Have you ever heard of prosper.com? This website is a P2P community that allow regular people to lend/borrow from other people. Basically, they created Financial Napster 2.0. This might be another way to diversify your assets and to start thinking as a bank. You think that you are smart enough to be the banker and lend to the right individuals, here is your chance!

The system is pretty easy. You have two sides: Borrowers and Lenders. Lenders are registering on their own name or they can create groups with common characteristics such as personal profile, profession or goals. They post their request and provide information such as employment status, TDSR and motivation. The borrowing rate is determined by their credit score (established from E to AA) and the amount requested.

For lenders, they have access to borrowers’ credit bureau and other more specifics information such as a Q&A’s section. They also have the possibility to form lender groups. They don’t have to lend the full amount requested by the borrower. They can lend small amounts to several individuals and therefore spread their risk among their credit portfolio. This is exactly how banks are working despite the fact that they fund the full amount of your request.

Loans are usually over three years maximum which decrease your risk of default. The website is working as a platform where lenders and borrowers can meet. Obviously, prosper.com does not offer any guarantee that you will be repaid partially or fully by the borrowers. You are the only one playing in the game of credit.

Why people would use Prosper as an investing option? It can be an interesting way of diversifying your portfolio and earn money. You can make money by lending to several individuals by managing your credit portfolio carefully. There is little difference between the stock market and lending to people. In both cases you will place your faith and (most important) your money into a few individuals’ capacity of performing.

Why people would use Prosper as a lending option? Some individuals might have difficulties to prove their income source such as self employed and business owner. There are also people that are getting paid the Canadian way, but that is another story for a later post. For others, they might have run into financial difficulties due to a divorce, sickness or bad credit management. All those people will find in Prosper an alternative to regular banks.

But my question remains, as propser.com is getting bigger and bigger, where is prosper.ca? Is there any reasons why we don’t have a Canadian version of this company? Unfortunately, I don’t have the answer to this question. However, I will surely investigate this further and let you know about it!

 While I was writing this post, canadiancapitalist alreay find out about the answer. You visit his site here.

***This post was not made to promote prosper.com, just to give some thoughts on the p2p lending. I don’t know if it works as only US citizen can be part of this lending community***

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