P2P Lending News

American P2P lending service Prosper announced on their blog today that they had received a new round of “investment” from Nigel Morris of QED Investors, the founder of CapitalOne. This investment is much different than the previous $40 million in equity financing that the P2P lender has taken in the past, since this is a 1-year, 15% loan.

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P2P Lender Prosper announced today that they are now welcoming lenders from Florida. Florida is the fourth most populous state in the U.S., which adds 6% of the population to Prosper’s addressable market. Along with recent announcements opening Rhode Island and Virginia, Prosper is now available to 54.1% of the U.S. population. Rival social lending site Lending Club also announced recently that they were open to Missouri lenders, adding 1.9% of the population, for a grand total of 54.3% of the population.

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It started off innocently enough with a post on the Prosper blog entitled “All sorts of people looking for loans on Prosper.com“, featuring alongside a police officer and a desk jockey, a borrower wanting to buy a camcorder to “expand further in the adult entertainment industry”. I’m sorry… a what? Really?

Well, apparently, yes, the borrower really is an adult entertainment professional (later shortened to “porn star” in a followup post), and she really was requesting a second loan from Prosper. Her first loan for a candy vending business back in April 2008, can be found here.

So Prosper, newly relaunched under SEC oversight, and eager for a followup to their Twitter contest, jumped at the opportunity. We hooked a porn star! the all-porn star post seemed to shout. Authored under the pseudonym “Prosper Pink” (complete with Twitter account and Facebook page), Prosper tackled the feminine side of P2P lending, strutting across the wide line that separates financial services from pornography, and wondering aloud why they couldn’t get a little “financially sassy”.
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Today the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 goes into effect. Although the changes included in this reform are good for consumers,  and eliminate some of the credit card industry’s most egregious practices, smart consumers shouldn’t finance their purchases by paying the interest to credit card companies at all.

Here are five reasons a personal loan from a peer-to-peer lending company are better than a credit card loan…
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Today Prosper announced that they are welcoming lenders from Louisiana and Missouri. This comes a little more than a week after the social lender’s announcement that they are available to investors from Connecticut, Idaho, New Hampshire, and Oregon. The progress in opening up states to new lenders has come at a reasonably good clip, adding 9 new states since Prosper’s relaunch a month ago in mid-July, for a total of 23 states.

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Although the service is only a few years old, Twitter marketing is nothing new. First there was Ashton Kutcher’s race to a million followers. Nothing in it for the followers, but boy did the media swoon. Copyblogger gave away an iPod Nano, SmartyPig gave away $100 to people who could answer their Twitter questions, and Zappos gave free shoes to whoever would re-write their (self-admittedly) boring customer service messages.

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What is it about social lending that inspires people to write music and create videos promoting their favorite services? Okay, sometimes it’s just cold, hard cash, as in Lending Club’s $3,000 or Zopa UK’s £500 prizes for the top video posted on YouTube, or it’s a trip around the world, as with Zopa Italy’s launch-focused Zopacontest. But other times, it’s just creative folks with a little extra time on their hands who want to promote their favorite site.

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The two companies’ announcements were less than a day apart, but reflected a world of difference between the leading U.S. peer-to-peer lending companies in the realm of loan pricing. On Wednesday evening Prosper published a blog post entitled “Why Prosper’s Auction Model Was Worth the Wait“, and on Thursday Lending Club released an “Investor Update”  informing lenders that the average borrower interest rate would be raised by 0.50%.

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Last Monday, after the SEC approved Prosper’s registration filing, the peer to peer lender opened its doors to borrowers in 47 states and lenders in 16 states. Lending Club, whose securities filing was a relative cakewalk through the Bush SEC, has been operating with regulatory oversight since October 2008, and showing some nice growth in the first half of 2009. So a week into the melee, how do the rivals stack up?

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After nine months of downtime, Prosper, the first American P2P lending company, re-opened its doors this afternoon, with a blog post by CEO Chris Larsen claiming “we mean it this time“. And they do — Prosper’s loan marketplace is now blessed by the SEC, and open for business. Prosper has also opened a secondary market, operated through Folio Investing, so that lenders who already hold notes can sell them to others.

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