•  Consumer Loans

Prosper Review

Prosper is a P2P online lending platform offering fractional investments in consumer loans.


  • Investment Types: Consumer Loans
  • Sectors: P2P Loans
  • Minimum Investment: $25
  • Advertised Returns: 7.75%
  • Open to all investors
  • Regular cashflow
  • Detailed data available on each loan allows for highly customized investment strategies
  • Automated investing feature
  • Services available across the entire US, catering to various property types.
  • Low investment minimums
  • Need to invest in many, many notes (100+) to achieve diversification
  • Loans are unsecured
  • Loan terms are only 36- or 60-months
  • Average returns appear to be declining over time


This Prosper Review will help you learn more about Prosper's investment offerings, including how the alternative investments on Prosper are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

Prosper was the very first onilne P2P lending platforms, and along with Lending Club remains one of the two main players in the consumer P2P loan space.

Types of investments Prosper offers

Prosper is effectively (if not technically) a 2-sided marketplace, matching borrowers looking for personal loans up to $35,000 with investors willing to loan to them. All of the loans are divided into $25 fractional notes, so each loan is spread across dozens or hundreds of investors.

What do you get when investing with Prosper?

Each loan made by Prosper is graded from AA-HR (with A being the lowest risk and HR being the highest risk). High-risk borrowers are charged higher interest rates, though they are in turn much more likely to default.

How does Prosper make money?

Prosper charges a 1% fee on the monthly payments collected from borrowers. If a loan is delinquent, additional fees are collected to cover the cost of collections (whether that’s done in-house by Prosper or via a 3rd-party collector). Unlike LendingClub, Prosper does not provide details on the amount of that compensation.

Potential returns and cashflow

Prosper advertises an average return of 7.75%, a number that has been declining in recent years. In part because they’ve been around for several years, and in part because of the substantial disclosure requirements from the SEC, there is a wealth of historical data about note performance. Individual investor performance depends heavily on diversification as well as the particular mix of loan grades and other borrower factors.

Payments are collected montly and deposited regularly into your Prosper account, where they can optionally be automatically re-invested.

Breadth of offerings on Prosper

Prosper processes a large volume of loans, so there is usually a wide selection of available notes. In some cases there may not be notes available that meet your specific criteria, though the automated investing option will match you with a note that meets your criteria when one becomes available.

In addition to several automated risk profiles, you can also manually set a note profile mix, or even individually pick loans to invest it.

There are also two 3rd-party firms that emerged to provide alternative (and they would argue more sophisticated) algorithms for selecting notes and managing investments across both LendingClub and Prosper. The firms, LendingRobot and NSR have recently merged, and like Prosper have also been tuning their more recent offerings more toward institutional investors.

Regulatory framework

The regulatory framework for P2P lenders is quite distinct from the rest of the investment crowdfunding ecosystem. The borrower side of the equation is regulated via the Consumer Financial Protection Bureau and the Federal Trade Commission, while the lender/investor side is regulated by the SEC. As part of the process in place, each loan is registered and filed with the SEC to comply with securities regulations.

Once a borrower applies for a loan, the platform grades the loan quality and files a detailed disclosure with the SEC. The loan is then made available to prospective investors; once enough investors express interest, the loan is funded.

While Prosper does perform a credit check, much of the application is information supplied by the borrower and not independently verified.

(Here’s much more on the gory details of the rather-complicated regulatory landscape around P2P lending from Harvard Business Law Review.)

This review was first published on 25 March 2017.

Our Rating

Very Good

More about our ratings

Share this review:

  • Sponsored content
  • Other Investment Opportunities

    CEO interviews