When it comes to loans, banks and other financial providers seem to have a vice grip on the market, offering little choice to borrowers who might be seeking a variety of options. That is until co-founder of Prosper Marketplace, Chris Larsen, came along to put the "people" back in the driver's seat of financial planning. Larsen is one-of-a-kind, carving out a new market place that challenges "payday" lenders and traditional banks for loan customers. How does he do it? Larsen explains that "We let people on both sides, borrowers and lenders, participate in the credit marketplace directly." With a similar structure and business plan to the online juggernaut eBay, Prosper is foraging into uncharted territory with the potential to boom.

Prosper isn't just a way for people to get money when they need it. It also turns anyone with a little bit of money into an online banker. Here's how it works. If you're seeking a loan up to $25,000, simply state the purpose for getting the loan and a maximum interest rate you're willing to pay. After placing your request, Prosper and other necessary authorities perform a rigorous background check and credit record report which is displayed on your listing. After your loan is placed, lenders can begin bidding for portions of the loan in increments starting at $50. When the listing ends, the bids with the lowest rates are combined into a single 3-year loan for the borrower. In this case, the lender and the borrower are both empowered by establishing their desired rates and plans and helping everyone reach their goals. From there everything is left to Prosper. On a monthly basis Prosper takes money from the lessee's bank account and delivers it to the lender's account, making the transaction smooth and safe.

One aspect of Prosper that offers the greatest potential for success and security is through their groups. A group is organized by one or more "leaders" and consists of borrowers who all share something in common. By establishing a mini-online-community, group members are accountable to each other as well as to the specific group. So if a member of the group misses a payment, the group leader is first to know before it goes to a collections agency. Group categories vary from Art & Culture, Military, Education, Non-Profit, "Starting Over," and much more. When considering joining a group, you can view any late payments to determine the reliability of the lenders and borrowers. Chris Larsen states that accountability is the key to Prosper's success, saying that "credit markets have destroyed the sense of commitment and shame if you don't pay. So we try to make sure buyers are tightly associated with a group, whose reputation is directly impacted by one person not paying." This philosophy has dramatically lowered default costs.

Prosper empowers the borrower by offering them the opportunity to set their own interest rates and follow a specific plan with a willing lender. But it also provides a unique investment opportunity for lenders who find more security in Prosper Marketplace than they might in other investments. The communities at Prosper provide opportunities for everyone to win, by coming together in the people-to-people online setting.