Are people starting small new businesses often loan customers?
CL: We definitely see a lot people starting new businesses but it’s certainly not limited to this segment . In the credit crunch the financing spigot has been shut off so that even more established businesses are having trouble. Prosper is one of the few remaining open channels; plus you can get a better rate with Prosper as well. The big trend is that more credit-worthy people are coming to Prosper now because banks are in some cases just shutting off all customers. In the credit crunch it’s not that the people are becoming risky. It’s really more of a bank problem than a people problem. GC: Beyond a credit score, how do lenders connect with borrowers to get a better feel for who they are when making a loan? Do lenders and borrowers know each other? CL: Not usually, but it’s becoming increasingly common for friends to help borrowers they know. Borrowers can invite friends to give a recommendation and bid to fund a portion of the loan, and even bids as low as $50 can have a powerful im
