Struggling to Prosper
Peer-to-peer lending programs were once heralded as a promising way for extending credit, but the initial reports suggest that the model still has a long way to go.
Prosper and Lending Club are several of the largest peer-to-peer sites. In just the last few years, both have witnessed huge huge gains in overall volume. That should underscores their appeal, both for borrowers as well as for lenders. These sites reduce many of the transactional costs involved in lending. Most of the underwriting work is shifted to lenders. The costs of hosting and maintaining sites is not de minimis, but nonetheless, it is hardly anything when compared to costs of maintaining a branch location.
One problem is that the Prosper loans are not performing. A report in 2010 said that almost 23 percent of Prosper (more…)

