Questions and Answers: Prosper Edition

Last week on my trip to San Francisco I sat down in the Prosper offices and met with many people on the management team. We covered a range of topics and I brought many of your questions to the table. Here are their responses.

Q. Any movement on new states being approved?

There has been some movement in this area and we will be able to announce one new state coming on board shortly. What we are doing going forward is trying to reengage the state regulators in a broader conversation at a higher level. We made applications to many of the states several years ago and a lot has changed at Prosper since then. We want state regulators to be aware of these changes.

Q. Is there anything individual investors can do to help along this process?

Not really. We need to deal with each state regulator in our own way. Editor’s note: contacting your local NASAA official certainly can’t hurt. Here is a link to the page that lists all the state regulators.

Q. What about opening the secondary market to different states the way Lending Club has done?

We have done some work in this area as well but are not able to make any announcements yet.

Q. In your latest financial statements it looked like you had available cash for another 9-12 months of operations. Are you planning a new funding round soon?

There has been a great deal of interest from the VC community in Prosper from both our existing team of investors and new investors looking to participate in this space. So, while there are no guarantees we are confident that another funding round will be available to us if and when we need it.

Q. What is the status of the bankruptcy remote vehicle Prosper Funding LLC?

We are in a quiet period right now regarding that application so we cannot comment on any progress.

Q. You have a much lower average loan size than Lending Club – any plans to allow larger loans?

Yes. In fact we increased the maximum loan size for B and C grade borrowers to $25,000 (from $15,000) earlier this month. We will continue to evaluate loan size as part of our overall risk management strategy.

Q. You increased the number of 5-year loans available on the platform earlier this year – are you going to be maintaining this higher percentage?

Yes. Our 5-year loans have been performing at better than expectations and we see them as an excellent product for both borrowers and investors.

Q. How have repeat borrowers been performing? It seems that their returns have declined a little this year.

You will remember about a year ago we made an adjustment to the interest rates on many repeat borrower loans so returns for investors are now closer to our expectations.

Q. Your collections process is not transparent at all. Can you provide details about this process?

Certainly. Editor’s note: I sat down at length with Prosper’s collection manager and we went through their collections process in detail. This warranted its own article so it will be shared in a blog post next week.

Q. With Prosper stats on Lendstats still offline there are no options for data analysis for Prosper investors. Are you working to make your data download easier to work with?

As a matter of fact we have some changes in the pipeline that should be released soon that will make analysis of the loan history on Prosper much easier.

 

  • 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.

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