Prosper P2P: $50 For New Lenders + Up to 2% Rebate Bonus was the first big name in the person-to-person lending space. Things have been quiet recently, as they took a while getting SEC approval for their investment notes. In addition, the problems with “old” Prosper included the fact that they let just about anyone apply for a loan in the beginning, including people with horrible credit who had been basically turned down everywhere else. Many lenders thought charging a 35% interest rate was enough – it wasn’t. But as this recent Washington Post article outlines, things are picking up in the P2P space.

The way I see it, LendingClub (review, $25 bonus, performance update) basically looked at all the problems that Prosper had and tried their best to fix them. So now, Prosper is back, and in turn looks a lot like LendingClub. For example, LC requires a 660 minimum credit score to qualify for their lowest grade loan (amongst other things), and now Prosper requires a new borrower to have at least a 640 credit score with their new ratings system. With both, you can have them automatically construct a portfolio for you based on your risk/return preference, and you can buy/sell notes before maturity on a open trading market.

Prosper still has their “reverse auction” eBay-style method of determining the interest rate, but lenders are now are restricted to a specific range of interest rates. (LendingClub simply sets the interest rates for you.)

In order to stimulate lending activity, they have a few incentives going on. If you sign up as a lender and bid on two loans (minimum total investment of $50), they will provide you a free $50 bonus. Click here and on the orange “Invest Now” button and you’ll see it. You must reinvest this $50 by the end of 2009. On top of that, Prosper is also offering a 1% or 2% “rebate” back if you invest at least $1,000 or $5,000, which would help juice your returns. Details:

Starting on October 12 if you invest $1,000 – $4,999 you will receive a 1% cash rebate into your Prosper account or, invest $5,000 or more and receive a 2% cash rebate into your Prosper account. Lenders must invest the funds during the promotional period of October 12 through November 15 by being a winning bidder on loan listings that result in funded loans. Notes purchased through the trading platform are excluded from the promotion. Once you have bid and invested on the loan listings your 1% or 2% cash rebate will be deposited into your Prosper account by December 4.


  1. I was going to try it, but “We’re sorry. Prosper lending is not available in Alabama…”

  2. States where you can’t join to lend: AL, AK, AZ, AR, DC, IN, IA, KS, KY, MD, MA, MI, MS, NE, NJ, NM, NC, ND, OH, OK, PA, TN, TX, VT, WV

    That seems pretty restrictive to me.

  3. I just signed up and it gave me the $50 immediately, no waiting for your own deposit! Looks like a fun way of investing.

  4. It seems to me that they try to add states over time. Thats been my experience with LC. I did one loan before the quiet period with the old prosper bonus. Its still current, and I remove the cash each month – looks like no lending in AZ

  5. Looks like a good promotion. Too bad my state is not allowed either.

  6. I still don’t think it’s really worth it vs. a short-term corporate bond fund, considering the extra hassle and the extra risk.

  7. I think I like LC better…so sticking with them. :)

  8. Looks like Lending Club has almost the same state restrictions. The only difference is that Lending Club allows Mississippi while Prosper does not. The only ambiguous one would be DC, if Lending Club allows DC then that’s another area they allow that Prosper does not.

  9. Oops. Looks like I missed the fact that Oregon is allowed with Prosper but not Lending Club, while West Virginia is allowed with Lending Club but not Prosper.

  10. From the Washington Post article:

    “Lending Club’s borrowers have a default rate of about 3 percent. Prosper’s default rate is about 5 percent.”

    I call BS on both of those statements. With extra-BS on the number for Prosper.


  11. Can anyone confirm Matt’s experience of receiving the $50 bonus immediately, without having to make your own deposit?

  12. I signed up and can confirm that the $50 is available immediately and requires no other funds to be transferred in. However you are required to link a checking (or possibly savings) account.

  13. MakingItWorkNJ says:

    I am in NJ and I’m able to lend money to folks getting my 14.96% at Lending Club. Been investing with them since 02/2009. I initially started with $350 just to see and was able to get it to $450 by reinvesting the payments before I decided that I should put $175 out of each paycheck (on top of reinvesting to compound my investment). Plus I got a $25 referral bonus from them (and a T-Shirt) by participating once in their Twitter promotion. I only have one late loan, knock on wood. The rest, pretty much on time.

    Prosper I cannot lend, BUT I had no problem getting a $1500 loan at AA. Unfortunately for those lenders, I will be paying that loan off early (the latest, March 2010). I’ve been prepaying the amount. I’m hoping I can refinance my high interest car loan with Prosper in March and they’ll see that I’m not a high-risk borrower. LC will not give me a loan because my credit file is too thin. :(

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