A Prosper Bank Review
This online lender is one of several online lending companies out there. In our Prosper loans reviews, we look at just what sets this online lender apart from the others.
They offer personal loans for business use. However, it seems as if applications for business loans always go to their partner, OnDeck. So this is regardless of personal credit rating or amount of credit requested. We look at the specifics and drill down into the details with respect to this company.
Background
The company is located online here. Their physical address is:
Prosper Funding LLC
221 Main Street, Suite 300
San Francisco, CA 94105.
They also have an address in Phoenix, Arizona.
You can call them at: (866) 615-6319. Get in touch with them via their contact page.
Code of Ethics and Business Conduct
They abide by a Code of Ethics and Business Conduct.
The main thrust of the Code is to support standard disclosures of conflicts of interests.
Employees have restricted access to company loans, in order to make it harder to exploit inside information. This is somewhat similar to the SEC’s insider trading rules for publicly traded corporations.
The Code also means their employees cannot accept substantial gifts.
However, this may be to deter overly enthusiastic but well-meaning clients who have a hard time taking no for an answer. With the Code, the company can be the ‘bad guy’.
The Code also specifically protects whistle blowers in case an employee witnesses and reports wrongdoing to management.
Going Public
On April 30, 2019, the company presented its second prospectus to the Securities and Exchange Commission. This is a document filed before presenting an Initial Public Offering (IPO).
The funding is for up to $1.5 billion.
If accepted by the SEC, the company could begin offering stock to the public in the 2020s.
Prosper Personal Loans for Business Use
From $2,000 – 40,000 is available but be sure to do your own Prosper personal loans review. They will check your personal credit score. But there is no information on a Prosper loan minimum credit score. Rates are “low” yet otherwise unspecified. For a Prosper personal loan, the company offers a fixed term of 3 or 5 years. You have a single monthly payment. There is no information on Prosper personal loan rates.
Prosper does not charge prepayment penalties. According to their investments page, rates of return for investors are between 3.4 and 8.3%. However, there is no information on rates for borrowers. Given that Prosper likely gets a cut of any interest paid, it is a reasonable assumption that borrowers will pay more.
The Prosper Credit Score
Per their prospectus, the company calculates a score for borrowers, “… calculated using the historical performance of previous Borrower Loans with similar characteristics”. The score comes from data from Experian.
The Score predicted the probability of a loan going “bad”, e. g. going more than 60 days past due within twelve months of the application date. The score works as the foundation of Prosper lending requirements.
Risk Modeling
To calculate the company credit score, the company developed a custom risk model by using their historical data in addition to a data archive from a consumer credit bureau. They used this Prosper loan calculator to determine if you’re a good credit risk for them.
They built the model based upon a population of users who applied for a Borrower Loan. This was so that their model would incorporate behavior which is unique to that population.
A Prosper loans credit score is in contrast to a credit score from a credit reporting agency. That is based on a much broader population.
However, borrowers from this lender are only a small subset of those under consideration when developing a standard consumer credit score. The company then used both the Prosper loan credit score and a borrower’s credit score to best gauge the level of risk. Their Prosper loan application would, of course, be under review.
Current Use of the Prosper Score
It’s not clear, but it appears Prosper is no longer using the Prosper Score. They are certainly not emphasizing its use on their site anymore.
Fees
There are no hidden fees or prepayment penalties.
Advantages
Advantages include fixed terms and no hidden fees. They say there is no Prosper origination fee.
Disadvantages
Disadvantages include an unspecified interest rate. Also, they will perform a hard inquiry on your personal credit. Are you wondering, “is Prosper loan safe?” The answer is: maybe.
Prosper Rates and More, on Balance
Given that the company likely to go public soon, their Board of Directors will be beholden to shareholder demands. This is as opposed to the requests of either borrowers or employees.
Furthermore, the company seems to shunt all small business loans off to OnDeck, anyway. It seems the best action for a small business owner to take is to bypass the middleman and go straight to OnDeck.
And finally, as with every other lending program, read the fine print and do the math. Go over the details carefully, and decide whether this option will be good for you and your company.
In addition, consider alternative financing options that go beyond lending, including how to build business credit, to best decide how to get the money you need to help your business grow. Share this if you agree with our Prosper loan reviews.
