Prosper.com, a peer-to-peer lending marketplace with approximately one million members and over $193 million in loans, entered into a Letter of Intent with new and existing investors for a Series D financing round in the range of $13.3m to $15.8m.
The company, which expects the closing to happen no later than April 15, 2010, has raised a total of $43m to date.
Prosper’s auction model provides users with the chance to get a personal loan or invest in loans.
People and institutions list and bid on loans using Prosper’s online auction platform. Borrowers can list loan requests between $1,000 and $25,000 and set the maximum rate they are willing to pay an investor for the loan, and tell their story.
People and institutional investors register on Prosper as lenders, then set their minimum interest rates, and bid in increments of $25 to $25,000 on loan listings they select.
In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers’ personal stories, endorsements from friends, and community affiliations.
Once the auction ends, Prosper takes the bids with the lowest rates and combines them to facilitate the funding of one simple loan to the borrower, and then issues what are called “Notes” to all the winning bidders.