1. Borrowing
1.1. Who can borrow money on Prosper?
1.1.1. A new Prosper borrower must be a U.S. resident in a state where Prosper loans are available, and must have a bank account, a Social Security number, and a credit score of at least 640. Prosper uses Experian to obtain credit scores. Depending on their qualifications, approved borrowers can request unsecured loans from $2,000 to $25,000.
1.2. How much can I borrow?
1.2.1. Prosper loan amounts range from $2,000 to $25,000. The maximum loan amount for any borrower is determined by the borrower's Prosper Rating
1.3. Applying for a Loan
1.3.1. What are the fees for getting a loan?
1.3.1.1. There are no fees for posting a borrower listing on Prosper. Fees are only charged if your loan is funded and money is transferred to you.
1.3.1.2. Closing fee
1.3.1.2.1. The closing fee is a percentage of the amount borrowed and varies by Prosper Rating:
1.3.1.2.2. The closing fee is taken from the loan immediately, before loan proceeds are transferred to your account.
1.3.1.3. $15 failed payment fee:
1.3.1.3.1. A failed automated withdrawal, returned check, or bank draft will result in a fee of $15. Only one failed payment fee will be charged per payment period.
1.3.1.4. Late payment fee:
1.3.1.4.1. If a monthly payment is 15 days late, you'll be charged a late fee. Late fees are passed on to investors. Prosper does not retain late fees.
1.3.2. How can I make my loan payments?
1.3.2.1. The first option is electronic funds transfer, which is the simplest method and the one preferred by investors.
1.3.2.1.1. Most borrowers will select the electronic funds transfer option, which is secure and convenient.
1.3.2.1.2. If you select electronic funds transfer, Prosper will electronically deduct your monthly payment from your bank account on the due date.
1.3.2.2. The second option is bank draft.
1.3.2.2.1. If you select bank draft as your method of payment, you are authorizing Prosper to write a check on a monthly basis on your behalf to cover your payment each month.
1.3.3. Why can't I use my loan proceeds for postsecondary educational expense?
1.3.3.1. The law says that, once the lender approves a loan application, the borrower must have at least 30 days to accept or reject the offer. This rule is incompatible with Prosper's platform
1.3.4. What if I have family or friends who want to help fund my loan?
1.3.4.1. When someone who knows you personally trusts you to pay them back, it may provide a measure of credibility to your borrower listing. You can invite your family and friends to invest in your borrower loan, and that person will be sent an email from Prosper.
1.3.4.2. If a friend or family member partially invests in your loan, they will have the option of writing a recommendation for you that other potential investors will see.
1.4. Funded Listings
1.4.1. What if my listing ends without being funded?
1.4.1.1. If your borrower listing runs out of time and has not yet received investments sufficient to fund the loan, no loan will be made. If you want to try again, you can create a new listing at no charge.
1.4.2. What is a loan review? How long does it take?
1.4.2.1. Loan review helps protect investors by verifying some or all of the information you provided while registering and creating your borrower listing. The review period lasts up to eight business days after the listing period ends, and any requested documentation must be provided in that period.
1.4.3. When will my monthly payments begin?
1.4.3.1. Interest on your borrower loan begins to accrue on the business day following the day Prosper initiates the funds transfer, which Prosper considers the origination date of your loan. Your first payment is due one month after your origination date. Your payment due date is the same day of the month as the origination date of the loan, or the closest possible day in future months where that date does not exist
1.4.4. Can I have more than one Prosper loan?
1.4.4.1. It is possible to have more than one borrower loan; however, you must meet certain requirements. Also, because all outstanding Prosper loans are included in your $25,000 total loan limit, this means that your first Prosper loan will affect the maximum amount you can request in your second loan.
1.4.4.2. A minimum number of months must have passed since your last loan was made, listed below.
1.4.4.3. A minimum number of consecutive on-time payments must be made on your previous loan, listed below.
1.5. Payments
1.5.1. By default, your borrower loan is set up for monthly payments to be automatically deducted from your bank account on file.
1.5.2. Can I pay by mail or phone?
1.5.2.1. Prosper requires you to make your payments by an automatic withdrawal through an electronic fund transfer or bank draft.
1.5.2.2. As a convenience to our borrowers and at our discretion, we currently accept phone and mail payments as well
1.5.2.2.1. If you would like to make a payment by phone, please call 1-866-615-6319. Please have your bank account and routing numbers on hand during the call. We do not currently charge for phone payments.
1.5.2.2.2. Please include your first and last name and loan number on your checks. We cannot accept payments by credit or debit card.
1.5.3. Can I cancel the automatic ACH payment?
1.5.3.1. Yes. Please contact customer support to assist you in cancelling the automatic monthly ACH payment and switching to monthly bank draft service.
1.5.4. Can I change my payment due date?
1.5.4.1. No. Unfortunately, it's not possible to change your payment due date at this time.
2. Investing
2.1. Getting Started
2.1.1. Who can participate on Prosper?
2.1.1.1. Individual investors must be United States residents who are 18 years of age or older and have a valid Social Security number.
2.1.1.2. Institutional investors must be based in the United States and have a valid Taxpayer Identification number.
2.1.1.3. All investors must have a checking or savings bank account.
2.1.2. Do I have to be licensed?
2.1.2.1. You do not need to be licensed to be an investor on Prosper. Although you are sometimes referred to on the Prosper website as a "lender," you are not actually lending your money directly to Prosper borrowers, but are, instead, acting as an investor purchasing Notes issued by Prosper that are dependent for payment on payments we receive on the corresponding borrower loan.
2.1.3. What is a borrower loan?
2.1.3.1. A borrower loan is a loan originated through Prosper that is made to a borrower by WebBank, an FDIC-insured, Utah-chartered industrial bank, and then subsequently sold and assigned by WebBank to Prosper.
2.1.3.2. All borrower loans are unsecured, fully amortizing loans and may be for one, three or five years.
2.1.3.2.1. Not all borrowers are eligible for one and five year terms, eligibility is based on Prosper Rating and size of loan request.
2.1.4. What loan terms are offered?
2.1.4.1. Prosper offers fixed rate, "fully amortizing", unsecured loans from $2,000 to $25,000. Loan terms of one, three and five years are available, depending upon a borrower's Prosper Rating and loan amount.
2.1.4.2. There are no penalties for paying off the loan early or for making partial prepayments.
2.1.5. Does Prosper guarantee repayment of Notes?
2.1.5.1. No, Prosper does not guarantee repayment of Notes.
2.1.6. What fees does Prosper charge for being an investor?
2.1.6.1. Investors pay an annual loan servicing fee, currently set at 1% per annum of the outstanding principal balance of the corresponding borrower loan prior to applying the current payment.
2.1.6.1.1. The fee is accrued daily, the same way that regular interest is accrued on the loan. It is calculated as: the annual servicing fee divided by 365 multiplied by # days since last payment, then multiplied by the outstanding principal of the loan.
2.1.7. Bank Accounts and Money Transfers
2.1.7.1. You can transfer money to Prosper and it will be added to your Prosper account cash balance. When a payment comes in for one of your Notes, it's also added to your Prosper account cash balance.
2.1.7.1.1. To verify your first bank account, Prosper will make one deposit and one withdrawal to your bank account (both less than $1.00). These two transfers should arrive in your bank account within 2-4 business days. After the verification transfers have completed (look for an email from Prosper), you need to find the exact amounts of the transfers from your bank's website or by calling your bank. Enter these amounts on Prosper to verify your bank account.
2.1.7.2. Requirements for instant transfer:
2.1.7.2.1. Transfer amount must be between $25 and $10,000.
2.1.7.2.2. Sum of pending transfers cannot exceed $50,000.
2.1.7.2.3. Your active loan value must be greater than $0.
2.1.7.2.4. Your cash balance cannot be negative.
2.1.7.3. Bank transfers are done through an ACH (Automated Clearing House) transfer. ACH is a system of the U.S. Federal Reserve Bank that provides electronic funds transfer between banks.
2.1.7.3.1. It is the same kind of fund transfer transaction that is used for direct deposit of paychecks, for example. Funds from ACH transfers may take two to four business days before they become available in the destination account.
2.1.8. How does Prosper treat the funds in my Prosper investor account? Are the funds FDIC-insured?
2.1.8.1. Prosper is not a bank, and does not take and hold deposits. Prosper does not pay interest on funds held in the Prosper account.
2.1.8.2. All funds Prosper investors place with Prosper to invest in borrower loans are maintained in a pooled account at Wells Fargo Bank, N.A. titled in our name "for the benefit of" our investor members.
2.1.8.3. Funds in the FBO account will always be maintained at an FDIC member financial institution.
2.1.8.4. Investors have no direct relationship with Wells Fargo Bank, N.A. by virtue of participating on our platform as a borrower or investor.
2.2. How It Works
2.2.1. What are loan interest rates and estimated lender returns?
2.2.1.1. Loan interest rates are set by Prosper and are based on factors including
2.2.1.1.1. Prosper Rating
2.2.1.1.2. Expected loss rate
2.2.1.1.3. Loan term
2.2.1.1.4. Economic environment
2.2.1.1.5. Competitive environment
2.2.2. How do I invest in listings?
2.2.2.1. You can search for individual loans and manually invest by clicking "Invest Now" from any loan.
2.2.2.2. You can use Quick Invest which allows you to efficiently invest in a group of loans. You specify the Prosper Rating and any other selection criteria and Quick Invest will find loans that meet your criteria.
2.2.2.3. With new funds of $25,000 you can sign up for Prosper Premier. This priority service is a convenient way to earn great returns by letting our analysts execute your investment strategy for you.
2.2.3. I prefer to invest in multiple loans at one. How can I do that?
2.2.3.1. Try our investing tool, Quick Invest, which helps you to set basic or detailed criteria
2.2.4. How do we calculate Annualized Returns?
2.2.4.1. To calculate Annualized Returns, a total gain or loss is calculated by summing all loan payments received net of principal repayment, credit losses, and servicing costs. The gain or loss is then divided by the average daily amount of principal outstanding to get a simple rate of return. To annualize that rate, we divide it by the dollar-weighted average Note age of your portfolio (calculated in days) and then multiply it by 365.
2.3. Loans
2.3.1. How do I receive my monthly payments?
2.3.1.1. When a borrower makes a payment on a loan, after a short delay for processing, your portion of the payment will be added to your available cash balance in your Prosper account.
2.3.2. Can I sell my Notes to others?
2.3.2.1. Yes, you can sell your notes to others using the Folio Trading Platform
2.3.3. What happens if a borrower makes an additional loan payment of pays off a loan early?
2.3.3.1. Borrowers have the option to pay all or part of the outstanding principal balance of a borrower loan in advance of the due date at any time.
2.3.3.2. There is no penalty to borrowers for doing this.
2.3.3.3. Partial prepayments will not change the monthly payment amount, but may shorten the loan term, resulting in the investor receiving less interest overall.
2.3.4. What is a charge-off?
2.3.4.1. A borrower's loan is charged-off when it reaches 121 days past due. This means the borrower has missed the last five monthly payments. When a borrower loan is charged-off:
2.3.4.1.1. The borrower entire loan balance is accelerated, meaning it is collectible in full as of the charge-off date.
2.3.4.1.2. From the borrower's perspective, interest continues to accrue on the principal balance just as it did before the charge-off. There are no changes to the interest rate or the way interest is accrued. Late fees are no longer charged.
2.3.4.1.3. From the investor's perspective, the loan's principal balance is labeled the "charge-off balance."
3. General
3.1. How is Prosper regulated?
3.1.1. Loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank, which is regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC).
3.1.2. Prosper Funding LLC and its affiliate, Prosper Marketplace, Inc., are subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer credit, trade, and commerce; and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws, trade, and commerce.