Yesterday afternoon we took a look at the status of our loans on Prosper.com. To our chagrin, it seems 8 of our 34 loans are late. This means that approximately 23% of our prosper portfolio isn’t current. To some degree a high level of delinquencies was to be expected, especially since we made a conscious decision to invest in high risk loans, but 23% of our loan portfolio being late is not exactly what we had in mind.
So, for future loans via prosper we’ve decided to change our lending standards. We are going to target pretax returns of 18% for lenders who have prosper ratings of C or better. The graph above shows how Prosper assigns a value to roughly approximate a borrower’s credit. It may take more time to find suitable borrowers, but time is something we do have.