Prosper

Prosper is a US peer-to-peer consumer-lending marketplace, founded in 2005, where individual investors can buy notes tied to personal loans, with a 20-year dataset across multiple credit cycles. In November 2008 the SEC found that Prosper had offered and sold notes without registering them and ordered it to cease and desist from violating Sections 5(a) and 5(c) of the Securities Act ([SEC order](https://www.sec.gov/files/litigation/admin/2008/33-8984.pdf)); its notes are now offered as SEC-registered securities. The honest question is whether the risk still pays: platform-reported average historical returns of 5.2-5.3% (as of 3/31/25) are now barely above T-bills for unsecured consumer credit. Notes cost $25 each, no accreditation required (state suitability rules apply), with a 1% annual servicing fee on outstanding note principal. Notes amortize over 2-5 year loan terms with zero liquidity; the secondary market closed in 2016. Prosper originated $2.2B in loans in 2024, but only about 7% flowed through the retail note channel. Notes are special, limited obligations of Prosper Funding LLC, paid only from the corresponding borrower payments and not secured, guaranteed, or insured; Prosper's annual report warns that a Prosper Funding bankruptcy could delay or reduce payments to note holders, on top of consumer credit risk ([Prosper 10-K](https://www.sec.gov/Archives/edgar/data/1416265/000141626526000012/prosper-20251231.htm)).