Fascinating article comparing the genesis, and evolution of Prosper and Kiva. There are dramatic similarities, and differences.
It is not surprising that Prosper’s reach is so much broader than Kiva’s. In its first seven months, Prosper’s 100,000 registered users have made $22 million in loans, averaging about $5,000. Kiva’s 15,000 lenders have made $1.2 million in loans, with an average loan size of $500. That translates into success for both companies, whose founders agree that there is room in the wide-open field for both models.
Says Kiva’s Shah: “Right now there are so few people doing this and it’s so experimental, we need to help each other. If either model has a significant flaw, it could destroy the credibility for everyone.
Source: A Tale of Two Lenders
Do any of the US readers have experience with Prosper, or Kiva, either as lender or borrower? Please feel free to share what you can about the experience in the comments.
Bankwatch 
Here is a great story about workings of Prosper from a customer. In the interests of privacy, this individual asked me to post the comment for him.
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I must say that I am fascinated with Prosper and have utilized this site as a lender (basically an experiment that has worked well thus far). I fully recognize we are very early in the Prosper lifecycle and lenders should only wager what they are willing to lose (sound like gambling advice?). I have returned 11.61% APY (recently had my first default…to be expected) so no real complaints with regard to rate of return. That said; a few defaults could easily wipe out all of my profits and I am concerned with fraud. By no means is Prosper perfect and there seems to be a decent risk of fraud no matter how carefully you screen listings before bidding on them. One could argue that unless the interest rates are substantially higher than an online savings account or money market account, you might not want to bid on some of them (i.e.; is a AA credit at 8% all that great given it’s an unsecured loan when I can get 5% from Citibank and don’t have to worry about reinvesting on a monthly basis?). Biggest problems right now seem to be a lack of risk management (potential fraud), lack of liquidity (3-yr. loan duration) and the difficulty of keeping cash actually invested on a monthly basis (cash management). The cash management issue is huge right now for Prosper as $50 is the current minimum bid. You get principal and interest payments on a monthly basis…so if you have $42 come in, you cannot readily re-invest and effectively have cash sitting in your account not earning interest. However, if you have enough in the site to generate $50 each month, autofund can take care of that if you are willing to blindly bid on credit rating, interest rate, etc. While I am not a borrower, state limits play a role in the ability to obtain financing. For example, if you live in Minnesota, 8% is the maximum interest rate which will really only allow a very select few AA borrowers get funded. However, in Alabama, the maximum interest rate is 30% so basically any borrower can get funded.
Some Lender Tips:
1) Stay away from ‘Groupthink.’ Just because a loan has a lot of bids does not necessarily mean it is a worthy loan. If you can’t find any listings that meet your requirements, don’t lower your standards to chase deals (i.e., rebidding) or chase markets (i.e., lowering your lender rates).
2) I would be wary of groups that have high rewards going to the group leader. The group leader’s primary interest could be easy money without having to risk anything.
3) Far and away the most important statistic on Prosper is the number of loans that you make which default. APR doesn’t mean a thing next to default rate.
4) The Experian numbers are meaningless. Prosper defaults bear no resemblance to them (at least the last time I looked a few months ago).
I have a very good friend that returned 21.20% in 2006 as a lender on Prosper which is unbelievable (at least in my book). This same friend borrowed $15K to partially finance an investment property at 9.XX%.
On 12.31, zzzzzz from Prosper noted: “Actually, we are working on creating a secondary market where you can sell loans that you own to other lenders at any time. It will probably not be available yet for several months, but it is one of our highest priorities.”
I am greatly looking forward to attending Prosper Days on February 12 & 13 in San Francisco.
How did I miss this article way back in January? I just discovered Kiva.org tonight and immediately signed up, invested $25 and blogged about it. I love this at one end of the spectrum and prosper.com/CommunityLend at the other.
Any more thoughts about Kiva since your initial post in January?
There is a good story about Kiva in the Star this month.
http://www.thestar.com/article/224975