Peer-to-Peer Online Loans

Prosper.com is an online peer-to-peer lender. Over S150 million (in amounts as small as $50) have been lent and borrowed by over 750,000 members of the site.  The business model may prove to rewrite the way people get loans, whether they need money for school, to build a business (an internet business perhaps), or for just about any other funding need. The model isn’t without its problems. In November, the SEC shut them down. for violation of the Securities Act of 1933. But on April 28th, Prosper.com was given special dispensation in California and, for now, it can operate in that state.

There are other internet sites offering peer-to-peer financing, for example DebtX: As The Economist magazine reports, While “Prosper aggregates lots of small bids, from ordinary investors, DebtX sells larger loans in asset classes such as commercial property…”

There are still many question to be worked out: “As of August 2008, approximately 18.5% of all money loaned on Prosper from inception (February 2006) through June 2008 are in some form of delinquency” But imagine how all of this internet innovation is changing — or redefining —  long-time traditional finance.

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