SOURCE: Prosper Marketplace

April 20, 2011 07:43 ET

Prosper.com Reports Record P2P Lending Growth in the First Quarter of 2011

Peer-to-Peer Lending Activity Reflects Macro-Economic Trends, Including an Increase in Auto and Small Business-Related Loans

SAN FRANCISCO, CA--(Marketwire - Apr 20, 2011) - Prosper.com, America's first peer-to-peer lending marketplace with more than one million members and $225 million in funded loans, today released its peer-to-peer lending results for the first quarter of 2011 which showed a 38% increase in the number of loans funded in the first quarter of 2011 compared to the fourth quarter of 2010. The quarterly growth represents the largest quarterly gain since the company re-launched in July 2009. Month-over-month loans rose 27% in March versus February, while the average dollar size of loans funded also rose, showing a 97% increase in March.

While securing credit through banks remains tight for small businesses, Prosper's loan originations data for the quarter showed that entrepreneurs and small business owners are turning to P2P loans to fund business development and growth. According to Prosper's market data, personal loans to fund small businesses have shown a steady increase in dollar volume, with a more than 73% increase in the past seven months and continued growth in the first quarter of the year.

"At first I thought it was too good to be true, but the speed of funding and the great rates proved to me that, on Prosper.com, small businesses can get access to the affordable small business financing they need," said Lydia Hamilton-Monnie, Owner of Boutique Larrieux, a Milwaukee-based plus size retailer. "With Prosper.com, I've been able to get the money to open my doors and grow my business."

Personal loans to fund auto-related purchases increased 54% on Prosper from December to January and rose more than 30% in February and March. This comes as the U.S. auto industry experiences a rebound in sales, and borrowers are finding personal auto loans on Prosper as an easy way to lower their monthly payments.

As loans for small business and auto showed consistent growth, debt consolidation and home improvement continued to be the bulk of loans funded through Prosper.com. Debt consolidation was 50% of first quarter originations as consumers find P2P financing to be an affordable way to drive down their cost of credit.

"P2P lending continues to expand and gain broader adoption, particularly as individuals and small business owners discover the simplicity of the process, the speed with which they can secure financing and, most importantly, the attractive personal loan rates available," said Chris Larsen, CEO and co-founder of Prosper. "As the U.S. economy gradually recovers, borrowers are turning to our personal loan marketplace to purchase the car they may have been holding off on buying during the downturn. Similarly, small businesses, which have been hit particularly hard by the recession, are starting to increase investments in their operations to drive growth."

Prosper was founded as a way to bring a more efficient, transparent and trustworthy process to consumer finance, removing the barriers of traditional financing and giving consumers direct access to affordable funding starting at 7.4% APR*. For lenders, Prosper delivers a new asset class with annual returns averaging 10.4**, the best in the category.

To learn more about our lender returns, competitive personal loans, small business loans and auto loan rates and other market updates, please visit http://www.prosper.com.

To register to automatically receive Prosper's Market Surveys, click here to send an email with "SUBSCRIBE" in the subject line.

Prosper Statistics for January 2011:

Prosper
Rating
Borrower RateEffective Lender
Yield
Estimated Annual
Loss Rate
Estimated Annual
Return
Average Loan AmountLoan
Volume
% of Funded Loans
AA7.80%6.81%1.48%5.32%$11,637$500,40015%
A10.87%9.84%3.46%6.38%$9,449$472,45014%
B14.85%13.63%5.67%7.96%$9,324$792,52124%
C20.02%18.58%8.52%10.06%$7,960$199,0006%
D27.87%26.23%10.56%15.67%$5,237$932,20028%
E32.11%29.68%14.29%15.40%$5,176$393,35012%
HR35.00%31.99%22.02%9.97%$5,750$11,5000%
Total19.39%17.89%7.36%10.53%$7,193$3,301,421100%

Prosper Statistics for February 2011:

Prosper
Rating
Borrower
Rate
Effective
Lender
Yield
Estimated
Annual
Loss Rate
Estimated
Annual
Return
Average
Loan
Amount
Loan
Volume
% of
Funded
Loans
AA6.91%5.91%1.52%4.39%$8,496$620,21317%
A9.56%8.54%3.43%5.11%$7,669$467,79713%
B14.73%13.50%5.80%7.69%$8,614$792,48522%
C19.53%18.10%8.53%9.58%$6,919$332,1279%
D25.93%24.31%10.51%13.80%$5,238$1,021,49928%
E31.68%29.27%14.70%14.57%$4,648$371,80010%
HR31.54%28.75%18.30%10.45%$3,163$50,6001%
Total18.26%16.83%7.41%9.42%$6,472$3,656,521100%

Prosper Statistics for March 2011:

Prosper
Rating
Borrower
Rate
Effective Lender
Yield
Estimated Annual
Loss Rate
Estimated Annual
Return
Average
Loan
Amount
Loan
Volume
% of
Funded
Loans
AA7.27%6.27%1.53%4.74%$9,350$514,27211%
A9.48%8.46%3.45%5.01%$8,768$640,06314%
B13.94%12.72%5.72%7.00%$8,381$670,46115%
C19.28%17.86%8.44%9.42%$6,513$481,96911%
D25.44%23.83%10.57%13.26%$5,645$1,411,13331%
E31.15%28.77%14.70%14.07%$5,023$547,48712%
HR31.76%28.96%18.30%10.66%$3,146$248,5466%
Total19.78%18.25%8.51%9.74%$6,269$4,513,931100%

* Based on personal loans made to borrowers with an AA Prosper Rating. APRs by Prosper Rating range from 7.43% (AA) to 35.84% (E). Rate offered is based on Prosper Rating and other factors and the actual rate may differ. Eligibility for a loan is not guaranteed and requires that a sufficient number of investors commit to fund the loan. Refer to Borrower Registration Agreement for all terms and conditions. All loans made by WebBank, a Utah-chartered Industrial Bank.

** Net Annualized Returns represent the actual returns on Borrower Payment Dependent Notes ("Notes") issued and sold by Prosper since July 15, 2009. To be included in the calculation of Net Annualized Returns, Notes must be associated with a borrower loan originated more than 10 months ago; this calculation uses loans originated through May 31, 2010. To calculate Net Annualized Returns, all payments received on borrower loans corresponding to eligible Notes, net of principal repayment, credit losses and servicing costs for such loans, are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans. To annualize this cumulative return, the cumulative number is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. Net Annualized Returns are not necessarily indicative of the future performance of any Notes. All calculations made as of March 31, 2011.

Definitions
Borrower Rate: The interest rate borrowers pay on their Prosper personal loan.

Effective Lender Yield: Effective Lender Yield is equal to the Borrower Rate: (i) minus the servicing fee rate, (ii) minus estimated uncollected interest on charge-offs, (iii) plus estimated collected late fees.

Estimated Annual Loss Rate and Estimated Annual Return: Estimated Annual Return is the projected average annual return on funds invested in all loans with a certain Prosper Rating originated on our platform during the month. Expected Annual Return is calculated by subtracting the Estimated Annual Loss Rate for those loans from the corresponding Effective Lender Yield. The Expected Annual Loss Rate is the estimated principal loss on charge-offs for loans originated during the month, and is based on the historical performance of Prosper loans for borrowers with similar characteristics. The calculations of Effective Lender Yield, Estimated Annual Loss Rate and Estimated Annual Return require significant assumptions about the repayment of loans, and lenders should make their own judgments with respect to the accuracy of these assumptions. Actual performance may differ from estimated performance.

Loan Purpose: Borrowers who post listings in the Prosper marketplace are asked how they intend to use their peer-to-peer lending personal loan. The loan purpose reflects borrowers' statements of intended use of loan proceeds and is the percentage of total dollars funded for the month. Prosper does not verify or confirm after funding how loan proceeds are used.

About Prosper
Prosper Marketplace Inc. is America's first peer-to-peer lending marketplace with over one million members and more than $225 million in funded loans. Prosper allows people to invest in each other in a way that is financially and socially rewarding. Borrowers list loan requests between $2,000 and $25,000 with loan terms of 1, 3, or 5 years. For example, a $5,000 loan with a 3 year loan term for a person with a Prosper Rating of A would have a 10.99% APR and scheduled monthly payments of $158.77, though the last monthly payment may differ slightly due to rounding. Individual and institutional investors invest in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers' personal loan descriptions, endorsements from friends, and community affiliations. Prosper handles the servicing of the loan on behalf of the matched borrowers and investors.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN. Prosper has raised $57.7 million in venture capital and is backed by financial and technology luminaries including, Jim Breyer of Accel Partners; Bob Kagle of Benchmark Capital; CompuCredit; Omidyar Network; Capital One Co-founder Nigel Morris of QED Investors; Court Coursey of TomorrowVentures; and Larry Cheng of Volition Capital.

Notes offered by Prospectus.

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