Prosper, America's first people-to-people lending marketplace (think of it as an eBay for loans) was created to make consumer lending more financially and socially rewarding for everyone.  In short, it is an online community where prospective borrowers and lenders can find one another - bypassing high-interest credit card companies and bank loans (on the borrowing side) and 5% CD's and the stock market (on the lending side).

Potential borrowers create a listing on Prosper’s online auction platform. They set the interest rate and amount they’d like to borrow, while lenders bid on these listings. Borrowers now have another option besides high-interest credit cards, pay-day loans, and banks to acquire money, while small-time lenders can suddenly compete with banks and credit card companies like never before.

Prosper uses the same criteria commonly used by institutional lenders, such as credit scores, DTI (dept-to-income ratios), etc. to evaluates one’s credit worthiness, however; it is the marketplace which decides on funding the loan.  After a potential borrower creates their listing, the auction begins as people who lend bid on the loan. Once the loan is fully funded, the interest rate is bid down. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan. Prosper handles all the on-going loan administration including loan repayment and collections on behalf of the matched borrower and lenders.