It seems like I am getting an email once a week from Prosper these days touting some kind of special promotion for investors. Both Prosper and Lending Club have routinely offered investor incentives but Prosper has certainly increased their activity on this front recently.
Prosper has come a long way since late December when they switched away from the auction based lending model and there was often less than 30 loans available for investors on their platform. Today, the number is ten times that; as of this writing there were 302 loans available for investors. They are obviously having little trouble attracting borrowers so they have turned their attention to wooing investors.
Wanted: P2P Lenders Who Handpick Loans
The latest incentive is a little puzzling to me. When you go to Prosper’s browse listings page you are greeted with 25 “featured” loans. There is no explanation as to why these loans are featured, but it is clear that Prosper wants investors to put their money into them. The latest 3% cash back incentive is just for the 25 loans featured on this page, it does not apply to any other loans on their platform.
They want investors to manually invest in these featured loans. If they do, and the loan is successfully funded, then Prosper will provide 3% cash back of whatever amount was invested. But you have to act fast – even though this special offer has been extended once it is scheduled to end at 11:59pm this Wednesday (in two days). You can read all the fine print here. Interestingly, this offer is not available to people who invest in these loans through automated plans, you have to invest manually through the featured listings page.
When I browsed through the 25 featured listings today I noticed a broad cross section of loans. They ranged in terms from a AA rates 3 year loan at 5.55% to a D rated 5 year loan at 27.99%. These certainly weren’t the best loans on their platform and most of them didn’t meet my loan criteria. About the only thing I saw that they had in common was that they were all ending soon (within the next 24-48 hours) so maybe they needed an extra push to get funded.
I am not sure if many investors who handpick their loans will be swayed by the 3% cash back. My guess is the purpose of this incentive is not so much about these loans. Sure, it might bring a few more dollars into these loans but I suspect what Prosper wants most is for you to visit their site. If an investor takes the time to login and view these loans then maybe they will stick around and invest in other loans. It also gives them an excuse to keep their name in front of their investors in an email.
Two Incentives Running Right Now
The incentives don’t just stop with the featured listings. In addition to the 3% cash back on featured loans, all month Prosper is offering a 2% cash back bonus to investors who kick in $25,000 or more. This applies to automatic or manual investors and is good for any loan funded during the month of March. While you can’t combine these two incentives, Prosper will make sure you get rewarded for the incentive that is the larger of the two. Here is some fine print from the 2% cash back promotion:
The promotional period for this offer will start on March 1, 2011 at 12:01AM, and finish on March 31, 2011 at 11:59PM, and all rebates will be paid by April 30, 2011. Only investments in loan listings placed during the promotional period that become funded Notes before the payout date will be considered “invested”. Invested funds can only qualify for one cash back promotion; in the event that a given investment qualifies for two different such promotions, the investments will count toward the qualification thresholds, if applicable, and the lender will be paid the higher of the two rebate amounts.
So Prosper has an incentive that anyone can partake in (there is no minimum on the 3% cash back on featured listings) and one incentive to encourage high rollers to invest more dollars.
Prosper’s Loan Volume is Increasing
During my discussion last month with Jim Caitlin, an EVP at Prosper, he suggested that volume at Prosper was about to take off. So far he appears correct. Loan volume looks like it is trending up nicely with month-to-date (MTD) loan volume up around 11% from February and around 29% from January. They are still well behind Lending Club’s numbers ($7.4 million vs $2.3 million MTD) but the trajectory is positive.
I would love to hear from other Prosper investors. Have you taken Prosper up on one of these many promotions? How do you feel about the featured listings? Please share your thoughts in the comments.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.