans originated through the whole loan pool in April. This makes up about 28% of loans originated through the platform in April and the remaining 72% originated through the fractional loan pool. On May 3rd we will officially add the whole loans pool as a permanent part of our service.

Here are some details on how it will work:

Prior to posting times, Monday thru Friday only, a subset of randomly selected loans will funnel into a whole loan pool, while all others will post normally into the standard, fractional loan pool. Those loans in the whole loan pool will remain there exclusively for a brief 45 minute period of time. If the loans are not purchased from the whole loan pool within 45 minutes, they will funnel into the fractional loan pool at regularly scheduled posting times, becoming available for funding on the standard Prosper platform. On Saturdays and Sundays all loans will funnel into the standard loan pool, giving our retail lenders the opportunity to bid on all loans available during that period.

This new process is in line with market conditions and enables us to offer whole loan buyers a solution to meeting their mandate and specifications without disrupting the retail lender experience. Additionally, for loans in the fractional loan pool, lenders will now be limited to 75% funding, ensuring that all retail lenders continue to have equal access to a large number of loan options.

Now back to April. In addition to a record month in terms of loan originations, we also made some great progress. We launched a new logo and identity. We would love to hear what you think. As promised, we increased the loan cap from $25,000 to $35,000. Many of you have noticed that this change also included removing our one year loan option. The reason for removing this is simple; one year loans are not in high demand by our borrowers. We will continue to make changes and enhancements like these to balance the needs of both lenders and borrowers.

We also welcomed back our Washington lenders. We appreciate your patience while we worked with the Securities Division of Washington’s Department of Finance to obtain approval and reopen peer-to-peer lending in Washington.

Finally, we are approaching the deadline to transfer to the new enhanced API service we introduced to our lenders back in March. The feedback on this has been tremendous and we are transitioning everyone over. The last day to transition to our new API for lenders is May 1st. If you’re interested in this, please email us at investorservices@prosper.com. If you’re already using it, great! A new password functionality in the settings section will be available in May. Stay tuned.

More exciting things are still to come over the next couple months.

• Improved collections: We are still very focused on increasing the success of our collections. We have made several changes over the past couple months to increase call intensity and work closely with delinquent borrowers. We continue to enhance this service and will keep you updated here as changes are made.

• Document Update Functionality: We have begun development on a tool that will allow our borrowers to upload documents directly to our site. This will help to streamline the borrower experience and allow our verification team to move more quickly on verification initiatives.

• Ramping Borrower Inventory: Over March and April we focused a lot of resources and attention on the lender side of our platform. This has allowed us to onboard a lot of eager lenders. As stated above, in May, we are ramping up our borrower marketing initiatives to meet these new lender needs and will be funneling more and more loans onto the platform.

We are really proud of the progress we’ve made so far, and have many more exciting updates to come as we work to make Prosper the best peer-to-peer lending platform. I’d like to thank everyone who commented on my March post for their thoughtful questions and considerate debate. I’ll be reading and responding so feel free to ask questions or add comments below.

Thank you,

Aaron Vermut
President

It’s been a little over two months since CEO, Steve Vermut and Head of Global Institutional Sales, Ron Suber, joined Prosper’s management team, and this week, I am excited to be joining them full time as President. I wanted to let our community know that we intend to use this blog as a method of communication to continuously inform both our borrowers and lenders of what we are working on here at Prosper, and of what new and exciting things are coming in the near future. It’s important to all of us that our customers understand we are striving to make Prosper a leader in customer service and technology. With valuable feedback from our customers, we are able to deliver products and solutions that will enhance the user experience across the platform.

I want to give everyone an idea of all the exciting things the Prosper team has been working on since bringing on the new management team. In February, we focused on building and launching tools and improvements vital to the platform’s performance. Our new API gives lenders the tools they need to customize their Prosper experience in ways never before possible, and Prosper Funding LLC provides increased security and protection for our lenders. We also extended our customer service hours to provide more one-on-one support for more hours of the day.

As we come to the end March, we’re excited to report $15.1 million in loan originations, a 60% growth over February and our best month since October. We also project $25 million in new loan listings on the platform this month. In fact, at the time of this post, there are 200 new loans now available to lenders.

We have also been looking at various ways to improve our service and product offerings for our retail and institutional lenders, as well as for our borrowers. Here are some of the priority items that we’re focusing on over the next few months (in no particular order):

•   New Prosper Logo/Identity: Along with the technology enhancements to our product, on April 2nd we are launching a rebranded web experience including a new logo and identity. We have been working on this for a while and are excited about the changes. Let us know what you think.

•   Improved collections: Over the past several months, we have focused on improving collections by increasing call intensity, and working with our delinquent borrowers to be the payment of choice during tax refund season. As a result of these changes, we have had 3 consecutive record months of collections. Moving forward, we will be adding a new collections agency and will send delinquent accounts to collections at 16 days past due rather than 31 days past due. This will enable us to expand our call coverage and skip tracing capabilities, which will provide better results for our lenders.

•   Washington State (and more): We are currently engaged in communication with the Security Division of Washington’s Department of Finance and hope to reopen the platform to Washington lenders very soon. We apologize for the inconvenience to our Washington customers – the blackout is a result of the implementation of Prosper Funding LLC’s New Note Offering. With this implementation, we have also added West Virginia and Michigan, and plan to have several additional states join the platform in the near future.

•   Whole Loans: In April we are launching a whole loan product in beta for our institutional lenders, which will be separate from our traditional pool of fractional loans. The beta version of this product is in test mode and we will communicate more details as they develop.

•   Additional Improvements: Some of the many other things we are working on are a new IRA trading option on Foliofn, an increase in the loan cap on the platform to $35,000, enhancements to our Automated Quick Invest tool (AQI), and expansion to both our customer support and technology teams.

Steve, Ron and I are committed to creating a transparent relationship with our borrower and lender communities. This asset class and market place are changing rapidly. We will continue to make ourselves available to answer any questions. Please check back here regularly as I publish new posts with updates as well as gather questions and feedback from our community at large. We welcome any comments and/or questions below.

Thank you,

Aaron Vermut
President

We blogged last June about how debt consolidation works – and this week we’re turning the spotlight to Leonard C., a Prosper.com borrower who successfully simplified his debt.

Realizing he had “too many payments every month”, Leonard used a $10,000 Prosper Loan to pay off his credit cards. He points to two reasons for turning to Prosper for a personal loan:

1. Simplicity. Keeping track of multiple credit cards with outstanding balances is difficult and time consuming. Exchanging them for a single fixed monthly payment helped to reduce financial stress.
2. Community. Leonard didn’t have to walk into a bank to get his loan. In his words, Prosper’s peer-to-peer lending community “made [his] decision to borrow much easier”, adding that “lenders know what borrowers are going through”.

We think Leonard’s story is really heartening – and he is just one of thousands of borrowers who have used a Prosper Loan to take their first steps towards tackling their debt.

With the recession, Americans have seen some of the most astonishing and drastic shifts in our money markets. The nation’s individual credit scores have been no exception. According to Lisa Gerstner from Kiplinger Personal Finance Magazine, this change has not only evened out, but is on a slow, positive rise. Lisa Gerstner writes, “As we pulled out of the recession, the middle started to grow again. Now, about 18% of scores are in the highest range: 800 to 850”. Gerstner goes on to confirm that this is the highest we have seen since October, 2008, which was about 15%. You can find Gerstner’s complete article here.

Gerstner predicts that this is more than likely due to the fact that the recession forced people to focus on their finances more closely. As a result, they were able to build their credit scores, and increase their chances of receiving better rates down the line. Borrowers with a higher credit score are more likely to receive lower interest rates on personal loans, such as those provided through Prosper.com.

Increasing your credit score isn’t always the most straight forward process. Gerstner advises that borrowers stay current on bills, keep credit balances low relative to credit limits, and only take credit when they need it. But what else can borrowers do? Jessica Anderson, associate editor of Kiplinger Magazine demonstrates 6 things that borrowers should bear in mind in order to raise their credit scores and consequently lower their rates. Anderson covers these steps in her article, “6 Things to Know About Credit Scores”

“Debt consolidation” can sound complicated and downright confusing. But it’s really just about reducing your debt to a single monthly payment and then making a commitment to getting rid of it forever. Here’s an example:

With Prosper.com, it’s simple.

1. Apply online, at your convenience and from the comfort of your home or office.
2. Pay off your credit cards or other loans with the proceeds of the loan.
3. Make your monthly payment on your Prosper.com loan and eliminate your debt forever.

If you’re carrying credit card balances but have been afraid to take the next step, then make today the day.

* Minimum payment requirements vary by card issuer (for another example, see this Federal Reserve Credit Card Calculator explanation). We have used a conservative assumption here, taking the greater of $25 or 2% of the outstanding balance plus finance charges accrued in the period. This example assumes that the loan proceeds, net of a $495 closing fee, are used to pay off the credit cards immediately, rather than a scenario with continued monthly minimum payments.

** If you have a Prosper Rating of B and no previous loans and take out a loan for $10,495 for five years, your interest rate will be 20.85% (23.32% APR), you will have 60 monthly payments, and your scheduled monthly payment will be $283.04. Eligibility for a loan is not assured and requires that a sufficient number of investors commit to invest in your loan. Refer to the Borrower Registration Agreement for all terms and conditions. All loans made by WebBank, an FDIC-insured Utah-chartered Industrial Bank.