Prospering from Microloans

August 20, 2010

Prosper, the on-line peer-to-peer lending marketplace,  this week reported that it has helped to facilitate 34,000 loans worth more than $202 million during the 12 month period ending July 31.

Prosper provides an online marketplace for individuals who, for any number of reasons, doesn't want to borrow money from a bank or credit card. In fact, many Prosper borrowers - about 54% by Prosper's reckoning - are looking for debt consolidation loans. According to Prosper, the average borrower has a credit score of 738.

Borrowers list loan requests on Prosper, and investors bid on loans in increments of $25. Investors can decide on which loans to fund based on detailed analyses, including credit ratings, scores and histories. Once an auction ends, Prosper handles funding and servicing on behalf of lenders and borrowers.

Between July 2009 and July 2010, the best rate available to Prosper borrowers was 9.24% APR; the highest was 33.65%. The average loan was for $4,353, and the annual loss rate on loans was an average 6.79% across all loans, Prosper reports.

135 million of the world's poor today have some type of microinsurance policy