If you read personal finance blogs, you’ve likely heard about prosper.com. Prosper.com is an on-line borrowing and lending service similar to ebay, but for micro-loans, instead of for stuff.
How the service works is borrowers request a certain dollar loan, and provide information about their credit, their desired interest rate, and the reason why they need the money. Lenders have the option to ‘bid’ on loans (e.g. loan a specific amount to specific borrowers), which they feel maximize their return and minimize their risk. Prosper.com is the corporate agent (e.g. borrowers technically borrow from prosper and lenders lend to prosper).
The fees seem modest, only .5 percent for lenders and 1 percent for borrowers.
At any rate, we’re going to try it out. Our initial capital will be around $500, and we’re targeting getting a 10% return after taxes and fees.
We are still getting the money transfer set up, but we will post more info as it becomes available…