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What Is Prosper? And Why Does Elaine Recommend It?

Prosper is essentially an online community for two kinds of people: borrowers and lenders.

Borrowers are people who want a personal loan up to $25,000.

They want that money for a variety of reasons including funding a small business start-up, paying off credit cards, renovating their home, buying a vehicle, paying for a child’s college tuition, and plenty of other reasons. These borrowers want to loan money from Prosper for a variety of reasons as well, such as, they want a lower interest rate than a bank or credit card would offer them, they have trouble getting a loan elsewhere, or they don’t like banks and want to loan from individual people, sometimes particular people like mom, dad, a friend, or business partner.

Lenders are people who want to loan money, as little as $50, to other individuals.

The lenders choose to lend for a variety of reasons as well, including the likely possibility of earning higher returns than if they put the money in a savings account or it they invested the money in a mutual fund. Other reasons include the lack of fees to the investor associated with this type of investment and the quick turn around time. (Prosper loans are 3 year loans.) Some lenders are of a more generous nature and like Prosper because it allows them to loan money at below market rates. These lenders want to give borrowers a chance. They like the idea of lending to particular people and ideas.

There are many ways Prosper can be used as “people helping people” or win-win scenarios.

For example, a parent lender and child borrower may choose to formalize a zero-interest college-tuition loan through Prosper in order to improve the borrower’s credit rating. To me, that sounds like a much better idea than co-signing with a child on a credit card or car loan in order to build the child’s credit. Another example: a couple with great credit want to renovate their home to make room for a baby or an ill parent. They might choose Prosper because it can offer them lower interest loans than they’d get from a bank. Lenders who loan to them get a low risk investment they can feel great about. There are numerous other examples. We’re only limited to our imaginations.

Let’s say you’re a feminist and you want to support women-owned businesses. You could lend money to women entrepreneurs. Let’s say you want to help people escape predatory lending and get out of payday loan debt, you can loan money to people at a low interest rate in order to help them escape the payday loan cycle. Say you want to pay off your high interest credit cards with a lower interest consolidation loan? Prosper can help you with that.

Or, say you read my blog post about vegan “churches” (which are really just restaurants preaching veganism through tasty food) and you wanted to help restaurateurs fund new vegan restaurants. You could lend to vegan restaurateurs by using Prosper’s keyword search and loan type search.

Another idea I had was to formalize poker loans through Prosper. You know, my husband is a professional poker player and he tells me it’s very common in the poker community to lend money to one another to help a player stay afloat during a bad run or to give a good player a chance. The trouble is, many of those loans are bad bets, which can cause bad blood between players. These loans could probably do better in a more legitimized setting, like Prosper. It would help the lenders by structuring the loan contract and offering a collections service. And it could help both the borrowers and lenders by documenting fund transfers that aren’t accounted for otherwise.

So, there you have it. That’s the essence of Prosper (from my perspective).

I encourage you to join Prosper >>

And not just because I’ll get a referral fee if you sign up; I truly believe in the concept.
(Besides, you get free money if you sign up as a lender.)