Prosper Loans Reviews
Advance Amount and/or Fees8.9/10
Service and Support8.8/10
- Origination fees lower than P2P competitors.
- Plan to add HELOCs in 2019.
- Low APRs (6.95%) for top borrowers.
- Soft inquiries won’t lower credit score.
- No prepayment penalty on loans saves money on interest charges.
- Able to borrow only up to $40,000.
- Credit availability dependent on investor appetite (loans not FDIC-insured).
- Does not offer invoice financing.
See above info for Prosper Loans reviews. If you are a current or former Prosper customer, we’d like to hear from you. How was your experience? Are you a repeat user?
Located in San Francisco, California, Prosper is an online credit marketplace. Prosper provides qualifying applicants with personal loans through lender partnerships (institutions) and individual investors. Like National Funding, Sofi and National Business Capital, Prosper is a venture capital backed, financial technology marketplace.
More specifically, Prosper is a P2P credit platform, competing directly with Funding Circle and Lending Club (see our Funding Circle reviews and Lending Club reviews for more insight). There are particular similarities with Lending Club including location (both are headquartered in San Francisco) and loan limits (personal loans capped at $40,000).
Prosper does not directly offer business loans. Instead, owners will seek personal loans for business through the platform. Since all loans are unsecured, these rates can be significantly higher than traditional financing from a bank. Prosper personal loans are made through WebBank, a Utah industrial bank.
Interestingly, another Utah-based bank (Celtic Bank) also backstops several fintechs including Kabbage Loans (see Kabbage reviews to see how we scored them). This has caused some friction as some former customers allege Kabbage has avoided Georgia usury laws by getting the loans through a Utah bank (where there are no usury laws or rate caps).
The annual percentage rates on Prosper personal loans range from 6.95% to 35.99%. These factor in fees and charges, predominantly the origination fee. As you can see, quick business loans used for startup capital are not cheap (unless you have very good credit). And if you did, you could probably qualify for a cheaper, larger loan financing from a bank. But remember, the rates are fixed, which can be an advantage over other floating rate options such as lines of credit or using small business credit cards.
Borrowers on Prospers website enter the required information through an application process that takes a just a few minutes. Prosper also asks for the use of loan proceeds and provides the options in a drop down menu including:
· Personal loans for Business
· Home Improvement Loans
· Debt Consolidation loans
· Medical Expenses
· Large Purchases
· Auto/Boat/RV loans
· Household Expenses
How is Prosper Different from Factoring Companies?
Prosper is not an invoice finance company, utilized by B2B entities looking for small business funding. Rather, it facilitates personal loans utilizing its technology platforms to match borrowers with appropriate creditors. During an invoice factoring transaction, businesses obtain capital infusions by selling off the rights to collect on accounts receivable. The important distinction is that accounts receivable factoring does not incur debt, since it’s classified as an asset sale. Asset based lending is a loan, although the terms are used interchangeably.
Further, Prosper finances entrepreneurs who aren’t covered by factoring companies. Startup capital is a more expensive funding option for new ventures. Traditional ‘factors’ serve the needs of cash flow and net working capital strapped businesses with a high percentage of credit sales such as construction, food manufacturing, transportation or oil and gas operations.
Prosper Personal Loans Pros and Cons
In addition to the Prosper Loans reviews above, we reiterate the key pros and cons:
· Origination fees lower than P2P competitors.
· Plan to add HELOCs in 2019.
· Low APRs (6.95%) for top borrowers.
· Soft inquiries won’t lower credit score.
· No prepayment penalty on loans saves money on interest charges.
· Able to borrow only up to $40,000.
· Credit availability dependent on investor appetite (loans not FDIC-insured).
· Does not offer invoice financing.
For more information on Prosper Loans:
Who Uses Prosper?
Where does their capital come from?
Do they offer other specialty funding options?