Prosper Marketplace Has 11 Days to Announce New Funding or May Face Bankruptcy
Last month Prosper Marketplace, a company that offers peer-to-peer loans, received a $2 million bridge loan due on April 1st to cover operating costs while it seeks its next round of venture capital funding. The loan is due in 11 days and Prosper Marketplace may find itself out of cash if it doesn’t announce a new round of venture capital by the time the bridge loan it took out comes due.
The interim round of capital was announced on February 3rd and at the time, Prosper Marketplace said that the process to seek its next major round of funding is “going well and we have strong interest from a number of world class investors.” The company said that hat they are looking “forward to announcing our Series D round soon.”
Others have been more skeptical of Prosper Marketplace’s chances in raising a next major round of capital. The company has been plagued by far higher than expected default rates from its borrowers and has not been able to get its loan demand up to anywhere near sustainable levels since the company was allowed to re-launch after registering with the SEC in 2009. We recently reported that the amount of new loans that Prosper is originating each month is declining.
No one is certain how much operating capital Prosper Marketplace has in its coffers, but many believe that it’s not much. On September 30th of 2009, Prosper Marketplace reported to the SEC that it had $2.07 million in operating capital. Since then, it’s received $3 million worth of warrants in terms of funding. Prosper has a relatively high burn-rate though, and some predict that it would be out of money in early April based on burn-rate calculations using the company’s previously released SEC filings.
Prosper Marketplace has not released a Form 10K to the Securities and Exchange Commission, but will be legally required to do so by April 1st. That report will tell the public the company’s financial status at the end of December.
The company will be required under the terms of its February loan to repay the $2 million with interest on April 1st if it does not receive a new round of funding. If the company does not announce a new round of funding and does not have capital to repay the loan, Prosper Marketplace will likely end up in a situation where it is out of cash. At that point, the company would either be forced to file for bankruptcy or wind-down its operations.