Wednesday, October 15, 2008

Prosper enters quiet period; halts lending

This has not only been a crazy week in the stock market - it's been a crazy week for p2p lending as well. Over the past couple of days Loanio has opened, Zopa has closed and Lending Club has emerged from their quiet period and announced a secondary market. Now, to top it off, Prosper is entering a quiet period to register with the SEC. Lending Club's registration took about six months.

This is the message Prosper has sent to members:

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.


Brian said...

I noticed that on Lending Club they are only selling Notes to investors in certain states now. Unfortunately my state of Oregon is not one of them. Will the same thing happen to Prosper when they emerge from their quiet period?

Matt said...

Borrowers with existing loans that have reached the 100% funded mark are being significantly adversely affected. Their loans cannot be bid down right now, so the listing will close during this quiet period and they will end up paying a higher interest rate.

Tom said...

Brian - I think you are probably right. However, it is likely that LC will continue to add states gradually. Prosper will too.

Matt - That's really too bad for those borrowers. The fees for borrowers were just raised too so they get hit twice. However, they can always cancel the request if they are not happy with their interest rate.