Real Applications of the Social Network/Auction
Person-To-Person Lending Flourishes on Web
by Jessica Smith
Morning Edition, NPR, November 2, 2007
“Welcome to the era of coffee shop money lending.”I read this story on NPR.org about person-to-person lending on the Internet which just seemed like an amazing idea. It is fascinating that this exists and that it seems to work.
The idea is that a person writes a profile of how much they want to borrow and for what and what their top limit on the interest they are willing to pay and then people bid on the loan request. The borrower is vouched for by friends, colleagues or family and the amount raised from various lenders is consolidated by Prosper.com and then the money is distributed. These are not small loans either- they can run from $50 to $25,000. It seems a risky proposition but interesting to see how people will take things into their own hands.
"Prosper generates revenue by collecting a one-time 1% or 2% fee on funded loans from borrowers, and assessing a 0.5% or 1% per annum loan servicing fee to lenders. Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital Partners, and Omidyar Network, Prosper has raised $40 million. Prosper's marketplace platform is patent pending."