As Prosper Gets The Green Light, A Comeback For Peer-to-Peer Lenders?

As banks clamp down on consumers’ ability to get credit, alternative credit sources could be getting a boost. On Friday, the Securities and Exchange Commission gave its blessing for Prosper.com–one of the largest players in the peer-to-peer lending space–to register its loans as securities, allowing the company to reopen its doors nationally after it entered a quiet period last October. The completion of the SEC registration process “means loans that are now purchased on Prosper are technically registered securities which means they can be resold in the secondary market,” said Chris Larsen, chief executive and co-founder of Prosper. As part of the registration process, the SEC approved Prosper’s auction-based platform, which works like an eBay-style marketplace for would-be borrowers and lenders. It’s the first time that regulators have approved a pricing mechanism where the final price of a security isn’t secured in advance. By contrast, other peer-to-peer players offer lenders a range of fixed rates.
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