Prosperity

Step by Step Credit Repair Guide

2009-09-06T19:55:00.000-07:00

Managing Debt and Credit

2009-07-28T16:45:00.000-07:00

Avoiding credit card overload increases your opportunities to save and invest for important goals.

1. Managing Debt and Credit

Credit was once defined as "Man's Confidence in Man." But in fact, the definition of credit today is more like "Man's Confidence in Himself." Using credit today means you have confidence in your future ability to pay that debt. Forty years ago, your parents may have paid cash for their homes and their cars, a largely unheard-of event today. If they borrowed money at all, chances are it was from a relative or friend, and not a financial institution.

Today debt and instant credit are part of our everyday lives. The convenience of instant credit, however, has taken its toll. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced.

What is the balance between using credit wisely and staying out of overwhelming debt? Let's look at the facts and some pros and cons.

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Credit Calculator

2009-07-27T14:38:00.000-07:00

Credit Calculator
Find out the difference in interest between a fixed payment and the minimum credit card payment with bankrate.com's financial calculator.

5 steps to do-it-yourself credit repair

2009-07-19T07:45:00.000-07:00

Blotches on your credit report cost you. But, don't despair. It's never too late to become credit worthy -- just get started, and remember that it won't happen overnight.

Here are 5 steps for improving your credit rating:

1. Order your credit reports
Find out what the top three credit bureaus -- Equifax, TransUnion and Experian -- are saying about you. It's likely that they're all slightly different. Yes, different! Creditors don't have to report to all three credit bureaus, so they typically report to the credit bureau to which they also subscribe.

Time and money is wasted, says Steve Rhode, president and co-founder of Myvesta.org, if you only order a report from one credit bureau. You can order a credit report from each bureau for free once a year through annualcreditreport.com.

If you've been denied credit, insurance or employment because of your credit report, you are entitled to a free copy of your report from the reporting agency. The company you applied to must supply the credit bureau's name, address and telephone number. You have 60 days after receiving the denial notice to request your copy.

2. Examine your reports carefully
Nearly every consumer has an error on at least one credit report from one of the major credit bureaus, says Rhode. Credit bureaus generate your report on information they receive from your creditors; they don't verify.

Keeping your credit report a true reflection of you is -- like it or not -- your job. Get ready to clean and polish. Carefully look for everything from typing errors, outdated and incomplete information to inaccurate account histories. You'll want to make a thorough list of items you dispute and why. Be meticulous.

Find The Best Credit Card Type

2009-06-22T00:38:00.000-07:00

There are a variety of credit card types, each claiming to offer you the best possible deal. Finding the programs and incentives that works best for you is key to maintaining a good credit card history.

Each type of credit card offer different benefits. Some are geared toward the individual consumer, while others are set up to work for small businesses. To find the type of card that best fits your needs, let's review some of the options.

Business Cards

A business credit card offers the business owner an opportunity to keep business and personal expenses separate. The card may offer special business rewards and saving opportunities that go above and beyond what the individual card owner has. Since money management is essential for running a business successfully, this card may offer an expense management service that helps track outgoing money. You can obtain additional cards for employees who may need them for travel expenses and such. You may also have a higher credit limit than you normally would on an individual card.

Student Cards

Many credit card companies will issue student cards with lower credit limits and fewer incentives, helping new card users to keep their spending in check. However, note that many college students now graduate with credit balances averaging from $3,000 to $7,000. With high interest rates, these debts can be a real problem to pay off.

Debit Cards

Prepaid debit cards are 1 type of credit card that has grown significantly in recent years. Although it works like a traditional credit card when making a purchase, that is where the similarity ends. With a prepaid debit card, you actually set the credit limit yourself by depositing money into the debit card’s account. The amount you deposit determines the credit limit on that card. This is a great way to have the convenience of a credit card without the possibility of charging more than you can afford to pay off.

Cards for Bad Credit

Even with bad credit, it is possible to obtain a credit card. These cards come with some restrictions not typically found on other types of cards. Your credit limit will be lower and your interest rate higher. Some may require you to have a secured card, meaning you have to maintain a savings or some other type of account that will cover the expenses on the credit card. Once you have established that you will be responsible in your credit handling, some, if not all, of your restrictions may be lifted.

Cash Back Cards

Many cards will now offer you cash-back incentives for using their cards. Depending on how much your balance is, and how often you use the card, you can earn cash back for your purchases. Some companies offer 1% off your balance while others, like Sears, will offer you cash off purchases made in their store. Either way, if you are planning on using a card, finding one that will offer you a cash incentive is a smart choice.

Read full article here

Prosper.com: America's first people to people lending marketplace

2007-12-31T12:39:00.000-08:00

What is Prosper?

Prosper is a marketplace for credit that enables people to lend money to other people in a safe, efficient manner. Prosper is a leap back to a time when people formed credit communities to help themselves live better lives and earn a fair return on their money. Prosper's founding principle is that people from close communities act more responsibly towards each other. Prosper leverages this powerful concept of group responsibility and applies it to person-to-person lending—resulting in better interest rates for people that borrow and lend.

Prosper enables people to create groups, which borrowers join to request loans up to $25,000 by posting listings indicating the maximum interest rate they wish to pay. Lenders search for and select these listings based on the borrower's credit, debt profile, and group affiliation. Lenders bid on listings by indicating a minimum rate they are willing to accept. When a loan is matched between borrower and lender, Prosper handles all of the tasks needed for payment and collection of the loan.

Who can lend money on Prosper?

2007-12-19T12:28:00.000-08:00

A Prosper lender is any person who is a U.S. resident with a bank account and a social security number. After passing Prosper's anti-fraud and identity checks, lenders offer money to borrowers at a rate they select, often earning a much better interest rate than putting their funds in a money-market account or CD. Learn about becoming a lender.

How Much Should I Save to Reach My Goal?

2007-03-20T11:19:00.000-07:00

What are you saving for: a computer, car, boat, summer home, down payment? Use this calculator to determine what you need to save on a regular basis to have the funds ready when needed.

How Much Should I Save to Reach My Goal? Calculator

What May My 401(k) Be Worth?

2007-03-09T06:45:00.000-08:00

Use this calculator to estimate how much your plan may accumulate for retirement.

What Kind of Loan Should You Get?

2007-03-06T07:26:00.000-08:00

The Homesteader

You've just found a home in a nice neighborhood and you plan to stay there until your kids are through high school. Or maybe you're 65 and are buying your retirement home. In either case, you know you're not moving for at least a decade.

What you want: No doubt about it. In the current environment, you want a fixed-rate mortgage. Rates on a 30-year fixed-rate loan are incredibly low, and though a fixed rate still costs more than an adjustable-rate mortgage, the difference between the two is not that great. The price of stability, in other words, is relatively affordable. If your monthly cash flow permits it, you might consider a 15-year loan. The monthly payment is higher, but you pay less interest over the life of the loan.

Where to shop: Your first stop should definitely be a mortgage banker such as Countrywide Funding. Unlike mortgage brokers, with which these outfits are sometimes confused, mortgage bankers are not intermediaries between you and a lender; they are lenders. Mortgage bankers don't write a lot of adjustable-rate loans, because it's harder to package those for sale to organizations, such as Fannie Mae and Freddie Mac. Thus, because mortgage bankers make their money on fixed rates, their prices tend to be the most aggressive around.

source: yahoo.com

Should I Buy or Rent a Home Calculator

2007-03-01T06:19:00.000-08:00

The decision of whether to rent or buy a home is a very difficult one. To make things easier for you, I found this very good calculator to help you decide what you should do.

The Four Costliest Lending Mistakes

2007-02-26T15:04:00.000-08:00

by Suze Orman

It's never easy to say no to someone you love, especially when they come to you in need of cash. But lending a financial hand can leave you out of money and out of sorts with your friends and relatives.

I often hear from people who have loaned money to someone they care about deeply, only to have to deal with the fallout when they don't get repaid.

Four Pitfalls to Avoid

According to Circle Lending, a company that helps formalize loans between individuals, about 14 percent of loans between friends and family end up in default, compared to just 1 percent or so for bank loans.

To protect yourself financially and emotionally, make sure you don't fall for my top four costliest mistakes individuals make when loaning money to friends and family:

Not being suspicious enough.
When someone comes to you for a loan, your first thought should be, Why? That is, why do they need the money, and why are they asking you for help.
Be incredibly cautious about why they need the money. A friend who gets hit with unexpected health-care bills and is worried about putting them on his credit card at 18 percent interest is a lot different from a friend who needs you to bail him out to settle a gambling debt, or to finance a vacation.
You also need to think hard about why they haven't been able to get a loan from a more conventional source. If a family member comes to you for a loan to start a business, you should ask -- out loud -- why can't he or she get a loan from a bank or the Small Business Administration.
My point is that there are plenty of folks in the business of lending money. If your relative or friend can't get money from one of them, it should set off an alarm for you.
Lending what you can't afford to lose.
Never loan money that you truly need. The best litmus test before you agree to give a loan is to ask yourself if you would be comfortable giving the money away as a gift. If the money is too central to your own financial well-being, then just say no.
There's no guilt or shame in that. If you're dealing with someone who truly loves you, they'll understand. All it takes is a bit of honesty: "As much as I would love to help, I don't have that sort of money to share right now, given all my bills and retirement goals."
You aren't saying, "No, I won't loan you money." You're saying, "My own financial situation makes it impossible for me to help you right now."
Overlooking the extra risk of loans for new businesses.
Say your brother is excited about a business idea, and he wants you to loan him $20,000 to help with the startup costs. This loan is the riskiest of all; your money is actually an investment in a business that may never make a penny.
The only way you're going to be repaid is if the business is a big success. But that's a big "if." It's important to be extra careful with such "dream" loans; the odds of repayments are a lot lower than advancing money to someone who has a steady source of income that will allow them to quickly start repaying you in installments.
Skipping the formalities.

Handshakes, hugs, and kisses are not good enough for sealing a loan agreement. Put everything in writing. In fact, that's another good way to size up the credibility of the person who needs your money: They should tell you right off the bat that they want to sign a formal loan document that spells out all the terms of the deal.

That's a sign that they respect not just you, but the importance of what they're asking you to do. If you have to ask for a contract, that should be yet another warning signal.

8 types of income the IRS can't touch

2007-02-21T05:16:00.000-08:00

By Jeff Schnepper

Don't overpay taxes on income that's protected by the U.S. tax code. Here are the major categories to watch, including five types of raises that don't add a dime to your taxable income.

Tax-free interest

Interest earned on bonds issued by a state, territory, municipality or any political subdivision is free from federal taxes. These are generically called municipal bonds, and their tax benefit increases in value as your marginal tax rate goes higher. (In other words, the bonds are worth more to you as your overall income rises.)

Assume you're in the 35% bracket, the top rate through the year 2010. A 5% tax-free rate becomes the equivalent of a taxable rate of 7.69%. In the 15% bracket, the taxable equivalent is only 5.88%. If you check out this page at investinginbonds.com, you can compare taxable and tax-free yields. Compare the after-tax rates on alternative investments of equivalent risk.

Some bonds may not only be tax-free at the federal level, they may also escape state and local taxes. If you're in the top brackets and live in New York City, this is one investment you definitely want to consider for your portfolio.

Carpool reciepts

Commuting to work? Bring a friend -- and his wallet. If you form a carpool to carry passengers to and from work, any dollars received from these passengers aren't included in your income.

Commuting costs are generally not deductible. But if you establish a carpool and you're reimbursed in amounts sufficient to cover the cost of your repairs, gas and similar items used in connection with operating your car to and from work, then you've converted personal nondeductible expenses into excludable income.

Assume you're in the 25% bracket for 2006 and 2007. You have to earn $133 per month to cover a $100 monthly commuting expense. If you have a carpool arrangement with expenses being reimbursed, you've got no additional income. But you do have an additional $133 per month in wealth!

Sell your house

Under a tax law enacted in 1997, if your house was your principal residence for two of the last five years, you can exclude as much as $250,000 in gain ($500,000 on a joint return) when you sell it.

You don't have to reinvest the money, and you can claim the exclusion every two years. (If you've got $500,000 in gain every two years, I want to meet your real estate agent and go shopping!)

If you don't meet the two-year rule, you can get a partial exclusion based on the time of use and ownership. Assume you sold after only one year and had a $50,000 profit. Your exclusion is half the $250,000, not half the $50,000 profit. In this case, you'd pay zero tax on the sale.

But this partial exclusion is only if the sale is required because of either a change in place of employment, health reasons or unforeseen circumstances. I haven't yet seen final regulations defining "unforeseen circumstances." My understanding is that the IRS is going to be flexible here.

Tax-free compensation
When you're due for a raise, ask your company to get creative in your compensation. There are numerous ways to receive non-taxable compensation. Let's look at some of the best alternatives to taxable earned income.

Use your health coverage. Health and hospitalization insurance premiums paid by your current or former employer are tax-free -- a huge benefit. Let's say your health insurance premiums come to $280 a month or $3,360 a year (for an HMO policy for a family of four with a $1,500 deductible). If you're in the 25% tax bracket and have to pick up the bill, the real cost to you would be $4,480. That's $3,360 for the premiums and $1,120 for additional income taxes because you'll be paying for the coverage in after-tax dollars. Having your company pick up the cost helps both of you. It doesn't have to pay the salary necessary to get you even. It gets to write off the full cost of the coverage. Plus, neither of you has to pay the 7.65% payroll taxes on the premiums. And you, of course, boost your disposable income substantially.

Cover your life. Group term life insurance coverage of $50,000 or less paid for by your company isn't taxed to you. You pick the beneficiary; your company pays the premiums. Your company deducts the expense; you walk away with additional tax-free income.

Send yourself to school. Get educated. The courses don't even have to be job-related. But they can't be for any education involving sports, games, or hobbies. Your company can pay, and deduct, as much as $5,250 per year in educational assistance paid for either undergraduate or graduate courses. Again, that assistance comes to you tax-free.

Get you there…and parked. Your company can give you discount fare cards, passes or tokens to take public transportation to work. As long as it's not worth more than $100 per month, your company can deduct it, but you, as an employee, receive it tax-free as a de minimus tax benefit. You're taxed only on any excess over the $100. If you drive and have to pay for parking, your company can provide free parking, up to a maximum value of $180 per month, to you tax-free.

Cafeteria plans. These are sometimes called Flexible Spending Accounts. Your company makes deductible contributions under a written plan, which allows you to select between taxable and non-taxable benefits. To the extent you chose non-taxable benefits, you have no additional income. Available non-taxable benefits may include group life insurance, disability benefits, dependent care and/or accident and health benefits. Your individual plan details the options. You make your choices among the items on the cafeteria menu.

You get the idea. Any time you can convert taxable income into non-taxable income, you've given yourself a raise. And when both you and your company save money, it's a win-win for everybody.

Get creative…in most cases you're paying for the items anyway, and on an after-tax basis. It's really relatively simple.

Life Insurance Blunders to Avoid

2007-02-19T07:53:00.000-08:00

by Alex Halperin
Monday, February 12, 2007

Other than insurance salesmen, no one likes to talk about life insurance. After all, no one wants to be reminded about their looming death. However, it's hard not to suspect that keeping this subject taboo is more in the interest of insurance companies than consumers. Better informed buyers are more likely to spend wisely. And like dentistry, life insurance can't be ignored forever.

Five for the Money usually advises readers on how to spend or invest wisely. This week, we're twisting it slightly to look at some of the biggest mistakes people make after inhaling deeply and deciding that as adults, they should probably pick up some life insurance.

1. Don't buy the wrong amount

There are rules of thumb about exactly how much life insurance one needs, with 5 to 10 times an annual salary being a common guideline. But these numbers should be taken for what they are: very general numbers. They don't account for an individual's requirements (see BusinessWeek.com, 2/21/05, "Scared to Death of Life Insurance"). "The need that we're often talking about is an income replacement," says David Greene, of financial planning firm Cooper, Jones & McLeland, so that survivors don't encounter financial havoc in the wake of a loved one's death.Starting from the conventional wisdom, Greene says policy holders with a good pension might be able to get by with less than the standard amount. A more common problem is not buying enough—this is even truer in cases where small children are involved. Greene and other experts caution that lump-sum payments that look substantial on paper often don't add up to much compared with a consistent salary spread over many years. Then again, it's hard to imagine too many complaints about receiving too much insurance

2. Don't trust just any insurance agent—shop around

The life insurance options available are dizzying. Charles Massimo, president of CJM Fiscal Management, which works with wealthy clients in Garden City, N.Y., advises against limiting yourself to insurance advisers who are "captive" to one company. This is doubly true for people worried about their health. Insurers calculate risk factors independently of each other, so they won't all give health conditions such as heart disease the same consideration in evaluating an application. "Some [companies] are more aggressive with different risk factors," Greene says. A good place to compare offers from different insurers is Insure.com.

Weighing your options doesn't end with the purchase of a policy. "The standard is, people buy insurance and they put the deposit in the safe-deposit box and never look at it again," Greene says. That's a mistake. The fact is people's circumstances change, and so do the offerings from insurance companies. The policy that best fit your circumstances five years ago might not always be the right choice.

3. Don't be cagey

Most people would rather not talk about their life insurance, what with its intimations of mortality and the implication—still considered tacky in some circles—that a dollar amount can be placed on human life. But if holders don't talk about their policies with the beneficiaries, letting them know what company holds the policy, if not the amount, something worse can happen: Human life becomes worth no dollar amount at all.

Sometimes survivors simply don't know about the deceased's policies, says Steven Weisbart, an economist with the Insurance Information Institute. "It happens much more than it should," he says.

Corporate consolidation can also complicate matters. A policy bought 40 years ago could have been through an outfit that has since been assimilated by an insurance giant. Insurance companies, Weisbart says, like to pay out on policies as it makes for good public relations. Even so, it "becomes very hard to make a claim unless you've got good documentation," he adds. Not knowing where to begin can't help.

4. Don't forget, the world goes on

One of the hardest things for life insurance policy holders to realize is that they'll no longer be around when the insurance pays out. The purpose of it is to protect their immediate family or beneficiaries.

Weisbart says insufficient foresight can hurt relatives. For example: Say a policy holder's spouse receives health insurance from the policy holder's employer. In planning how much a life insurance policy pays, then, the primary caregiver should account for the spouse no longer receiving health insurance. In a slightly less dramatic example, buyers should remain aware that the cost of big expenses like college will continue to increase after they pass away.

5. Don't depend on employer insurance

When asked about life insurance, it can be easy to choose a policy provided by an employer with the premium deducted from a paycheck. But those policies can often provide a false sense of security. Among their other problems, they sometimes expire at retirement, when buying a more comprehensive policy could be more costly.

Worse, group life insurance is less tailored to an individual's health and needs. And often, the policy isn't worth enough money, Weisbart says. "Most group life coverage [plans] are really pretty modest, one or two times salary," he says. "In relation to what [beneficiaries] need, it's not a lot of money." In the end, buying the wrong policy can leave your family shortchanged.

5 big mortgage mistakes and how to avoid them

2007-02-17T07:15:00.000-08:00

By Liz Pulliam Weston

Not fixing your credit

Mortgage brokers say they're confounded at the number of buyers who apply for a mortgage with their fingers crossed, hoping their credit will allow them to qualify for a loan.

Before you even think about applying for a mortgage, obtain copies of your credit report and your FICO credit score. Your FICO score is the three-digit number that's used in 75% of mortgage-lending decisions. You can order your FICO score on the Web for a fee of $14.95, which includes a copy of your credit report.

Doing this at least six months in advance should give you plenty of time to challenge any errors on your report and ensure that they're removed by the time you're ready to apply for a loan. You can also see the legitimate factors that are hurting your score and do something about them, such as paying off an overdue bill or paying down credit card debt.

Not looking for first-time home buyers' programs

These programs, typically sponsored by state, county or city governments, often offer better interest rates and terms than you'll find among private lenders, said mortgage consultant Diane St. James. Some are tailored for people with damaged credit, while most can help people with little saved for a down payment.

Some of these resources are listed on St. James' educational Web site, ABC Mortgage Consulting. You can also call the housing agencies for your state, county and city to see what they offer.

Not getting pre-approved for a loan

Many first-time borrowers confuse being "pre-qualified" with being "pre-approved." Pre-qualification is a pretty casual process, where a lender tells you how much money you probably can borrow based on how much money you make, how much debt you already have and how much cash you have for the down payment.

Getting pre-approval, by contrast, is a much more rigorous process and involves actually applying for a loan. You typically submit tax returns, pay stubs and other information. The lender verifies the information and checks your credit. If all goes well, the lender agrees in writing to make the loan.

In a hot or even warm real estate market, the house hunter who is only pre-qualified is a cooked goose. Home sellers and their agents give much more weight to offers being made by buyers who already have a loan lined up.

Borrowing too much money

Many people take out the biggest loan they possibly can, figuring that their incomes will eventually increase enough to make the payments comfortable. But few first-time buyers have any clear idea of how expensive homeownership can be. Not only will you shell out more for mortgage payments than you probably did for rent, but you'll also need to cover property taxes and homeowners insurance, as well as higher bills for utilities, maintenance and repairs than you faced as a renter.

Lenders are perfectly willing to let you overextend, knowing that you'll probably forgo vacations, retirement savings and new clothes for the kids rather than default on your mortgage.

"Mortgage money … is way too easy to get," said Ted Grose, president of the California Association of Mortgage Brokers. "People tend to overbuy … and that can really stress family life. It's also a formula for foreclosure."

Instead of going to the edge of affordability, consider limiting your housing costs -- mortgage payments, property taxes and homeowners insurance -- to 25% or so of your gross income. That's a much more sustainable level for most people, financial planners say, than the 33% lenders are typically willing to give you.

Not having enough cash on hand after closing

After borrowing too much, and scraping together every last dime for closing costs, many home buyers have nothing left in the bank to pay for anything unforeseen happening --and something unforeseen always happens.

"It costs so much just to move in," Grose said. "Then the water heater breaks."

Some people are so tapped out by the process, Jackson said, that they're not able to make their first mortgage payment on time. That's why "more and more lenders are requiring [borrowers have] three months' reserves after closing," Jackson said.

That's a smart idea for borrowers, anyway. Having three months' reserves, which means a fund equal to three months' worth of expenses, will help you handle the added costs of homeownership with much less stress.

Buy Instead of Renting When You Have the Down Payment

2007-02-15T09:17:00.000-08:00

After looking at all the costs involved in buying house, you may have begun to have second thoughts: Perhaps, it is better to rent a home.

Real estate in most areas today is not a top investment compared with investment securities. "You're not going to get a 30 percent return on your house," said Steve O'Connor, senior director of residential finance at the Mortgage Bankers Association of America. In the past decade, people have been advised to think of a home "as shelter not investment" O'Connor said. "Wealth accumulation is secondary."

Still, as shelter, most experts say if you can afford the down payment, it makes sense to buy your home rather than rent it. That's because you can deduct mortgage interest on income tax and build equity in your property. This is especially true when mortgage interest rates are low. Mortgage interest rates are deductible up to a $100,000 annual limit.

Example
A homeowner has a gross annual income of $40,000. The monthly mortgage payment is $1,000 on a 30-year mortgage. In the first few years, 80 percent of that payment goes to interest and is therefore tax deductible. In the 15 percent tax bracket, the homeowner saved about $375 more in taxes with the home provision versus with only a standard deduction.

Lease-Purchase Agreements
Some people take a middle road. They ease into homeownership by renting a house or condominium with an option to buy.

• Lease-purchase gives a buyer time to save for a down payment or to clean up a credit history.
• It can work in a buyer's favor in areas where real estate values are rising quickly at a rate of 10 percent a year. A buyer benefits from this appreciation because the purchase price of the home is locked in on the day the buyer signed the rent-to-own contract with the seller.
• In most agreements, the seller allows a portion of the rent to be applied towards the purchase price, which some lenders consider to be part of the down payment. The amount of rent credited could be 10 percent to 100 percent, based on your contract.
• Most rent-to-own options require some down payment to secure the agreement, which is not refundable in case the renter decides not to buy.

Homeowners who would agree to a lease-purchase option include people who have had property on the market longer than they wish or owners who had to move and want the house to be lived in. The owner benefits with rental income to help pay the carrying costs of the home, and the strong possibility of selling the house when the contract expires.

Copyrighted, Bankrate.com. All rights reserved.
source: Yahoo!

Finance Your Fantasy Start-up

2007-02-12T08:06:00.000-08:00

by Jessica Dickler
Thursday, January 25, 2007

If your New Year's resolution is to finally get your brilliant business plan off the ground, now is the time to turn those ideas into dollars - and it may be easier than you think.

Finding financing may seem like a daunting task, but before sending a business plan to a dozen venture capitalist firms, look at what's right in front of you.

Many experts suggest getting your idea off the ground with a little help from your friends and family for starters.

In the first phase of fundraising, angel investors, who invest their own cash, are also generally the way to go, according to David Rose, chairman of New York Angels, a group of accredited angel investors.

Angel investors, which generally fit in after friends and family and before VCs, may invest anywhere from $10,000 to $200,000. Sometimes groups of angel investors will pool their funds and invest up to $750,000.

Alternatively, a venture capitalist firm might be willing to invest a few million, but will require a very well honed financial plan and a significant return on their investment.

Shazi Visram, founder and CEO organic baby food company Happy Baby, admits that raising the first couple of thousand dollars was really difficult. Many venture capitalists "said it was too early," she said.

Visram and her partner, Jessica Rolph, turned to friends, family members and other angel investors to raise the $550,000 they needed to get their baby food business off the ground.

"Angels believe in you - are investing in you," Visram said. In the beginning "we didn't need enough [money] for a VC to get excited about."

But once Visram and Rolph got Happy Baby going, they launched a second round of funding to bring the business from the regional to the national market. At that point they were able to successfully draw on venture capital resources.

A little more than a year later, Happy Baby is carried by national gourmet grocery chains including Whole Foods and Wild Oats.

Go where the money is

Venture capitalists consider many factors in addition to the product, including the team, the marketplace, the business plan and the path to profitability. But investors agree that passion and persistence are also crucial.

Howard Morgan, partner at the New York-based venture capital firm First Round Capital which typically considers investments between $200,000 and $500,000, said entrepreneurs "have to have vision and unshakeable passion," but at the same time, should be realistic about their idea, their goals and their potential to make money.

Rose recommends getting a good understanding of the market, what else is out there and where investors are putting their money before attempting to negotiate a deal. With a little research, you can find a VC firm that's well suited for the concept you are pitching. Also, be realistic about how much money investors may be willing to put behind your idea.

The bottom line is that investors want to make money. In fact, considering the number of businesses that never take off, investors have to make their money back on the ones that do. So they are looking for a "big, big, big return," Rose said. That could mean 10 to 20 times their original investment.

To that end, one way to get the door slammed in your face is to promise a certain return on the investment by a specific date. "Don't say things that aren't true," Morgan advised.

Another sure fire way to get denied, he added, is an executive summary that declares "this is the only." Morgan and Rose agreed that if it is the right time for your idea then there are probably others out there thinking about it too.

Rose, who has been approached by three separate teams in the same week to produce and distribute high-end rum, says "you can never know what the investors have seen before," so "don't be naive to think that you are unique."

Seven Alternative Sources of Capital for Setting up a Business

2007-01-19T12:25:00.000-08:00

Borrowing from banks is every small entrepreneur’s nightmare. One gets turned down for bank loans for a variety of reasons, including lack of assets, collateral and business experience. Don’t despair, however. There are several common types of alternative sources of capital for setting up a business available to young companies.

Savings and Investments

The first source you should consider is your own savings and investments. One disadvantage though of self-financing is that if things did not turn out the way you want them to be it will be your money that goes down with the ship.

Angel Investors

Angel investors are affluent individuals who provide capital for a business start-up, usually in exchange for ownership equity. These individuals are looking for a higher rate of return than would be given by more traditional investments (typically 25% or more).
Angel investors are an excellent source of early stage financing and high-growth start-ups. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. And since angel investors are often retired business owners and executives, they can also provide valuable management advice and important contacts.

Peer to Peer Lending

Peer-to-peer lending is a means by which borrowers and lenders may transact business without the traditional intermediaries, such as banks. It can also be known as social Lending, ordinary people lending money. The process may include other intermediaries who package and resell the loans--examples are Prosper and Zopa-but the loans are ultimately sold to individuals or pools of individuals. Prosper.com, which is available in the US only, offers business loans for small companies.

An enabling technology for peer-to-peer lending has been the internet, which connects borrowers with lenders, for example through an auction-like process in which the lender willing to provide the lowest interest rate "wins" the borrower's loan. (wikipedia.com)

Money pool
Instead of a bank loan, borrow smaller sums from several family members, friends, or colleagues. The lenders have no legal ownership in the business, but can act as advisors and cheerleaders for your venture. Remember though that nothing causes tension in a family like lending money that is never paid back.

Credit Cards
Many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. But as a long-term financing method, they can be expensive. Most credit cards will charge you 2% to 4% of the face value of a cash advance as a "fee" making this method of financing very risky.

Bootstrapping

Another source of capital for setting up a business is bootstrapping. It is a way to finance a business by saving rather than borrowing money. It's being as frugal as possible so your business can be started on as little cash as possible.

The use of private credit cards is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. Other forms of bootstrapping include owner financing, minimization of accounts receivable, joint utilization, delaying payment, minimizing inventory and subsidy finance.

While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers were founded this way.

Venture Capital

Venture capital is not suitable for all entrepreneurs. It is an option for small companies that have a seasoned management team and very aggressive growth plans; however, venture capitalists will rarely invest in small businesses that have no intention of going public. If a company does have the qualities venture capitalists seek such as a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

The venture capitalist objective is to invest in a company for a short period of time – say 5 years – and then cash out of the business while making a significant return on their investment.

How to borrow at Prosper

2007-01-16T12:38:00.000-08:00

Borrowing money through Prosper is fast and easy, and because you're borrowing from people, the rates may be lower than you'd expect!

1. Register with Prosper
Registration is quick and easy. And free!

2. Join a Group
Build lender trust by joining a trusted group.

3. Create a Loan Listing
Say how much you want to borrow, and what your maximum interest rate is.

4. Watch the Bidding
Lenders start bidding immediately - watch the funding go up and the interest rate come down!

5. You Win!
If your terms are met, your loan will be funded directly to your bank account.

6. Easy monthly payments
Your monthly loan payments are withdrawn automatically from your bank account.

Prosper's Marketplace Performance

2007-01-10T07:11:00.000-08:00

The marketplace performance page includes performance data for Prosper marketplace loans. Using this data, lenders can gain a better understanding of the dynamics of the Prosper marketplace, and use that knowledge to influence your lending strategy.

For example, when you have adjusted all of the listing criteria to your liking, you can click "View matching listings" to view active listings that match those criteria or click "Create a standing order" to create a standing order which automatically bids on listings that match those criteria.

How quickly will a borrower receive money once a loan is matched?

2007-01-05T11:28:00.000-08:00

Borrowers typically receive their loan within 2 to 4 business days of the end of a successful listing.

How is Prosper regulated?

2007-01-02T09:42:00.000-08:00

Prosper is regulated at a few different levels of U.S. government.

At the federal level, Prosper is regulated by the Federal Trade Commission insofar as it must conform to the Truth in Lending Act, the Equal Credit Opportunity Act, and the Fair Credit Reporting Act.

At the state level, for states in which Prosper has an explicit license to lend, it is regulated by such state agencies as the Department of Banking or Department of Financial Institutions (this varies by state). For states in which Prosper does not hold a license, it is subject to limits and regulations established by the state's Attorney General's office or other agencies that regulate trade and commerce. You can see which states Prosper holds licenses in along with any special limits or regulations by state on the "States and Licenses" page.

Who are the borrowers?

2006-12-19T12:46:00.001-08:00

A Prosper borrower is any person who is a U.S. resident with a bank account and a social security number. After passing Prosper's anti-fraud and identity checks, borrowers can request unsecured loans from $1,000 to $25,000 at rates they select. Borrowers should join a group to ensure they get access to the best rates. Prosper allows borrowers to post listings on the platform regardless of their credit or income.

What exactly happens if I'm late?

2006-12-15T13:01:00.000-08:00

Below is the schedule that Prosper follows in the event of a borrower missing a payment due to insufficient funds (NSF). At any point in this process, if your outstanding payment is paid in full, your account will be returned to "Current" status.

One week before payment is due

You will receive an email from Prosper indicating the date and amount of your upcoming payment.

Day 0: First payment attempt

On the day your payment is due, Prosper will attempt to withdraw payment from your bank account.

Day 1-5: First failed payment

You will be charged a failed payment fee of up to $5, depending on your state lending limits. Failed payment fees are collected by Prosper.
You will receive an email from Prosper indicating the amount due, fees accrued, and notifying you about upcoming payment attempts.

Day 8: Failed payment notification

You will receive another email from Prosper indicating the amount due, fees accrued, and notifying you about upcoming payment attempts.

Day 10: Second payment attempt

Prosper will attempt to withdraw payment from your bank account a second time.

Day 16: Second failed payment notification; late fee assessed

You will be charged a second failed payment fee of up to $5, depending on your state lending limits. Failed payment fees are collected by Prosper.
You will be charged a late payment fee for being more than 15 days late on your monthly payment. Late fees are the greater of $15 or 5% of the unpaid installment amount, depending on your state lending limits. Late fees are passed on to lenders; Prosper does not profit from late fees.
You will receive an email from Prosper indicating the amount due, fees accrued, and notifying you about upcoming payment attempts.
If you are a member of a group, your group leader will receive an email from Prosper notifying them about your delinquency and the effect of your delinquency on the group's reputation.

Day 22: Third payment attempt

Prosper will attempt to withdraw payment from your bank account a third time.

Day 26: Third failed payment notification

You will be charged a third failed payment fee of up to $5, depending on your state lending limits. Failed payment fees are collected by Prosper.
You will receive an email from Prosper indicating the amount due, fees accrued, and notifying you that your loan will be turned over to an outside collection agency for collections.
If you are a member of a group, your group leader will receive a second email from Prosper notifying them about your delinquency and the effect of your delinquency on the group's reputation.

Month 1: Late fee assessed; loan sent to collections

You will be charged a late payment fee at 46 days past due for being late on the next month of monthly payments. Late fees are the greater of $15 or 5% of the unpaid installment amount, depending on your state lending limits. Late fees are passed on to lenders; Prosper does not profit from late fees.
Your loan will be sent to the collection agency partner selected by the lenders with the largest participation in your loan. The collection agency will attempt to collect the amount due and any fees accrued. Learn more about Prosper's collection agency partners.
Your delinquency will be reported to Experian, Prosper's credit reporting agency partner, and will appear in your credit history. Your credit score will be negatively impacted.

Month 2: Late fee assessed; collections continue

You will be charged a late payment fee at 76 days past due for being late on the next month of monthly payments. Late fees are the greater of $15 or 5% of the unpaid installment amount, depending on your state lending limits. Late fees are passed on to lenders; Prosper does not profit from late fees.
The collection agency assigned to your loan will continue attempting to collect the amount due and any fees accrued.
Your delinquency will be reported to Experian, Prosper's credit reporting agency partner, and will appear in your credit history. Your credit score will be negatively impacted.

Month 3: Late fee assessed; collections continue

You will be charged a late payment fee at 106 days past due for being late on the next month of monthly payments. Late fees are the greater of $15 or 5% of the unpaid installment amount, depending on your state lending limits. Late fees are passed on to lenders; Prosper does not profit from late fees.
The collection agency assigned to your loan will continue attempting to collect the amount due and any fees accrued.
Your delinquency will be reported to Experian, Prosper's credit reporting agency partner, and will appear in your credit history. Your credit score will be negatively impacted.

Month 4: Loan sold to debt buyer; credit history and credit score impacted

After four months of delinquency for any single payment, your loan will be sold to a debt buyer and any proceeds will be distributed to lenders.
Your delinquency will be reported to Experian, Prosper's credit reporting agency partner, and will appear in your credit history. Your credit score will be negatively impacted.
Borrowers who have defaulted on a loan at Prosper will not be allowed to borrow again on the Prosper marketplace.

Detailed Payment and Delinquency Fee Schedule

2006-12-13T09:16:00.000-08:00

What happens if I am late on a monthly payment?

Each month, your monthly loan payment is automatically withdrawn from your bank account on file. If you receive an email from Prosper that your payment failed, it means that your account has insufficient funds, or that the bank account on file at Prosper is out of date or incorrect. In either case, you will pay a failed payment fee and can fix the problem with no further penalty by making a manual payment and ensuring that your bank account has sufficient funds. Just go to "Your Account > Borrowing" and click the "Make payment" link. If your bank account information is out of date, be sure to add a new bank account first.

If you can't make a payment, Prosper will follow the delinquency schedule shown in full detail below. Please note that at all times interest continues to accrue on the principal balance of your loan, in addition to any failed payment or late payment fees assessed.

What's the best way to get current on a late loan payment?

Go to "Your Account > Borrowing" and click the "Make payment" link.

You will see the amount and date of your missed payment, along with any additional fees that have accrued. Simply enter the amount that you want to pay, and the transfer should complete in 2 to 4 business days.

Once payment is received, your account will be made current. The next month's payment will be due on the regularly scheduled date.

Five steps to group success

2006-12-09T07:40:00.000-08:00

1. Become a Prosper expert

2. Create your group's identity

Use pictures: Pictures help you tell the story of your group. The more you add, the better your story will be
Add links to related websites: Make these links specific to your group. For example, if you are on a softball team, put links to the pizza parlor where the team goes after the game
Use categories: Prosper lets you put your group in up to five categories so both lenders and future members can find you when they browse groups (add link to Groups tab)
Tell your group's story: Who are you and why are you starting this group? Both lenders and group members will want to know
Membership criteria: Create a clear list of criteria for group membership and post them on your page

3. Set your group's membership criteria

4. Connect with your group members

Communicate with your members regularly to ensure a strong bond and a good reputation.

5. Grow your group

Prosper provides resources to help your group grow:

Invite new members by clicking the "Invite new members" link on your group management page. Go to "Your Account > Group > Invite new members". Just type in email addresses and hit "send".
Download and customize your own Prosper business cards and flyers from the group resources page. Leave a stack of business cards at your dry cleaner, grocery store, gym, and everywhere you go.
Put a link to your Prosper group in your email signature. To find a link to your Prosper group, open your group page and scroll down to the bottom of the page and click the "Promote this group" link.
Visit Prosper's discussion forums to learn marketing tips from other group leaders.

Prosper Days 2007

2006-12-07T12:47:00.000-08:00

Join us for Prosper's First Annual Community Conference

Prosper lenders and group leaders, and those who would like to learn more about Prosper, are invited to San Francisco on February 12 & 13 for 1.5 days of learning, networking, and fun!

When: February 12 - 13, 2007
Where: The Argent Hotel, San Francisco

Click the red button that says Register now! Or visit: www.acteva.com/go/prosper. If you experience any difficulties, please email prosperdays@prosper.com.

Is there a cost for Prosper Days?
The cost of Prosper Days is $25. That price includes all education and materials as well as meals.

Five Ways to Improve Your Score

2006-12-05T09:48:00.000-08:00

If you’ve got a low FICO score, don’t get all depressed. Snap into action; there’s plenty you can do to snag a higher score. And it’s not nearly as hard as you might think. Here are the five major factors that determine your FICO credit score:

Pay the Minimum Due on time each month. Notice I said MINIMUM. You don’t need to pay off your balance every month to get a good credit score. Just hand over the minimum on time every month and you’ll please the credit folks. Think about it for a sec: the thing lenders, landlords, and other businesses care most about when sizing you up is whether you will be diligent about paying your bills on time. Showing that you can pay your credit card minimums every month is considered a sign that you are indeed a good credit risk. Your ability to pay the minimum on time makes up 35 percent of your FICO score.
Reduce your debt-to-credit ratio. Another 30 percent of your score is determined by how much outstanding debt you have relative to the total available credit limit on all your cards. (Part of this calculation also includes whether you have other debts such as car loans and mortgages, and how much you have left to pay on those, compared to the original loan amount.) The lower your debt-to-credit ratio, the better. And there’s plenty you can do with your credit cards to improve your ratio. Let’s say you have two cards. One has a balance of $5,000 and a limit of $10,000, and the other has a balance of $2,000 and a limit of $8,000. That means you have total credit debt of $7,000 and a total credit limit of $18,000, which works out to a ratio of 38 percent. Now let’s say you manage to cut your balances in half, so you now have just $3,500 in debt and the same credit limit of $18,000; your ratio will fall to 19 percent.

The FICO brain trust says there is no specific number that qualifies as a “good” ratio, just that lower is always better.

Another tactic for lowering your ratio is to boost your credit limit. But please be very very careful before you call up a credit card issuer and ask for a bigger limit. I only want you to do this if you know you have the will power to not use that extra money. The whole idea is to lower your ratio by changing the denominator in the calculation, without touching the numerator. For example, you maintain a combined credit card balance of $7,000, but you get your limits raised so your new combined credit limit is $25,000. That means instead of a 38 percent ratio you now have a 28 percent ratio. Again, only attempt this if you have the resolve to never touch the extra credit line.

Save your credit history. About 15 percent of your credit score comes down to your credit history. The more history you have, the more evidence the FICO folks have to size up your credit habits. Therefore it’s a big mistake is to cancel a credit card you no longer use. When you cancel the card you wipe out all that history. Look at it this way: if you were trying to size up two people to entrust with your money, would you lean towards the person you’ve known for ages, or someone you’ve just known for a short time? That’s the way lenders think. Besides, when you cancel a card, you also lose the credit limit it carries, a move that hurts your debt-to-credit ratio we just discussed.

Now if you are concerned you won’t be able to leave an unused card unused, then just tuck it away someplace safe where you can’t easily get to it—or hit it with a pair of scissors if you have to. Without formally canceling your history you’ll have made sure there’s no way you can use it.
Avoid offers for new cards. Even though your mailbox is full of credit card offers, and you’re asked if you want to open a card at just about every check-out counter these days, I want you to just say no. Too many cards makes lenders nervous, and your card count is responsible for about 10 percent of your FICO score. The theory is that if you open up a bunch of new card accounts you are an accident waiting to happen: you have way too many opportunities to ring up big balances you won’t be able to pay.
Get the mix right. While you don’t need 10 cards, lenders nevertheless also like to see that you can handle multiple credit lines simultaneously. An example of what they would consider a responsible array of personal debt would be a credit card or two, one department store card, and an “installment” loan such as student loan debt or a car loan. The idea here is that you want to show ‘em you are responsible enough to juggle a few different types of debt. It‘s a bit ironic, but the one thing that makes lenders absolutely nuts is if you have no cards or loans; they then have no way of gauging whether you will be a good customer. So your mix of credit cards and loans constitutes the final 10 percent of your FICO score.

http://biz.yahoo.com/pfg/e35score/art021.html

AA - Trying to help military families

2006-12-04T13:04:00.001-08:00

Listing Summary

Requested:

$6,100.00

Lender rate:

9.00%

Funded:

47% Funded:

$2,841.61 funded
$3,258.39 remaining

Bids:

27 bids

Time left:

9d 5h 41m

Borrower rate:

9.00%

Includes 0.00% group leader rewards

Borrower APR:

9.69%

Mo. payment:

$193.98
3-year payment schedule

Lending limits:

Maryland
Effective on Dec-03-2006

Borrower Information

ActiveRetiree

Harvard University Alumni & Students

(36)

Homeowner

Account verified

Gaithersburg, MD

Credit information

Credit grade:

Debt/Income:

I am a federal retiree with a guaranteed pension. I was bothered when I saw Prosper borrowers who are soldiers wounded in Iraq, and now they are stuck with payday loans at more than 100% interest !!

The money will be used to make Prosper loans to help military families, teachers, firefighters, police, and other public service families, trying to get back on their feet.

I have never had any credit problems, and have plenty of resources to repay the loan. This is a good opportunity to bid on a low risk loan.

Prosper security measures

2006-12-01T11:44:00.000-08:00

Never leave the computer you use unattended while you are signed in.
Please do not share your screen name, email address, or password with anyone else under any circumstances. Ensure that they are kept safe, secret and not used by anyone else for any fraudulent purpose.
Never mention your screen name or password in emails, letters or phone conversations, even to Prosper employees.
Do not write your screen name or password down in a manner that allows them to be understood by someone else. Do not use any of them for another purpose.
If you know or suspect that someone else has learned your screen name or password, please contact customer support immediately.
Please change your password regularly.
When signing in to Prosper, make sure that no one is watching you type your password or looking at your account over your shoulder.
Check your account regularly. If you spot a transaction you don't remember making, or if funds are transferred unexpectedly, please note the exact details and contact customer support immediately.
Check the certificate of the site. To ensure that you are using Prosper and not a look-alike scam, check the server certificate by clicking on the little yellow lock icon on the bottom right of your browser.
Please only use the secure "Sign Out" link to safely end your Prosper session.
Stay alert for spoof email which claims to be Prosper. Learn more about email security at Prosper.

Who's Building the Next Web?

2006-11-28T12:27:00.001-08:00

Prosper

Chris Larsen does not want you to pay 14 percent interest on your next credit card. He also thinks that lending small amounts of money to regular folks is an investment opportunity that's hoarded by big financial institutions. So the e-Loan founder introduced Prosper. The San Francisco firm allows regular users to take out loans of up to $25,000. They register with the site, specify how much they need and propose a rate of repayment over three years. Lenders either compete to fund that loan, or don't touch it if the buyer's credit rating or reputation is too risky.

To improve their reputations, borrowers can band together in groups with their offline friends. Members of a PTA, for example, might join together to form a virtual credit union and can all vouch for each other's identity and standing. Groups build their status on the site over time, and the better their reputation, the lower the interest rates they can seek. Larsen thinks borrowers will be less likely to default on loans if there's a real-world stigma attached. Meanwhile, the 35-employee company performs all the background credit checks and takes a 1 percent cut of each loan from the borrower. If it can explain this tricky model to consumers, Prosper might do as its name describes.

source: Newsweek

Who's Building the Next Web?

2006-11-28T12:27:00.000-08:00

How I Got My Funding:Trying Out Prosper

2006-11-24T11:21:00.000-08:00

Dow Jones

When Ellen Carroll moved from Seattle to Kingman, Ariz., she says she knew the town's need for a speech therapist could work to her advantage.

Ms. Carroll, 27 years old, got a job in the Kingman school district as its second full-time speech therapist, working with students in preschool through junior high school. Ms. Carroll says she has a "gigantic" caseload at the Kingman schools and that showed her that starting her own speech therapy business could be lucrative -- and helpful for the town of 26,000 people.

"I don't get to see kids for very long periods of time, so I'm not seeing much progress," Ms. Carroll said. "If I'm going to make a difference, I have to do things differently."

To start her own business, Ms. Carroll says she needed therapy materials, diagnostic tests which cost up to $700 each, games and toys, and a down payment on rent for an office. She estimated it would cost about $11,000 to get started, so she says she first turned to her credit cards, figuring to put $6,000 on one card and $5,000 on another. But she decided the interest rate of 21% on the cards was too high.

Surfing the Internet for possibilities, Ms. Carroll says she found Prosper Marketplace Inc (prosper.com). "I thought I'd try Prosper first, and if it didn't work, I'd go to a bank," she said.

The San Francisco-based Web startup offers an online marketplace that puts together prospective borrowers and lenders. Borrowers can request a loan of between $1,000 and $25,000, and specify the maximum interest rate they're willing to pay. The site allows lenders to evaluate hundreds of borrowers, who explain why they need a loan, and provide a credit history and a debt-to-income ratio. Borrowers seek loans for a variety of reasons, such as opening businesses, paying off hospital bills or even buying diamond engagement rings.

Prosper works a bit like an online auction, with prospective lenders bidding against each other to fund all or part of a loan. The site also has social-networking features like user groups and profiles.

Ms. Carroll joined Prosper, adding to her loan request another $2,000 that would allow her to pay off old credit-card debt from college. In April, she secured a $13,000 loan with 13% interest from lenders on Prosper. "I felt a sense of relief," she says. "I knew I was going in the right direction, finally doing what I want to do."

Ms. Carroll made her first $312 loan payment in May, an amount she'll pay each month for another two years and eleven months. To pay back her loan, she uses part of her salary from the Kingman school district as well as the cash earned from the speech therapy business.

Starting a business isn't something Ms. Carroll dreamed about when she was young. "I just want the freedom to be able to see kids or adults however long I want to see them," she says.

With her public school caseload, Ms. Carroll already has a vast resource for clients. She is providing private therapy sessions to a few kids on evenings and weekends and hopes to have a full caseload of 20 to 30 kids by the fall. Down the road she wants to open her own clinic with more therapists.

Hilda West, on the other hand, always believed she'd be her own boss. But it wasn't until after CNN downsized in 2001 and eliminated the broadcast engineering job she held for 12 years that Ms. West set out to start her own Atlanta-based videography and photography business.

"My father was a builder, he had his own business too," says Ms. West, 53. "I grew up in that atmosphere. It's more work than working 9 to 5 but there's more satisfaction."

To start her business, the Atlanta native spent about $8,000 -- using credit cards, severance pay and her savings -- to buy computers, a Sony VX2000 camcorder and a Fuji FinePix S2 Pro SLR Digital Camera.

Focusing on weddings and corporate events, she found clients by passing out business cards at wedding conventions and video-equipment businesses, advertising in the local newspaper and on the Internet.

After three years in business, Ms. West says she does about three events a month. To draw new customers, she has been charging less than she would like -- usually about $1,500 for what she estimates is about $3,000 in services.

Recently, Ms. West needed to buy DVD and CD duplication equipment after her clients began asking for that service. But, she says she didn't have the $5,000 she needed for the purchase.

Ms. West says she posted her request for a loan on Prosper and was approved for a $5,000 loan at 11% interest. "It was very fast," Ms. West said. The site's moderator said she should post her request for ten days, and after five days her loan request had been filled at rate of 17.62%. After another five days, the rate offered by lenders on Prosper dropped to 11%.

Ms. West says still relies partly on her savings to pay the bills because she isn't bringing home as much money as she made at CNN. Her standard of living has also changed. But she says the opportunity to own a business is worth as much as money. "I enjoy what I do; this is my passion. The freedom is worth it," she says.

Erica Davis
http://www.startupjournal.com/financing/trends/20060612-davis.html

Lots Of Loans, But No Banks :Finance co-ops have hit the Web, and they look like a good deal for borrowers and lenders

2006-11-23T12:20:00.001-08:00

Timothy J. Mullaney, BusinessWeek, Jul-3-2006

When Lyna Lam's family landed in San Jose, Calif., in 1983 after fleeing Vietnam, they soon learned what it means to rely on a community for money. Times were tough, with seven people in a studio apartment. "My parents were on welfare a long time," she says. But the Lams tapped into their local hoi, a cooperative of Vietnamese neighbors who pooled money to lend one another. Lam's father first used hoi to buy a used Oldsmobile. Then he borrowed from it to launch a landscaping business that took the family out of poverty.

Today the Net is taking the logic of Asian microlending co-ops global. One of the Web's most intriguing trends is the rise of peer-to-peer lending communities such as London-based Zopa Ltd. and San Francisco's Prosper Marketplace Inc. Fifteen-month-old Zopa (www.zopa.com) has attracted 75,000 members. But the most buzz surrounds Prosper, the four-month-old site (www.prosper.com) whose undisclosed number of members have made about 1,500 loans for over $7 million. Backed by eBay Inc. (EBAY ) founder Pierre Omidyar and the venture capital firm that funded eBay, Prosper has spawned a raft of microbusinesses that recall the eBay economy. Prosper founder Chris Larsen is the former CEO of Web mortgage pioneer E-Loan Inc. His wife? Lyna Lam. "He was fascinated by how we work together and come through for each other—and that's how he started Prosper," Lam says.

"WHAT DO WE NEED A BANK FOR?"
At first blush, the idea of making loans to complete strangers seems crazy. But it turns out that online communities can do a lot of what banks and payday loan companies do—and cheaper. In Prosper's market, loan rates are set by auction. Borrowers post an application, and prospective lenders bid on the interest rate, aided by basic analysis tools provided by Prosper such as simplified credit scores. Prosper rates borrowers from AA (top credit) to HR (high risk). Many lenders do extra research; some contact prospects by phone.

Analysts say peer-to-peer lending could become a big deal. Americans make 6.1 million friends-and-family loans, for more than $89 billion each year, says Asheesh Advani, CEO of CircleLending, a Waltham (Mass.) startup that provides billing services for friends-and-family loans. Forrester Research Inc. (FORR ) lumps peer-to-peer lending with "social computing" phenomena such as blogging, podcasting, and wikis that are shaking up industries. The opportunity lies in consumers' mistrust of financial institutions: In Forrester studies, most people believe their banks put their own interests ahead of consumers', and a majority don't think their financial institutions have strong ethics. Their attitude, says Forrester analyst Catherine Graeber: "If we can get this done cheaper between ourselves, what do we need a bank for?"

That said, Prosper and Zopa probably won't have an eBay-like upside. EBay created the first national market for stuff people used to move at garage sales and craft fairs. But capital markets are dominated by big companies that sell a smorgasbord of credit cards, mortgages, and other products to people with virtually any credit profile—and rates finely calibrated to borrowers' credit scores and other data. Fact is, no one knows if borrowers will reliably repay loans from relative strangers. CircleLending says 14% of person-to-person loans go unpaid in the non-Internet world. Zopa says its default rates are a tiny 0.05%; Prosper hasn't broken out default rates.

Then again, peer-to-peer lending isn't a risk that can't be managed. The key is diversification. Loans are typically divided among lenders; a $5,000 loan might be funded by 100 people. Payments are sent directly to Prosper or Zopa, which distribute the money to lenders and report deadbeats to credit agencies or collection firms. Lenders can simply ignore high-risk borrowers; only 2% of Prosper applications from poor-credit customers have been funded, according to SavageNumber.com, an Atlanta Web site that tracks Prosper data. Formal arrangements seem to make people responsible about repayment even without a bank involved. Advani says delinquencies fall to 5% when friends-and-family loans use his firm's billing service.

The result: Loans are cheaper, while lenders can earn more than from other investments. Last month Doug Sophia borrowed $12,500 on Prosper to buy equipment for his new pizzeria in North Myrtle Beach, S.C., at 11.75%; his local finance company wanted 26%. Meanwhile, Frisco (Tex.) lender Dave Elliott, CEO of a small software company by day, says he expects a 13% return on 97 loans. "There aren't many investments that will get you more than 12% without much management," he says. Zopa CEO Richard Duvall says the average Zopa lender makes 7% to 10% after bad debt is written off, twice what top British savings accounts pay.

THE SHAME FACTOR
One draw is the sense of community that online peer-to-peer lending shares with Asian co-ops, though there are some differences. At a May dinner for Prosper lenders in New York, a half-dozen agreed on a favorite example of their quirky clique: A mother of five who wanted breast implants to undo the effects of nursing. Members were impressed enough with her—and her AA credit—to bid the interest on her loan down to 7% from 14%.

Mostly, though, borrowers and lenders are drawn by better prices. Take Sophia, who plans to open Acme Pizza in late June. When a partner backed out in May, he needed money fast. Prosper rated his credit AA, its lowest-risk category. His three-year loan, at $413 a month, was not only cheaper than finance companies offered but also felt far safer to him than starting a business with revolving credit cards. "Once that teaser rate goes away, you're looking at the same rate as the finance company," he says.

For lenders, the trick is charging enough to cover defaults and still profit. If online communities are paid as reliably as others, says Prosper, lenders must add 2% or so to rates for defaults. Small fry are springing up to help: Part-timers from Germany to Atlanta have set up sites to crunch data about Prosper market conditions.

Most of all, Larsen relies on a strategy borrowed from hoi: shame. He says people repay real-world co-ops because they fear losing face among peers. So Prosper has 1,000 organized groups set up to let members lend to one another. "If you acquire customers through a Jimmy Stewart sense of community, you'll have a better business," he insists. And if his virtual savings and loan takes off, it will be a wonderful life indeed.

Money: Lend Me a Little?

2006-11-20T11:52:00.000-08:00

Money: Lend Me a Little?
Newsweek

July 31, 2006 issue - Banks, shmanks. New person-to-person online lending sites eliminate loan officers (and savings-and-loan regulators) and match borrowers directly with lenders. San Francisco-based Prosper.com and the British site Zopa.com work similarly: borrowers post their needs ($7,000 for backyard landscaping; a $3,000 small-business loan) and lenders respond to the rates and reasons. Payments are automatically deducted from the borrower's bank account and deposited into the lender's account. Zopa says its lenders have been getting an average of 6.75 percent on their loans.

Lending to complete strangers is a risk, but Prosper limits that by vetting the identities and credit scores of borrowers and by threatening collection agencies if they don't pay. Lenders can limit their risks by offering $50 to 100 borrowers (who may each have 100 lenders) instead of making one $5,000 loan. Now that's diversification.

—Linda Stern

This Time, You Be the Bank

2006-11-18T07:26:00.000-08:00

Fed up with high interest rates or loan rejections? Try online peer-to-peer lending.

If we all stick together, can we live without banks? Not likely, but the online move toward so-called peer-to-peer lending suggests some of us are ready to try.

The trend plays off the success of eBay, which proved strangers can deal directly just fine. Now, key eBay backers are behind Prosper.com, a new peer- to-peer lending site.

Here's how it works: Prosper.com links folks seeking modest sums -- small business owners, would-be debt consolidators -- with other folks who bid on interest rates they place on money they're willing to lend. For a fee, the site consolidates bids, links them to loans and moves monthly payments between parties.

Sure, such unsecured loans can be risky. But anytime we can skip a middleman, that's its own reward.

source: http://www.rd.com/content/openContent.do?contentId=30377

How is a credit grade different from a credit score or credit rating?

2006-11-15T12:31:00.001-08:00

A Prosper credit grade is a letter grade that Prosper assigns you based on your credit score, for use solely in the Prosper marketplace. Prosper obtains your Experian ScoreX PLUS™ credit score from your credit report, and assigns one of eight credit grades.

Here is a table that shows the equivalent credit scores for Prosper credit grades:

Grade:	AA	A	B	C	D	E	HR	NC
Score:	760 and up	720-759	680-719	640-679	600-639	540-599	Up to 539	No credit score

Your credit grade is posted with your loan listing to help lenders plan their bids appropriately. Your numerical credit score is never displayed or disclosed to anyone.

Note: Having Prosper obtain your credit grade won't affect your credit score! Although we are making a request for your credit score, we're doing so at your instruction so no inquiries viewable by subsequent users of your credit report will be placed in your credit file. That means your credit score won't be affected when you register or post a listing. Only if you obtain a loan through Prosper will an inquiry that others can see be placed in your credit file.

Learn about Credit Grades

2006-11-14T11:49:00.000-08:00

What is a credit grade?

A credit grade is what potential lenders use to measure your likelihood of repaying money you have borrowed based on your past history. Everything from your first credit card to your home mortgage contributes to your credit history. Your credit grade can be affected by many factors, such as how much money you owe and your on-time payment history. Lenders will consider this credit grade (along with other factors, such as your group's borrowing history) to determine the interest rate they are willing to offer you, and how much to loan.

Borrower Death

2006-11-13T11:42:00.001-08:00

If a borrower with a Prosper loan dies, the executor or administrator of the borrower's estate must send proof of death (a death certificate) and proof of authority (a letter testamentary) to Prosper.

Upon the death of a borrower, it is possible that the borrower's Prosper loan will be paid in full by the estate. In this case, lenders will receive their pro-rata share of the outstanding principal, interest, and fees accrued. If the borrower's Prosper loan is not paid in full by the estate, Prosper will sell the loan to a debt buyer as soon as is practicable. Proceeds from the sale of the loan will be distributed pro-rata among participating lenders. Loans in which the borrower has died will receive a special status on the lender's loan accounting screens.

Rules for Lenders

2006-11-10T12:28:00.000-08:00

Offers to Make Loans Off-site or Modify Loan Terms

Prosper prohibits email offers between members to borrow or lend money outside of the Prosper web site. Offers of this nature circumvent Prosper's fee structure, may violate state or federal consumer protection laws, and are a potential fraud risk for both borrowers and lenders.

Some examples of off-site loan offers include:

* Using information obtained through Prosper to offer to lend money to a Prosper borrower outside of Prosper
* Offering to lend additional money above and beyond the loan amount stated in your bid
* Offering to accept additional interest or other compensation (in the form of cash or other things of value) above and beyond the interest rate stated on the listing page

If you would like to report a member who is attempting to borrow or lend money outside of Prosper, please contact customer support.

2006-11-09T12:33:00.000-08:00

Soliciting of Financial or Identity Information from Borrowers

Lenders may not require prospective borrowers to provide proof of identity, proof of employment, financial statements, a credit report, or authorization to obtain a credit report as a condition to bidding on listings, and borrowers are not encouraged to provide such information. When a borrower creates a listing, Prosper obtains their credit report and determines their credit grade, which is displayed in the listing. That is the only credit grade relevant to lenders placing bids on Prosper.

People-to-People Lending

2006-11-07T12:26:00.000-08:00

Here are just few of the names for people-to-people lending:

Egypt: Gameya
Ethiopia: Ekub
Kenya: Mabati
Madagascar: Fokontany
Tanzania: Fongongo
China: Lun-hui
India: Kamet
Japan: Miyin
Korea: Mujin
Vietnam: Hui
Bahamas: Esu
Bolivia: Pasanacu
Brazil: Consorcio
Mexico: Tanda
West Indies: Susu

If I make a loan through Prosper, what guarantees do I have that the loan will get repaid?

2006-11-06T13:20:00.000-08:00

There are no guarantees that your loan will be repaid. We try to give lenders as much information as possible about the credit worthiness (or "credit grade") of the borrowers on the site, their debt burden (known as the "debt to income ratio"), and the expected default rate of a borrower with their credit grade, which is based on historical data from Experian, one of the three major credit reporting agencies.

The way to ensure a good return on your investment is to diversify your lending—create a standing order to place bids on many listings, and spread your risk across many borrowers. If you make 100 loans to B-rated borrowers at 8%, and B-rated borrowers have an expected default rate of 1.8%, then you might have 2 borrowers default, which would lower your return by 2%. After annual lending fees of 0.5%, this would give you an annual 5.5% return overall. Learn about diversifying your lending with standing orders.

Lender Death

2006-11-03T12:08:00.000-08:00

If a lender with a Prosper account dies, the executor or administrator of the lender's estate must send proof of death (a death certificate) and proof of authority (a letter testamentary) to Prosper, and Prosper will work with the executor or administrator to liquidate the decedent's assets.

Proper Prosper Etiquette

2006-10-28T08:53:00.000-07:00

As with any new product or service, it helps to have some common guidelines and conventions established about how to use it and how to interact with others. In that spirit, we offer a simple guide to happiness and well-being on Prosper.

Recognize differences between people using thesite

Different people use Prosper in different ways. Recognize and respect these differences, and treat others the way you would like to be treated.

Prosper welcomes borrowers of every financial background and credit grade. As a lender, you don't have to bid on any listing that doesn't appeal to you. Others may choose to bid on their listing, but that is the decision of those lenders. Different lenders have different reasons for placing bids: some bid out of kindness, some bid for profit. Both are acceptable reasons for lenders to bid at Prosper.

Lenders are just people who have a little extra money and are willing to lend it out. Don't assume that they have unlimited resources and can bid on every listing. Don't be offended if they haven't bid on your listing. And don't bug them about it. Also bear in mind that many people bid using standing orders, without personally reviewing the listings.

Group leaders are responsible for their own groups. As such, group leaders may be very particular about who they let into their group. If you don't get accepted, don't take it personally: you might not have fit their criteria. Some group leaders might not respond to your group request at all. Just move on and find another group to join, or start your own!

2006-10-28T08:20:00.000-07:00

Act respectfully

Spam is annoying and disrespectful, and may actually work against your objective. Spam is normally defined as "unsolicited commercial email", and includes any message that is both unsolicited (the recipient did not ask to receive it), and commercial in nature (the recipient is asked to buy a product or service). Prosper takes a broader view of what is considered spam—often broader than the definition of spam under federal and state spam laws.

Prosper considers the following to be spam:

* Borrowers sending messages to lenders saying "Bid on my loan!"
* Group leaders sending messages to existing borrowers saying "Join my group!"

How can sending such messages work against you? Most lenders who have reported spam on Prosper noted that this kind of message from a borrower, rather than being an enticement, is actually a warning flag against bidding on that listing. So if you spam a lender, you might have actually reduced your chances of receiving a bid from the lender.

If you want to send a short thank you note to your lenders or fellow group members, that's okay. But try to keep unnecessary chatter to a minimum.

Respect the privacy of others on the marketplace. If you happen to know your group leader's name, but that information is not published publicly elsewhere, please do not include "thanks to my group leader Jill Smith" in your listing. This is a violation of your group leader's privacy, and undercuts the effectiveness of the marketplace.

2006-10-28T08:17:00.000-07:00

Communicate truthfully

In much the same way that spamming lenders for bids can reduce your chances of getting bids, making false (or improbable) promises in your listing or group description can also work against you.

Use simple forthright language that clearly describes your situation in ordinary words. Keep the promotional language to a minimum. Avoid vulgarities.

Not OK	OK
Guaranteed greatest business investment ever!!! Can’t lose!!!	I need the loan to buy a commercial espresso machine for my new restaurant.
Our group will never-ever-ever miss a payment!!! That’s right!!! Never!!!	We are a group of friends who has known each other for 10 years. We all live in Baltimore.

Lastly, falsifying information on a credit application is a crime. Prosper will end any listing and close any group or account if we suspect fraud.

2006-10-28T08:15:00.000-07:00

Don't attempt to collect on late payments

Under no circumstances should you attempt collection on a late payment yourself. Compliance with all state and federal laws while attempting to collect a delinquent loan is not trivial. When necessary, Prosper ensures all collection activity is performed by licensed and professional collection agencies. Lenders who undertake debt collection (even if they are a debt collector by trade) are in violation of Prosper legal agreements and will undermine the collection agency's ability to do their job. Moreover, in doing so you run the real risk of creating a legal liability for yourself. Learn about Prosper collection agencies

Group Ratings

2006-10-27T11:58:00.000-07:00

What are group ratings?

A group's rating is a measurement of that group's performance in paying back its Prosper loans. Specifically, the group rating is an expression of a group's performance against expected (historical) default rates.

"Expected default rates" are based on Experian historical default rates, which are available to lenders on every bidding page.

	Not yet rated Groups are not rated until they have at least 15 total payments billed or at least one late payment
	1 star Underperforms expected defaults by 60% or more
	2 stars Underperforms expected defaults by 20% - 60%
	3 stars Performs within 20% of expected default rates
	4 stars Outperforms expected defaults by 20% - 60%
	5 stars Outperforms expected defaults by 60% or more

Prosper Fees

2006-10-26T12:02:00.000-07:00

Prosper fees are very straightforward. All of the fees we charge are on this page. There are no fees to use the site, post a listing or place bids. Fees only result from obtaining a loan as a borrower or receiving payments on a loan as a lender.

Borrower Fees

1% closing fee

If you are a borrower and your loan is funded, you will be charged 1% of the amount borrowed or $25, whichever is greater.

For example, if you take a loan for $5,000 to help pay for your wedding, you will be charged $50. The 1% is taken from your loan immediately, so in this example your loan is for $5,000 and you'd receive $4,950 in cash deposited into your bank account.

This means that if you're using Prosper to purchase something specific (like a wedding dress), make sure you ask for enough to cover the dress and the 1% closing fee.

1% Non-electronic payment charge (optional)

Borrowers who elect to pay their loans through bank drafts, rather than the free electronic payment service through ACH, will have 1% of additional interest added to their loan's interest rate. This added interest will be paid to Prosper for processing bank draft payments, not to lenders.

Prosper Fees

2006-10-26T12:00:00.000-07:00

Lender Fees

0.5% annual loan servicing fee

The annual servicing fee is accrued daily, and is based on the current outstanding loan principal. This fee is accrued the same way that regular interest is accrued on the loan.

For example, on a $5,000 loan at 10% interest, the servicing fee would be $40.40 over its full 3 year length. Because the servicing fee is based on the daily principal balance (which is an amortized value), it will change on a monthly basis, and the servicing fee for a loan will vary based on the interest rate and the length of the loan.

Collection agency recovery fee

In the event that one of your loans becomes more than 1 month late, Prosper will assign a professional collection agency to attempt to collect the overdue amount. Each collection agency has its own fee structure, but will only collect a fee for their services if funds are recovered. Learn more about collection agencies and their specific fees.

Prosper Fees

2006-10-25T23:20:00.000-07:00

Delinquency Fees

$5 failed payment fee

If your automatic monthly payment fails due to insufficient funds or because you closed your bank account and forgot to tell us, you'll be charged $5, which may vary depending on your state lending limits. This fee is paid to Prosper, and covers the fees that Prosper's bank charges for failed payments.

Late payment fee

If your monthly payment is 15 days late, you'll be charged a late fee, which depends on your state lending limits. Late fees are passed on to lenders; Prosper does not profit from late fees.

Note: Delinquency fees may vary based on regulations from the borrower's state of residence. View state lending limits for state-specific fees.

Are there any other fees?

No. There are no other fees of any kind.

Manual Bids

2006-10-25T14:14:00.000-07:00

How do I place a bid?

To bid on loan listings, you must be a registered lender, and you must transfer funds to Prosper before you can start bidding. Learn about becoming a lender.

Once your account has funds for bidding, you are ready to go! Simply go to the "Lend" tab and search for a loan listing that you would be interested in bidding on and click on that listing's title.

When you get to the listing page, you can view some information about that listing:

Requested: This is the dollar amount that the borrower is interested in borrowing.
Lender rate: This is the current interest rate that lenders have to bid at, or below. If the loan is fully funded (there are enough bids to meet the loan amount requested by the borrower), lenders will have to bid less than the current listed interest rate to participate in this loan.
Automatic funding: If displayed, this icon indicates that the borrower has selected an "immediate funding" listing—it has nothing to do with any superhero powers the borrower may have. Immediate funding means that the listing will close as soon as the requested amount is funded. This scenario can happen when the borrower is less interested in getting the absolute lowest interest rate, and is more interested in getting a loan quickly.
Funded: This shows how much of the amount the borrower is requesting that has been funded by bids. If the full amount requested is funded, a "100%" icon is displayed next to the amount funded.
Bids: This shows how many bids have been placed on this particular listing. Clicking on the number of bids will display the bid history (learn more below).
Time left: This is how much time remains before the listing ends. Tick tock.
Borrower rate: This is the current interest rate that the borrower must pay on their loan if their loan listing is matched. In some cases, the borrower rate shown on a listing may be higher than the lender rate. This can happen when the borrower's group takes group leader rewards. To understand how group leader rewards can shift the borrower interest rate, learn more about group leader rewards.
Borrower APR: The borrower Annual Percentage Rate (APR) is the cost of your credit as a yearly rate. It is different from the borrower rate (or "note rate") because the APR factors in both the interest rate and the one-time fee Prosper collects at the time of loan funding. Learn more about borrower APR.
Monthly payment
The monthly payment is the amount that the borrower will pay for the requested amount at the current borrower interest rate. If the listing receives enough bids to drive the interest rate down, the monthly payment will also go down.

To begin placing a bid, click the "Place Bid" button.

You will then be asked to enter the following information:

Amount: Enter the amount you wish to bid on this listing. You may bid as little as $50 and as much as the entire amount requested in the listing.
Minimum rate: Enter the minimum interest rate that you would be willing to receive on the loan if you are a winning bidder. Unlike some auctions where the price is bid up, Prosper bids on your behalf down to your minimum rate. So if you are a winning bidder, there's a chance that the interest rate you receive on this loan will be higher than your minimum rate. How's that for a nice surprise? One other important note: your minimum rate is kept confidential from other bidders and the borrower—only you know what it is. When choosing a minimum rate, you can use the "Experian historical default rates" chart at the right of the bid page to help you determine the rate you should offer.
Collection agency: You may select a different collection agency for each of your bids. The collection agency that you selected during lender account setup will be displayed here automatically.

Support this group: If you would like this group's name to appear on your member page under "Groups I support," click this checkbox.

After clicking continue, you will be shown the bid data you specified on the previous page, and asked to confirm your bid. A few very important things to note about bidding before you click that "confirm bid" button:

When you place a bid, funds are immediately set aside in your account for that bid.
By placing a bid, you are committing and promising to fund and purchase the loan should your bid be matched.
If you are a winning bidder, funds will be automatically transferred from your account to the borrower's account when the listing closes.
If you are not a winning bidder, funds will be immediately made available for you to bid again elsewhere.
Bids cannot be withdrawn at any time.

2006-10-24T12:18:00.000-07:00

What interest rate should I specify?

When you create a listing, you specify the maximum interest rate that you are willing to pay, and lenders bid the interest rate down, unlike some other auctions where the price is bid up. Prosper displays average interest rates on funded loans, which can serve as a useful guide in determining what kind of interest rate you can expect.

Successful borrowers usually set a starting rate which is a few percentage points higher than past rates for their credit grade, group status, and amount requested. For example, if the historical interest rates chart says that borrowers with your credit grade, group status, and loan amount are getting interest rates around 12%, you might start the bidding on your listing around 14% to attract more lenders. Keep in mind, however, that the listing could close at the starting rate, so only specify a starting interest rate that you are prepared to pay.

What does it cost to borrow money?

There is one standard fee for obtaining a loan through Prosper. You will have to pay a fee of 1% of your loan amount if your loan is matched and funded. The 1% fee is deducted from the amount of your loan at origination. For example, if you asked for a $5,000 loan, the 1% closing fee would be $50, and the total amount you would receive at loan closing would be $4,950.

After your loan is funded you will, of course, have to pay interest on your loan. As long as you make timely loan payments, you will not have to pay any other fees.

Creating a Loan Listing

2006-10-24T12:08:00.000-07:00

How do I create a listing?

Before you get into it, view a tutorial on borrowing money.

If you are not registered with Prosper, click the "Register now" button on the home page. You will be asked to fill out a quick registration form. Registration is free.

If you are not a member of a group, we recommend that you join a group before creating your listing. Borrowers who join groups with a good reputation are likely to receive more favorable bids because its members pay on time. Learn more about joining a group. If you don't want to join a group, you can still post a loan listing as an individual.

When you are ready to create your listing, click on the "Borrow" tab and click "Create a new listing now".

First, you will be asked to provide your social security number and a few other personal details so Prosper can verify your identity and pull your credit score. There is no fee to you for pulling your credit score, which we use to categorize your credit into one of eight credit grades. There is no fee to you for obtaining your credit score and grade.

This won't affect your credit score! Although we are making a request for your credit score, we're doing so at your instruction so no inquiries viewable by subsequent users of your credit report will be placed in your credit file. That means your credit score won't be affected when you register or post a listing. Only if you obtain a loan through Prosper will an inquiry that others can see be placed in your credit file.

You will also need to provide bank account information. If your loan is funded, your loan proceeds will be deposited in the bank account you specify. Additionally, if you choose, starting on the first month after funding, your monthly payments will be deducted automatically from your bank account. Learn more about monthly payments in manage your loan.

Your loan listing is what will inspire lenders to bid against each other to make you a loan. Your listing communicates very important details to lenders about you and your loan. Your listing will include what you need the loan for, how much, what group you belong to (if you belong to one), your credit grade, and additional data from your credit report which helps determine your grade. You can request a loan from $1,000-$25,000 (may vary by state), and you can also specify the maximum interest rate you want to pay. You decide how long you want your listing to be posted for bidding. You can add as much or as little personal information as you'd like, such as pictures or web links to a current project, like the independent film you're working on. You can review the details of your listing, including the estimated Annual Percentage Rate (APR), monthly payment, disclosures, and other legal terms.

If you belong to a group that requires listing review, your group leader will have up to 7 days to review your listing and approve or decline the listing. You may withdraw your listing at any time during this process.

Once your listing is active and posted on the Prosper marketplace, you'll be able to see it and track it on the "Lend" tab. You can easily monitor the bids you are receiving on the bid history page. Learn more about bidding.

Who can borrow at Prosper

2006-10-23T14:15:00.000-07:00

Who can borrow money on Prosper?

A Prosper borrower is any person who is a U.S. resident with a bank account and a Social Security number or Individual Taxpayer ID. Borrowers must first be approved by Prosper's anti-fraud and identity verification systems before they can post a loan listing. Approved borrowers can request unsecured loans from $1,000 to $25,000 (may vary by state ) at rates they select. It is recommended that borrowers join a group before creating a listing to attract more favorable interest rates. No matter how good or poor your credit rating, or how high or low your level of income, all registered borrowers are allowed to post a listing on Prosper.

What kinds of loans are available on Prosper?

Borrowers can request 3-year, fully amortized, unsecured loans up to $25,000 (may vary by state ). In other words, you will have three years to pay off the loan in full with set monthly payments. You don't have to offer any collateral, like a car or your house, to guarantee the loan. There are no penalties for paying off your loan early or for making partial prepayments.

How quickly wiil I get my money?

Borrowers typically receive their loan within 2 to 4 business days of a match.

Group Leader Rewards

2006-10-21T08:44:00.000-07:00

What are group rewards?

Group leader rewards are cash incentives earned by groups and group leaders when a new loan gets fully funded or an on-time monthly payment is made.

There are two types of group leader rewards:

Match reward: This is a one-time reward that is accrued by a group leader when a group member's loan listing gets funded. See the chart below for specifics.

Payment reward: This is a monthly reward that is accrued when a borrower's monthly payment is successfully paid on time. Payment rewards also vary by the borrower's credit grade. So a high grade means a smaller payment reward (because they are lower-risk). Group leaders can choose to receive all, some, or none of the payment rewards generated by their group members.

Group rewards by credit grade

Grade	Match reward	Payment reward
AA, A	$20	1%
B, C, D	$10	2%
E, HR, NC	$10	4%

How are rewards paid?

The group leader will receive match rewards one month after a group loan is funded as long as the loan is still outstanding (not repaid) and payment is current.

Payment rewards are paid after a 3-month withholding period to ensure the loan isn't bad right out of the gate. After 3 months, all current month payment rewards earned for that month are paid. At the end of the loan term, any remaining rewards withheld are paid in full.

Because, at this time, group leader rewards are paid directly to the group leader's primary bank account on file at Prosper, the group leader must have earned at least $25 in group rewards before a transfer is made. $25 is the marketplace-wide minimum transfer amount.

Can I choose how much to receive in payment rewards?

Yes. In fact, some group leaders do choose to receive payment rewards at all. For those who want to receive payment rewards, they can choose to take 25%, 50%, 75%, or 100% of the base group leader rewards in the table above. For example, a group that receives 75% of base group leader rewards will add 0.75% to an A or AA borrower's listing, 1.5% to a B, C, or D listing, and 3% to an E, HR, or NC listing.

Why would a borrower join a group that takes group leader rewards?

Here's the thing: groups are designed to help secure lower interest rates for borrowers, even after the group leader rewards are factored in. A borrower can get a good rate in either case:

If they are in a group that does not take group leader rewards, the rate will be lower because the group leader reward will not be added.
On the other hand, if they are in a group that takes group leader rewards, the borrower may be perceived as less risky by lenders because of the presenc the group leader and the value of the group's reputation, which would drive the interest rate down.

Since there are benefits to being in a group, even if the group leader rewards are high, borrowers should consider joining a group. In the end, some lenders will prefer to loan money to borrowers who represent the least risk, while other lenders will be willing to take on a little more risk for a higher rate.

There is one last benefit to lenders of a group that takes group leader rewards: if one of those borrowers defaults, the lenders will share the first 3 months of earned group leader rewards. Every little bit counts!

Group Leader

2006-10-20T14:25:00.000-07:00

What is a group leader?

Each group begins with a designated group leader who is responsible for setting up a group home page and inviting members. Some group leaders form groups based on their community interests or prior affiliations, such as membership in a club, social organization or religious association.

Group leaders have two responsibilities:

Set up the group home page.
Invite borrowers to join the group and create loan listings.

How do I create my own group?

If you are not registered with Prosper, you will be asked to fill out a quick registration form. Registration is free.

Once registered, click the "Become a Group Leader" link. You will be asked to provide your social security number and a few other personal details so that we can check and protect your identity. There is no fee to become a group leader.

Next, you will need to provide some basic information about your group. This will include the group name, a short description, a group "shortcut" (this will be a short web link for potential members to access when you invite them), and categories (see below).

Prosper is basically a community made up of all kinds of groups of borrowers. Potential lenders, borrowers, and future group members will search and find each other through Prosper's classification system of group categories. When you create your group, you will need to categorize it (you may select up to five categories). For example, if you are a group of soccer players, you would categorize your group under "Sports & Recreation / Ball Sports / Soccer."

Once your group information is complete, all of this information will be sent to the Prosper Group Services team, who will review your group application, and make a decision on your group application within a few days.

As a group leader, you can choose to receive group leader rewards as your group members repay their loans on time. You should add your bank account information to Prosper so that we will know where to send your group leader rewards.

While you're waiting for Group Services to review your new group request, you should view and update your group's home page! In fact, the more information you add about the group you want to create (including the description, pictures, and links), the more speedily Group Services will be able to approve your group. Learn more about editing your group profile, description, and pictures.

Can I lend or borrow if I'm a group leader?

Yes, you can lend and borrow on Prosper if you're already a group leader. If you want to borrow money, however, you will not be able to do so as a member of your own group; you will have to join another group. You are not allowed to borrow money as a member of your own group to avoid any conflict of interest.

Can I create more than one group?

Not at this time.

Can I recruit existing borrowers who don't have groups?

How friendly you are! But unfortunately at this time you cannot recruit existing borrowers. Since a borrower's interest rate is often tied to the existence (or absence) of a group, it is Prosper's policy to not let borrowers with currently active loans join a group. This may change in the future.

What are the most inportant tasks of a new group leader?

First, you should update your group's home page as much as possible. This is your voice to both potential borrowers and potential lenders, so you should spend some time making it attractive, or at least complete. Add some photos of your group, and include those on the page. Tell as much as you can about your group in the description—don't be shy! The more lenders and borrowers can learn about your group, the more likely they will engage with your group. Learn more about editing your group profile, description, and pictures.

Second, get out there and recruit borrowers! Since you will earn money when borrowers in your group listings that get funded, you should be knocking on the door of anyone who would make a good member of your group and might have a need for a loan. Prosper makes this easy by allowing you to invite people directly through their email system, and providing a shortcut link that you can put in your emails and even on your personal web site. Learn more about inviting new group members.

Joining a Group

2006-10-19T10:07:00.000-07:00

How do I join a group?

Once you find a group you'd like to join, click "Join this group" on their group home page.

If you are not registered with Prosper, you will be asked to fill out a quick registration form. Registration is free.

Once registered, you will send a short note requesting membership to the group's leader. Along with your note, we will include your name, email address, and telephone number, in case the group leader wants to contact you to discuss your request. Share as much as you feel comfortable with. The group leader should get back to you within seven days about the status of your membership request. You can withdraw your request to join a group at any time, and request to join another group instead. Once you are a member of the group, you can create your own loan listing as a member of the group.

Do I need to join a group to get a loan?

No. While borrowers aren't required to join a group in order to post listings on Prosper, they are likely to receive more favorable bids as a member of a group with a good reputation. However, if you're not interested in joining a group, you may get a loan on your own. Just sign in and click the "Create a loan listing without joining a group" link on the "Your Account, Get Started" page.

Can I join more than one group at a time?

No. It is important that your reputation be tied to, and in the hands of, one group and one group leader only while your loan is active.

Can I leave my group?

You can leave your group as long as you don't have an active listing or loan. In that case, just go to "Your Account > Group", and click "Leave group".

If you have an active listing or loan, you will not be able to leave your group until the listing is withdrawn or expires (without becoming a loan), or until your loan is paid in full.

What's next?

After being accepted into a group, you should create a listing for a loan.

Group Leader

2006-10-19T09:33:00.000-07:00

What is a group leader?

Each group begins with a designated group leader who is responsible for setting up a group home page and inviting members. Prosper has an easy template for setting up a group page. Some group leaders form groups based on their community interests or prior affiliations, such as membership in a club, social organization or religious association. Although group leaders have to do more work than members, there are rewards for the extra effort. Learn more about becoming a group leader .

What are "leader rewards" or "group leader rewards"?

Group leaders can earn group leader rewards (money) in two ways. First, each time a borrower's loan request is matched with a lender and a loan is funded, there is a "match reward". And every time a borrower in the group makes an on-time loan payment, there is a monthly "payment reward." (Try finding a credit card that does this.) The better the group's loan repayment performance, the more the group leader earns, and the better the group's reputation becomes. Learn more about group leader rewards and reward amounts .

What are "shared group leader rewards"?
Instead of being the recipient of the full reward amounts, some group leaders may choose to share their group leader rewards with their group instead. In the case of 100% shared rewards, the group leader will not receive any compensation for on-time payment. Instead, the group leader rewards will be passed on in the form of reduced interest rates on group members' loans. The lower interest rates that group members get when the group leader shares group leader rewards stays the same for the life of the loan, even if the group leader decides later not to share group leader rewards.

What is "listing review"?

Some group leaders will require their borrowers to submit new listings for their review before they are put on the marketplace. If you join a group that requires listing review, when you finish creating your listing, the group leader will have up to 7 days to review your listing and make a decision on the listing:

If the listing is approved, the listing will become live on the marketplace for the full duration selected (e.g., 7 days).

If the listing is declined, the listing will be cancelled and you may create a new listing at any time.

When a group leader reviews a listing, he or she has the ability to add a public endorsement to the listing which can be viewed by lenders.

Groups: the strength of community

2006-10-18T12:35:00.000-07:00

Groups are the heart of the Prosper marketplace. A group is organized by a single leader and consists of borrowers who all share something in common. Borrowers request membership or are invited to join a group, and since membership is limited, usually have some connection with one or more group members.

What is a group?

The foundation of Prosper is based on groups of borrowers who share a common interest. A group can be large or small, based on a a community organization or nationality or even a common interest, like muscle cars or knitting. Groups can be religious, ethnic, educational… the options are as varied as the members who form them.

Why should borrowers join a group?

Joining a group can boost your reputation as a borrower and be a gateway to lower interest rates from lenders. Although individual borrowers can and do exist, Prosper thinks lenders will have greater confidence in borrowers who belong to a reputable group. That confidence can translate into lower rates on your loan request and lower monthly payments.

Even though you will still individually request the loan and are solely responsible for its payment, your performance as a borrower has an effect on your group. Because lenders can view the aggregate repayment history of groups, lenders' confidence in you and your group depends on your group's repayment performance. Additionally, group leaders with members who successfully repay their loans earn more group leader rewards. A group's reputation is only as strong as its members.

What should borrowers look in a group?
Some borrowers will receive an invitation to join a group, while others will need to find a group to join on their own. Take a look in the different group categories and see if there's a group with whom you share a common interest or sense of community. Be sure to check whether this group repays their loans on time.

If you don't see a group that fits you can form your own group.

Browse all groups. Join a group.

Lend money to other people and earn interest

2006-10-17T14:26:00.000-07:00

Lending money to people directly is a great way to earn a fair return. And when you make lots of small loan rather than one or two big ones, you spread your risk out and ensure a more reliable return. It's called diversification and the pro's do it everyday. Here's how it works:

Although we refer to you and other individuals as "lenders", the loans are being made by Prosper and then sold to you, making you a loan purchaser.

Borrow money from people

2006-10-16T11:42:00.000-07:00

Borrowers are Prosper members who want to borrow money from other people and get a better deal than the credit card or loan rates offered by banks.

Rates are low because Prosper lenders are people—like you—who want a fair shake from honest borrowers without all the fees and hassles of doing business with big banks.

How it works

Lend. Borrow. Prosper

2006-10-14T14:49:00.000-07:00

Prosper, America's first people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone.

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform.

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers.

In addition to criteria commonly used by institutional lenders, such as credit scores, people who lend can consider borrowers' group affiliations. Groups on Prosper are critical to bringing people together for the common goal of borrowing at better rates. Groups earn reputations according to their members' repayment records. Groups with successful repayment histories should attract more lenders offering lower rates.

Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as people who lend bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrower and lenders.

Prosper's rigid privacy policy reflects co-founder and Chief Executive Officer Chris Larsen’s longstanding history as an advocate of stringent consumer financial privacy protection laws and practices. Prosper does not sell, rent, or share members' personal information with third party marketers. Prosper members are in control of how much personal information—if any—is revealed on the website and with other members. Prosper's security and identity verification systems are state of the art, and consistent with those used by banks, brokerages and institutional creditors.

Prosper generates revenue by collecting a one-time 1% fee on funded loans from borrowers, and assessing a 0.5% annual loan servicing fee to lenders. Backed by Accel Partners, Benchmark Capital, Fidelity Ventures, and Omidyar Network, Prosper has raised approximately $20 million. Prosper's marketplace platform is patent pending.

How to Reduce Debt

2006-02-08T08:44:00.000-08:00

Paying off debt is easier once you stop using your cards.

* • Pay off your highest interest credit card debt first, making sure you avoid the "minimum balance trap." Because credit card companies make their money from interest payments, they purposely set those payments low so it will take you years to pay off the balance. Paying just a little more than the minimum can make a big difference.

• For example, assume you have a balance of $5,000 at an interest rate of 15% and you make the minimum monthly payments of 2.5% of the balance or $25, whichever is greater. It would take you 183 months to pay off the debt and cost you $4,395 in interest. However, if you were to pay an extra $150 each month, you would pay only $845 in interest over 27 months. This is a hypothetical example for illustrative purposes only.

* • Consolidate your debt by transferring outstanding balances to lower-rate cards. These days, the competition between credit card issuers is so intense that you can often negotiate your interest rate. If you don't want to transfer your balances, chances are that your current credit card company will match the interest rate of a competitor. Just be aware that some of the low rates available these days are "teaser rates," which only apply during the first 6 to 12 months you have the card.

* • Cancel your old cards so you won't be tempted to use them again. The most you need is two. And leave them at home unless you really need them.

* • Set up a realistic payment timetable and stick with it. If you need to readjust your timetable, do so. If you have trouble, talk to a professional. The counselors at the nonprofit National Foundation for Credit Counseling can develop a more structured plan for you, if needed. To find their nearest location, call 1-800-388-2227, or log on to www.nfcc.org.
Pay Extra and Save
You can eliminate debt and save money by paying more than the minimum monthly amount on your credit cards. The table below shows the difference between making an assumed $20 minimum payment on a $1,000 debt versus paying $40 a month.
Total Payments Months to Pay
$20/month
6% $1,126.97 56
12% $1,353.43 67
18% $1,783.97 89
$40/month
6% $1,025.24 25
12% $1,103.28 27
18% $1,199.00 29

Assumes a monthly compounding of annual percentage rate and that amount due (principal plus accrued interest) must be paid in full.

source: yahoo.com

Secured Business Loans

2006-01-31T12:36:00.000-08:00

by Grant Cliv

Secured business loans cater to the need of both small as well as big business enterprises. Business, whatever is its type, can survive only if there is an uninterrupted cash flow

The cash, however, can not keep flowing all the time. There are times when your business is suffering losses due to internal as well external problems. It is at these times that you need secured business loans.

Secured business loans are provided against collateral. You could offer some of your company assets as collateral. This makes the job easy for the lender as he does not risk losing his money. For the borrower, secured business loans offer low interest rates, easy terms and conditions and manageable monthly instalments. These loans involve a lot of paper work.

You can take secured business loans for various needs of your business. You can

• Develop the infrastructure of your business by buying raw materials, equipments and machinery that your business might need
• Expand your business or change its direction
• Pay off old debts which your business might have incurred
• Get your business out of the current monetary problems.

Before applying for secured business loan, you should put down on paper everything that the lender might be interested in: your turnover, net profit or loss, profit you are likely to make in the future etc. A clear business plan will help the lender decide quickly whether to disburse the loan or not.

Not all things are in your hands when you are running a business enterprise, big or small. Things may get wrong and you may find yourself in a difficult spot. Secured business loans are your only solution at such junctures.

Checklist for Starting a Home-Based Business

2006-01-30T14:00:00.001-08:00

Starting a home-based business can be a complicated undertaking. The following checklist covers the most important points that you will need to consider and will help you stay focused as you try and get your business off the ground.

1. Create a business plan. Even if you are the only one that will ever read it, it is important to plan out your business and the important milestones you hope to accomplish. See the AllBusiness.com Business Plan Center for advice on putting together this important document.

2. Establish your business entity. You will need to decide if you want to run your business as a sole proprietorship, a partnership, or a corporation.

3. Get your business license or reseller certificate. Make sure you are in compliance with your state laws and get a business license or a reseller certificate if your state requires one.

4. Check with your local zoning commission. You do not want your business shut down prematurely due to zoning laws. Make sure you can legally run your business from your home before you put in too much time and effort.

5. Purchase insurance. Determine what kind of insurance you need, and purchase this before you actually open your new business.

6. Organize your office. A well-organized office space leads to a successful business. Make sure that your office is in a place in your home where you will be able to focus on running your business with minimal distractions.

7. Purchase your equipment. Make sure that you purchase any required office equipment ahead of time. You will avoid embarrassing moments if a customer wants to fax you an order and you do not have the proper equipment ready.

8. Set up your Web site. You will need to purchase a domain name and set up your Web site so that it is ready to go live when you open for business. By planning your Web site concurrently with starting your business, you will be able to include your domain name on your promotional material. Check out the Internet & E-Business Center at AllBusiness.com.

9. Make your schedule. Even if you do not want to work 9 to 5, you will need to create a schedule that follows somewhat normal business hours to ensure that your customers can reach you. They may not be aware that your business is in your basement and you have to get your kids to soccer practice.

10. Organize your inventory. If you plan on stocking merchandise in your home, you will need to make sure it is well-organized to facilitate a quick turnaround time. Make sure that they are easily accessible and free from dirt and debris. If you are a smoker, make sure you store your inventory in a smoke-free area.

11. Get your shipping supplies ready. You should not have to scour your house for a padded envelope when you get your first order. Gather all of the supplies you will need, such as envelopes, boxes, bubble wrap, shipping tape, and labels ahead of time.

12. Open your virtual doors. Now that you are completely prepared, you are ready to open your business up to the public.

source: http://allbusiness.about.com/article.asp?ID=3318&CenterID=3349&CatID=3350

Checklist for Starting a Home-Based Business

2006-01-30T14:00:00.000-08:00

3. Get your business license or reseller certificate. Make sure you are in compliance with your state laws and get a business license or a reseller certificate if your state requires one.

5. Purchase insurance. Determine what kind of insurance you need, and purchase this before you actually open your new business.

Top List of Ways to Change Your Current Car Insurance into Cheap Auto Insurance

2006-01-29T12:29:00.000-08:00

Is Your Car Insurance Cheap Auto Insurance?

Are you getting cheap auto insurance? This list will help you obtain cheap auto insurance-not cheap quality but cheap on your wallet! Get your car insurance policy and compare your savings with this list to see if you are getting all of the savings you are entitled to, or print it out and use it when getting a new policy or obtaining an online insurance quote.

Top List of Ways to Change Your Current Car Insurance into Cheap Auto Insurance:

# Theft Devices: Most new cars have theft devices. Some are automatic and some have to be started at the touch of a button, but all usually get discounts on car insurance. Also, some states provide extra discounts for such things as window sketching.

# Multiple Car Discount: Did you know sometimes insuring two cars can be the same price as insuring one? If not the same price, insuring another car usually does not cost as much as you may think.

And if you have 2 cars, it is very wise to check with your insurance agent, or while obtaining your online insurance quote, to make sure you can get this discount on your car insurance. Also, if you are planning to sell a second car, the cheap auto insurance trick would be to keep that car on just liability to get your multiple car discount. Sometimes people are surprised when they call their car insurance company to take a car off of their insurance, only to find that their price did not go down but possibly increased!

# Yearly Policies: Choosing a yearly policy can extend your savings on your car insurance. Purchasing a yearly policy instead of a six month policy gives you a rate that cannot be changed for one year VS. changing every six months.

# Comprehensive Storage Coverage: If you are planning to store your car for any period of time, you can save on your car insurance by only keeping comprehensive coverage during the storage time. Since the car would be stored, it is very unlikely it will get in a collision or need the liability coverage.

# Mileage: This is a great way to get cheap auto insurance: If you are really close to the "miles to work" break-off, you may want to check your mileage closely. When your car insurance company or insurance agent asks you "How many miles do you drive to work one way?" this is a crucial question that will designate you into a particular class. Each class can have significant differences in prices.

# Organization Affiliation: Many companies offer a discount on car insurance for being affiliated with certain organizations. These can range from credit unions, college sororities, or just having a certain credit card. Call your service center and ask them for a list of the organization affiliation.

# Liability/Comprehensive/Collision/Medical Payments Coverages: Of course, you can lower your basic coverages. Comprehensive and Collision are probably the first to look at lowering by increasing your deductibles on your car insurance. Most vehicles that are on bank loans can have up to a $1000 deductible. Next, lowering your liability and medical payments could help, but only if you are having a hard time paying for your premium and is not recommended for general savings.

# EFT Payments: Many car insurance companies are now charging up to $5.00 or more for mail payments, but sometimes nothing if you choose to have payments automatically deducted. And, sometimes the deductions can come from your credit card, so you don't have to worry if the money will be in your bank account when payment time comes.

# Defensive Driving Course: Some companies give considerable discounts on car insurance for attending defensive driving courses. Check with your state insurance commissioner, insurance company or when obtaining an online insurance quote to see if you could qualify and to find out where to take courses.

# Auto/Home/Renter's Companion Policies: Most insurance companies give a discount if you carry your auto and home or renter's policy with the same company. This discount can be anywhere from 5%-20%!

# Credit Rating: Another great tip to get cheap car insurance-keep your credit clean! Yes, a lot of insurance companies are checking your credit and basing your policy on what is found. Make sure you check to see if your credit is in good shape, and if it is not, you may want to seek out companies who do not do credit checks.

# Teenage Drivers: Drivers Education can give a reasonable discount on your car insurance, but also good grades! You can report them to your car insurance company every semester.

# Rental Car: If you have comprehensive and collision coverage on your current vehicle, you might not need rental coverage. You are covered as much on a rental car as you would be on your vehicle. So, if you have a fairly new car you should be OK, but if your car is only worth a few thousand, you should get additional coverage.

# High Risk: Whether you are in the process of obtaining an online insurance quote or using a local agent, if you are in a high risk category and when you try to get insurance you either get turned down or cannot afford the ridiculous high premiums, you may want to contact your state insurance commissioner. All states have insurance for high risk individuals who may not be able to obtain insurance elsewhere. The coverage may not be the greatest, but at least it will get you rolling again!

source: http://personalinsure.about.com/cs/vehicleratings/a/blautosavings.htm

Zopa.com

2006-01-26T08:59:00.000-08:00

Zopa is a UK-based company providing an online money exchange, allowing people who have money to lend to provide it directly to people wanting to borrow it without the need to go through banks, a process sometimes referred to as peer-to-peer lending.

The name, Zopa, stands for Zone of Possible Agreement, a negotiating term identifying the bounds within which agreement can be reached between two parties. The idea for the service was identified following extensive socio-economic research which itself identified a group of individuals, coined Freeformers.

Freeformers were identified as displaying different attitudes towards many aspects of life, including their money, and Zopa has developed a credit referencing process that goes beyond credit bureau information in order to establish consumers' attitudes towards money, as well as their credit-worthiness. This extends their ability to offer credit to this freeformer group, who may have irregular incomes or short-term cash-flow requirements, but who may not be offered credit through traditional methods of credit referencing.

The service matches people that want to offer to lend money with people that need to borrow money. Matching is done on a many-to-one basis, such that no one lender is exposed to any single borrower. Bad debt risk is taken by the lender, and priced into the rate offered to borrowers, although debt recovery processes are available.

Variously likened to eBay and Betfair in the UK press, Zopa is an addition to the emerging group of peer-to-peer services enabled by the internet. Prosper is a similar service based in the U.S.

Launched in 2005, Zopa is led by a management team that comprises many of those that founded Egg in the UK.

The company is based in London and backed by Benchmark Capital and Wellington Partners.

Both borrowers and lenders are charged a 0.5% fee by Zopa on the funds for each transaction although founder members are exempt from this charge.