Peer-to-peer lender Prosper resumes service after SEC nod
Let the lending begin. Prosper, a popular Web portal that facilitates peer-to-peer loans, announced on Tuesday that it has been given the go-ahead by federal regulators to resume its lending platform in several U.S. states after wrapping up a detailed registration process with the Securities and Exchange Commission (SEC).
The SEC’s approval ends a nine-month enforced hiatus for the company and should come as welcome news to small businesses and entrepreneurs, many of whom are still struggling to find loans amid tight credit markets.
Prosper is now cleared to let lenders in 14 states and borrowers in all but a few use their online auction platform to buy loans and request to borrow money. The approval allows lenders in California, Colorado, Delaware, Georgia, Illinois, Minnesota, Montana, Nevada, New York, South Carolina, South Dakota, Utah, Wisconsin and Wyoming to use Prosper, and more states will gain access soon, the company said in a press release.
Launched in 2006, Prosper was the first online lending and borrowing platform of its kind in the United States and signaled an innovative new way for small business owners to raise funds. But last fall, the startup came under pressure from U.S. regulators concerned about the lack of oversight in the industry and was told to halt all operations until registering with the SEC.
Under the new regulatory parameters, Prosper has introduced a credit grading system for its loan listings, changed some of its bidding requirements, added transparency measures and amended its auction platform to help lenders “appropriately price for risk while investing online”.
For more details, see the full release.
(An earlier version of this post contained incorrect information about Lending Club, an online financial community that facilitates peer-to-peer loans. The company completed its SEC registration in October, 2008.)