Prosper sent out an email yesterday with good news for individual investors. Large investors are now limited to 50% of any one loan down from 75%. Here is an excerpt from the email:
We have continued to listen to your feedback and to monitor the effect of the changes we made in April and as a result have decided to adjust the policy. For that reason, effective the close of business today, the maximum stake an individual lender can take in a loan from the standard loan pool will be reduced to 50%.
Since Worth-blanket2 came on the scene over two years ago retail investors have been competing with institutional investors. Back then Prosper set a 90% limit of any one loan for large investors which often meant just 3-4 investors would fully fund a loan in a minute or two. Then, for a brief time early this year the 90% limit was removed completely.
In April, Prosper introduced their whole loan program where a portion of new loans were held back for large investors to take the entire loan. This allowed them to be more flexible with the loans that are added to the retail platform. They started at a 75% limit per loan and today they have reduced that to 50%.
While many of us would prefer that Prosper showed no preferential treatment for institutional investors I applaud the management on this move. It is one thing to say you want to support individual investors but another thing to actually do something about it. This should mean loans stay on the platform longer as more investors get a chance at every loan.
