Prosper.com Releases 2010 Peer to Peer Lending Market Data

Prosper.com, a peer to peer lending company based out of California, recently announced its lending data f or the year of 2010. The company boasted that its investors have earned, on average , a 10.1% rate of return.

Here’s the press release from BusinessWire:

Prosper.com, America’s first peer-to-peer lending marketplace with more than one million members and $217 million in funded loans, today released its Market Survey for December and the full year 2010.

Lender returns throughout 2010 were strong, with actual returns of 10.1% through the end of the year. These returns were primarily the result of more rigorous risk management measures the company instituted almost two years ago. For a recent explanation of how Prosper calculates returns and how those returns compare to competitive offerings, visit the Prosper Blog.

Throughout 2010, large investors continued to join Prosper, indicating that Prosper peer-to-peer loans are becoming an important component of investors’ portfolios while adding a significant amount of capital to the marketplace. These large investors are employing a variety of strategies and investing across the risk spectrum.

This influx of big investors in addition to many smaller individual lenders has resulted in the availability of more loans at affordable rates to more borrowers – with rates starting at 5.9% APR.* In fact, nearly all loans listed on Prosper are being funded and at a much quicker pace than before. In the weeks prior to switching over to pre-set interest rates in December, Prosper loans on average funded in 2 to 4 days; since the change, the majority of loans are being fully funded in less than 48 hours.

The amount of loans originating on Prosper continued to grow this year, particularly in the latter half of the year. To close out 2010, the dollar amount of loans originated on Prosper in December jumped 22%, resulting from a 12% jump in the number of loans originated during the month and higher average loan amounts, particularly among borrowers with better Prosper ratings.

“Peer-to-peer lending has a lot of momentum going into 2011, due in part to the fact that people are much more careful with their money,” said Chris Larsen, CEO and co-founder of Prosper. “Serious investors increasingly see P2P loans as an important asset class, both for the returns P2P loans are delivering and for the social benefits, while borrowers are much more informed and are being smarter about debt, choosing P2P loans to get more affordable interest rates. In the coming year Prosper will continue to look for ways to improve the experience and expand its offerings to help community members make the most of their money.”

To learn more about our lender returns, competitive rates and other updates, please visit www.prosper.com.

To register to automatically receive Prosper’s monthly market surveys, click here to send an email with “SUBSCRIBE” in the subject line.

Prosper Statistics for December 2010:
Prosper Rating		Borrower Rate		Effective Lender Yield		Estimated Annual Loss Rate		Estimated Annual Return		Average Loan Amount		Loan Volume		% of Funded Loans
AA		8.72%		7.71%		1.48%		6.23%		$11,216		$415,000		14%
A		11.11%		10.07%		3.44%		6.64%		$9,026		$478,353		9%
B		14.86%		13.63%		5.64%		7.99%		$8,037		$659,050		26%
C		20.94%		19.47%		8.57%		10.90%		$9,320		$93,200		5%
D		27.90%		26.23%		10.44%		15.79%		$4,330		$805,460		23%
E		31.92%		29.50%		14.20%		15.30%		$4,266		$400,986		11%
HR		33.60%		30.68%		21.92%		8.76%		$2,755		$382,925		13%
All Funded Loans		21.27%		19.64%		9.05%		10.59%		$5,383		$3,234,974		100%

Prosper Peer-to-Peer Borrower Loan Purpose
		Funded Loans
Debt Consolidation		53%
Home Improvement		12%
Business Use		11%
Auto / Vehicle		2%
Other Use		21%

* Based on personal loans made to borrowers with an AA Prosper Rating. APRs by Prosper Rating range from 5.93% (AA) to 35.64% (E). Rate offered is based on Prosper Rating and other factors and your actual rate may differ. Eligibility for a loan is not guaranteed and requires that a sufficient number of investors commit to fund your loan. Refer to Borrower Registration Agreement for all terms and conditions. All loans made by WebBank, a Utah-chartered Industrial Bank.

Definitions

Borrower Rate: The interest rate borrowers pay on their Prosper personal loan.

Effective Lender Yield: Effective Lender Yield is equal to the Borrower Rate: (i) minus the servicing fee rate, (ii) minus estimated uncollected interest on charge-offs, (iii) plus estimated collected late fees.

Estimated Annual Loss Rate and Estimated Annual Return: Estimated Annual Return is the projected average annual return on funds invested in all loans with a certain Prosper Rating originated on our platform during the month of December, 2010. Expected Annual Return is calculated by subtracting the Estimated Annual Loss Rate for those loans from the corresponding Effective Lender Yield. The Expected Annual Loss Rate is the estimated principal loss on charge-offs for loans originated during December, and is based on the historical performance of Prosper loans for borrowers with similar characteristics. The calculations of Effective Lender Yield, Estimated Annual Loss Rate and Estimated Annual Return require significant assumptions about the repayment of loans, and lenders should make their own judgments with respect to the accuracy of these assumptions. Actual performance may differ from estimated performance.

Loan Purpose: Borrowers who post listings in the Prosper marketplace are asked how they intend to use their peer-to-peer lending personal loan. The loan purpose reflects borrowers’ statements of intended use of loan proceeds and is the percentage of total dollars funded for the month. Prosper does not verify or confirm after funding how loan proceeds are used.

About Prosper

Prosper Marketplace Inc. is America’s first peer-to-peer lending marketplace with over one million members and more than $217 million in funded loans.

Prosper allows people to invest in each other in a way that is financially and socially rewarding. Borrowers list loan requests between $2,000 and $25,000 with loan terms of 1, 3, or 5 years. For example, a $5,000 loan with a 3 year loan term for a person with a Prosper Rating of A would have an 11.65% APR and scheduled monthly payments of $160.28. Individual and institutional investors invest in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers’ personal loan descriptions, endorsements from friends, and community affiliations. Once the auction ends, Prosper handles the funding and servicing of the loan on behalf of the matched borrowers and investors.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN. Prosper has raised $57.7 million in venture capital and is backed by financial and technology luminaries including, Jim Breyer of Accel Partners; Bob Kagle of Benchmark Capital; CompuCredit; Omidyar Network; Capital One Co-founder Nigel Morris of QED Investors; Court Coursey of TomorrowVentures; and Larry Cheng of Volition Capital.