Prosper closed September with another solid performance. They issued $171.6 million in loans last month up from $167.6 in August which is a 2.4% increase. While this is the smallest percentage increase since their down month in February I should point out that on a dollars issued per business day basis the increase is 12.7% over August.
While the vast majority of loans are going to the whole loan platform I did regularly see over 200 loans available last month on the fractional platform. While this is far less than Lending Club on any given day at least there are some high yielding loans that are staying on the platform for investors. As of this writing there are 21 loans yielding 15% or more available to investors. There was a time a few months back when every loan of 15% or more was being snapped up in minutes.
Still, I would like to see more emphasis on retail investors from Prosper. They keep saying this is their plan and we are seeing some minor improvements here but more needs to be done to attract new retail dollars to their platform in my opinion.
Below are some of the key stats for last month with most metrics staying very consistent over previous months.
Average loan size: $13,291
Average dollars issued per business day: $8.6 million
Percentage 36/60 month loans: 66.0%/34.0%
Average interest rate: 14.96%
Percentage of whole loans: 90.8%
Average FICO score: 700
Note: If you are wondering about the Lending Club numbers they have unfortunately stopped updating their new loan data in real time. Their latest origination numbers are from the second quarter. You can take a look at these numbers in this post.
Congrats to the Prosper for this continued successful track record.
“Percentage of whole loans: 90.8%”
Difficult for individuals to buy notes in Prosper.com?
If you are using the API and not being terribly picky it’s not that bad. I focus on C and riskier with one or two other criteria and I stay pretty well invested – it’s spiked up to 2-3% cash before, but usually I sit right around zero cash.
90.8% is all institutional in whole loan pool, and then of course there are some of them bidding 10% or more in the fractional pool – I’d guess institutional is 95% of the money on the platform.
One would think at 90.8% whole loans it would be difficult for retail investors but like Prescott, I am staying pretty much fully invested. Having said that Prosper needs to do a better job attracting retail investors. The reason there are fewer loans for retail is because they just don’t have the investor base to support a larger percentage of fractional loans.
Tough month – easy fix with a near prime product 😉
What do you guys think of karrot? The new consumer platform from kabbage.
They’ll likely lend to anyone who doesn’t have current accounts in collection. I have no doubt that the bar will be set substantially lower than Prosper. So if they execute as planned the interest rate range is going to be significantly higher, with the average number in the the high teens to low twenties, I’d guesstimate. Of course default rates would also be significantly higher, though I’d bet serious money that management at the company will deny this vehemently………………with some version of the we’ve found a way to better evaluate risk bs.
Regardless, average investors would very likely do just a little better than they do at Prosper & LC during the good or stable economic times……………but get simply defiled during the bad ones.
The big difference between Karrot and LC/Prosper is that they are a balance sheet lender so borrowers will get their money quicker. This also means that investors will not be able to participate.
They are definitely going after the LC/Prosper borrower – with a minimum interest rate around 6%, a loan size up to $35K and 3 & 5 year loan terms. You can read coverage on Techcrunch from a few days back:
https://techcrunch.com/2014/09/24/with-karrot-kabbage-digs-into-lending-clubs-and-prospers-consumer-loans-business/
I disagree. I think that they are aiming lower than Prosper. I just read the NY Times article you listed on the weekly roundup & it is quoting a 21% average interest & an undisclosed minimum FICO. Furthermore, I cannot imagine that anyone except the truly desperate borrower will put up with their invasive verification procedures with the bank account passwords etc., as described in that article.
The bank passwords won’t be given to Karrot – likely they are using plaid, yodlee or giact. This is much faster bank verification than say ACH challenge deposits- it makes sense to get people their money faster, especially when they don’t need to be posted at a few windows a day for funding.