Hard Money

Interested in becoming a banker? Now, you can, with several different avenues. The largest currently are Prosper and Lending Club. There’s a few others, and a couple in startup and pre-startup (hint hint). Here’s a cool ABC News story about Lending Club and a guy who got 15 bank rejections for his loan application for seed money for a business before 74 strangers on Lending Club listened to his pitch and chipped in for $25,000 total.

A few weeks back I opened accounts on both Prosper and LC and deposited $1,000 in each just to test it out. I’ve used the automated bidding mechanism to create a portfolio with a large chunk at moderate risk and a small bit (15% of portfolio) at higher risk. So far, Prosper has lent out $900 in 18 loans at an average rate of 15.59%. LC is more difficult to work with for the way I want automated bidding to work (I’m not interested in people’s stories, only their credit grade, debt ratios, and so on — all the classic criteria). Lending Club has now lent out $750 in 29 loans averaging 12.05%.

I’ll be blogging much more about this in the future. The surface of what can be done with this in terms of risk management, creative hard-money finance, international arbitrage, and so on, has not even been scratched.

HT: Rate Ladder

Richard Nikoley

I'm Richard Nikoley. Free The Animal began in 2003 and as of 2021, contains 5,000 posts. I blog what I wish...from health, diet, and food to travel and lifestyle; to politics, social antagonism, expat-living location and time independent—while you sleep—income. I celebrate the audacity and hubris to live by your own exclusive authority and take your own chances. Read More


  1. Richard Nikoley on April 8, 2008 at 15:43

    I was disappointed in the news, certainly not surprised. I'd bet the story under the story is the touch of regulators.

    I've been looking at P2P for some time and I figured there would be a securities issue owing to the way these loans are originated and then sold.

    Hopefully it will all be sorted out in time. The advantage of dealing with the securities issue is that if P2P lender wish to create a secondary market, this will all have to be dealt with eventually anyway.

  2. RateLadder on April 8, 2008 at 15:19

    Glad to hear you are trying p2p lending… what did you think of lending clubs news today?

  3. Matt on April 10, 2008 at 11:26

    This site summarizes Prosper stats. Very handy:

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