Prosper’s Peer-To-Peer Lending Promises An eBay For Money
A new peer-to-peer finance services aims to help groups of people come together online to lend up to $25,000 to someone they don't know, eliminating the bank middleman. The information week article describes the company as flush with venture capital. Prosper has about $20 million from Accel Partners, Benchmark Capital, Fidelity Ventures, and Omidyar Network. Prosper is like eBay for money–except that instead of auctioning products, it lists loans people want and lets lenders bid on them, alone or in groups.
Information Week reports that Prosper's rates range from 7.32% (low risk, low amount) to 24.04% (high risk, high amount). Zopa claims an average gross return of 7%. The sites make money on fees and attract a mix of ardent capitalists and wild-eyed dreamers.