Hello Friends!  Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice!  As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisers prior to making any investment decisions based on information ont his website.

I wanted to stop for a second and share with you a fascinating website that I have discovered courtesy my nephew Ryan K. who pointed it out to me last month, with a new twist on person-to-person borrowing/lending.  

I shall try to limit my digressions like this, and I do indeed receive a referral fee (full disclosure) if you do sign up through the above link.  But it is indeed a fascinating, albeit potentially risky, venture.

In a nutshell, the website, started by one of the E-Loan founders and other web pioneers, involves individuals looking for short-term loans (36 month duration) of limited amount (up to $25,000) in an unsecured fashion.  They apply to Prosper.com and submit a credit application.  Much like any loan company, Prosper obtains a credit report but instead of loaning the money, the request is listed, eBay-style, and multiple investors are given the opportunity of bidding for a portion of the loan.  Generally bids are in the $50 to $100 range. 

If the borrower is successful, then the entire 'consortium' of lenders, (both lender and borrower remain anonymous to each other) become the lender and the borrower pays back a portion of that loan to each lender monthly (Prosper handles the distribution of funds).  If the borrower fails to pay on time, then the usual collection process is initiated.

Prospers allows prospective lenders the right to sort through the loans (again with anonymous borrowers) based on credit ratings and other criteria.  Many highly rated loans are placed with ratings of 8% and higher and rates climb into the 20% range as the riskiness increases.  Of course, defaults on loans, which are then sold to collection agencies, will diminish one's overall performance and certainly could even result in a loss.

Anyhow, it's a fascinating site and if you use this link and do get involved, I do get some credit for referring people over.  But I am intrigued with the entire process.  It is a win-win for the little guy who now have an opportunty to obtain funds at a rate lower than otherwise would be possible.  For the lender, this represents an opportunity to receive a return on one's funds far greater than available in a CD or Money Market!

Bob