Friday, November 07, 2008

The Financial Crisis Hits P2P Lending Websites...

We all know about how the financial crisis has led to a credit crunch. More and more people can't get a loan to buy a car, pay for college, or get a mortgage. Well, that scenario has extended from banks and other financial institutions all the way to peer-to-peer lending websites.

Once all the rage, P2P lending was hyped as the next revolution in the world of finance. Need to get a quick infusion of cash to pay for a broken water heater? Just borrow what you need from some regular Joe willing to lend it to you. Want to pay off those high-interest credit cards by taking out a more palatable 7% loan? No problem; plenty of people would love to lend it to you and make that kind of return.

But that silence you hear from the hype machine is now deafening. Symbolic of what's happening in the larger P2P lending world, has entered a "quiet period" and put all new loans on hold. Indefinitely.

From their website:

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources. As the appropriate securities authorities may consider a new loan listing to constitute the offer of a security, we are unable to post new loan listings on our site until our registration statement becomes effective.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

And the hits just keep on coming...


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