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Prosper - the private lending community

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Sun, 2006-04-30 05:08 — Marketing Fan

Just before I was struck clicking via Howard Rheingold's blog to Prosper: The online marketplace for people-to-people lending ... and I must say I'm pretty amazed to find this new business and community model out there...

Prosper's claim is "The online marketplace for people-to-people lending"

instead of buying and selling tangible goods like on ebay, the people group together to lend other's some money...

Quote:

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select.

People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers.

In addition to criteria commonly used by institutional lenders, such as credit scores, people who lend can consider borrowers' group affiliations.

Groups on Prosper are critical to bringing people together for the common goal of borrowing at better rates. Groups earn reputations according to their members' repayment records. Groups with successful repayment histories should attract more lenders offering lower rates.

With the concept of groups which allows to negotiate better rates and allows to lend more money. The flexible rate creates a market that could be similar to the stock market but where instead of share prices, it would be the possible borrowing rates that would vary for a given company.

CERTAINLY something with a huge potential...

and there's a lot of cash to be made...

1% of the loan that goes to Prosper, paid by borrower
0,5% of the load that also goes to Prosper is paid by the lender

And then there's a community feature where groups of borrowers ... and the group leaders of those groups earn another cash incentive for building up the group, thereby stimulating activiy and creating a network of trust within the system...

IMHO a striking sample of community building incentives...