Peer to Peer (P2P) loans are increasing in popularity for both individuals and businesses because they offer a safe, viable alternative when you might not qualify for a traditional bank loan. Among the top P2P lenders, Lending Club and Prosper stand out. Here, we compare the two to help you decide which is right for you. For more information about these and other lenders, check out our P2P Lending Reviews.
Prosper vs. Lending Club: What They Have in Common
Most P2P lenders like Lending Club and Prosper work in similar fashion. Your applications are assessed on more than straight credit history and may include your business's performance if you are looking for a business loan, for example. Once it has determined that you qualify, it posts your application on its website for lenders to assess. Loans are generally posted for two weeks to seek fulfillment.
Both Lending Club and Prosper offer unsecured loans, which means you do not have to put up collateral, such as a house or car. Lending Club's unsecured loans are up to a specific amount, and then it requires collateral. Both lenders have a similar debt-to-income ratio and credit-rating threshold, and its fees are similar as well. Our research also showed the two have similar customer satisfaction ratings.
Lending Club vs. Prosper: How They Differ
The most important difference between these two P2P lenders is how much you can borrow. Lending Club is able to provide loans for nearly 10 times what Prosper can, if you are looking for a business loan.
This peer-to-peer lending company originally provided personal loans only. However, it now offers business loans. If you qualify for a business loan, you may be able to get a much higher amount than with Prosper. Therefore, if your financial need more resembles the amount of a mortgage than a car loan, Lending Club is your best bet.
Business loans for more than $100K require a UUC lien. This gives Lending Club the right to acquire and sell liquid assets like inventory, cash and accounts receivable. However, you still don't need to put up real estate as collateral. In order to apply, you have to show your business has been running for at least two years and that you're making $75,000 in profits. If you do not qualify, you can still apply for a personal-for-business loan, but the loan amount is much less.
Your application is posted for two weeks. At the end of those two weeks, if it's not fully funded, you can choose to take the loan for however much is funded. Prosper does not offer this deal. During the process, you work with a dedicated loan assistant.
One drawback to Lending Club, however, is that it does not operate in all states. You should check the website or call customer service to find out if it offers loans in your state.
Prosper does not offer straight business loans, but rather personal loans for business. While you do not need to provide any specifics about your business, you will need to qualify based on your credit and investment risk.
This P2P lender has a three-stage verification process. You can find your loan rating and verification stage online. This information is also available to investors. Unlike Lending Club, Prosper will not give you a loan unless investors fund at least 70 percent of your loan.
It takes several days to get your funding, usually longer than Lending Club. However, Prosper is available in all 50 states.
Both Lending Club and Prosper are top choices for peer-to-peer lending for personal loans and business. Lending Club has some advantages Prosper does not, including pure business loans, higher amounts and the ability to take a partial loan. Prosper, however, is available in all states and has a process where you can see the progress of your loan.