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Prosper's SEC Registration Declared Effective July 13, 2009 Prosper, a leading online destination for borrowing money and investing in personal loans, today announced the successful completion of its registration process with the Securities & Exchange Commission (SEC). As a result, America's largest peer-to-peer (P2P) loans marketplace has resumed for borrowers nationwide and lenders in 26 states with others soon to follow. Prosper is the first Internet auction-based P2P loans platform to have its registration statement declared effective by the SEC - a move that marks a significant breakthrough for the P2P lending industry. Prosper's SEC registration statement also covers the first Internet auction-based trading platform (sometimes referred to in financial circles as a "secondary market"), which makes its possible for Prosper lender members to sell their Prosper Notes to other individual and institutional investors. The note trading service is provided by Foliofn Investments, Inc., through their Folio Investing Note Trader platform. Prosper first introduced the concept of people-to-people lending in the U.S. when it launched in 2006. The goal was to create a platform where people could invest in each other in a way that was socially and financially rewarding. The concept quickly caught on. From the time Prosper launched up until the time it entered an SEC registration quiet period in October 2008, Prosper had grown to more than 800,000 members and facilitated approximately $180 million in personal loans, making Prosper the largest peer-to-peer loans marketplace in the world. "With the financial system in crisis, P2P lending - Americans investing in fellow Americans and small businesses - is needed now more than ever," said Chris Larsen, CEO and co-founder of Prosper. "It has been extremely frustrating to be on the sidelines in the teeth of a credit crunch. Nevertheless, we believe that completion of the SEC registration process for our auction-based model - a model that we believe is an extraordinarily powerful tool for fair price discovery for everyone involved in the transation - is a major watershed for the industry." A competitive auction marketplace, combined with loan-level transparency and extensive credit and social data, allows Prosper lenders to fine-tune their bidding decisions. Prosper has enhanced its auction model to include a hard bid floor for each listing, which helps lenders appropriately price for risk while investing online. The bid floor for each listing is calculated by adding the national average certificate of deposit rate that matches the term of the borrower loan to the minimum estimated loss rate assigned to each listing. For example, an A-rated listing with a minimum estimated loss rate of 2.0% is added to a national average certificate of deposit rate of 2.27%, resulting in a bid floor of 4.27%. In addition to the new bid floor, more layers of safety and vigilance have been added to the marketplace. Prosper has lowered its minimum bid requirement to $25 (previously $50), which should make it easier for smaller lenders in particular to diversify. Prosper has introduced Prosper Ratings - an improved credit grading system for loan listings - and now requires borrowers to meet the new minimum credit score requirement of 640 (previously 520). Prosper Ratings are based on the historical loan performance of 29,000 Prosper loans and are designed to better convey risk. Prosper believes the new Prosper Rating system, combined with the new minimum 640 credit score requirement and enhanced auction model, will make analyzing risk simpler and more robust than ever. A review of historical returns since inception based on the improved risk rating and credit segmentation system determined Prosper lenders' return on investment ranges from 7.19% for loans with a AA Prosper Rating to 4.59% for loans with an E Prosper Rating.

Prosper's SEC Registration Declared Effective

July 13, 2009

Prosper, a leading online destination for borrowing money and investing in personal loans, today announced the successful completion of its registration process with the Securities & Exchange Commission (SEC). As a result, America's largest peer-to-peer (P2P) loans marketplace has resumed for borrowers nationwide and lenders in 26 states with others soon to follow. Prosper is the first Internet auction-based P2P loans platform to have its registration statement declared effective by the SEC - a move that marks a significant breakthrough for the P2P lending industry.

Prosper's SEC registration statement also covers the first Internet auction-based trading platform (sometimes referred to in financial circles as a "secondary market"), which makes its possible for Prosper lender members to sell their Prosper Notes to other individual and institutional investors. The note trading service is provided by Foliofn Investments, Inc., through their Folio Investing Note Trader platform.

Prosper first introduced the concept of people-to-people lending in the U.S. when it launched in 2006. The goal was to create a platform where people could invest in each other in a way that was socially and financially rewarding. The concept quickly caught on. From the time Prosper launched up until the time it entered an SEC registration quiet period in October 2008, Prosper had grown to more than 800,000 members and facilitated approximately $180 million in personal loans, making Prosper the largest peer-to-peer loans marketplace in the world.

"With the financial system in crisis, P2P lending - Americans investing in fellow Americans and small businesses - is needed now more than ever," said Chris Larsen, CEO and co-founder of Prosper. "It has been extremely frustrating to be on the sidelines in the teeth of a credit crunch. Nevertheless, we believe that completion of the SEC registration process for our auction-based model - a model that we believe is an extraordinarily powerful tool for fair price discovery for everyone involved in the transation - is a major watershed for the industry."

A competitive auction marketplace, combined with loan-level transparency and extensive credit and social data, allows Prosper lenders to fine-tune their bidding decisions. Prosper has enhanced its auction model to include a hard bid floor for each listing, which helps lenders appropriately price for risk while investing online. The bid floor for each listing is calculated by adding the national average certificate of deposit rate that matches the term of the borrower loan to the minimum estimated loss rate assigned to each listing. For example, an A-rated listing with a minimum estimated loss rate of 2.0% is added to a national average certificate of deposit rate of 2.27%, resulting in a bid floor of 4.27%.

In addition to the new bid floor, more layers of safety and vigilance have been added to the marketplace. Prosper has lowered its minimum bid requirement to $25 (previously $50), which should make it easier for smaller lenders in particular to diversify. Prosper has introduced Prosper Ratings - an improved credit grading system for loan listings - and now requires borrowers to meet the new minimum credit score requirement of 640 (previously 520). Prosper Ratings are based on the historical loan performance of 29,000 Prosper loans and are designed to better convey risk.

Prosper believes the new Prosper Rating system, combined with the new minimum 640 credit score requirement and enhanced auction model, will make analyzing risk simpler and more robust than ever. A review of historical returns since inception based on the improved risk rating and credit segmentation system determined Prosper lenders' return on investment ranges from 7.19% for loans with a AA Prosper Rating to 4.59% for loans with an E Prosper Rating.