After a nine-month hiatus, peer-to-peer lender Prosper.com is back with a new and improved lending service. Thanks to its recent SEC registration the improved Prosper.com is now available to borrowers in 46 states and lenders in 14, with plans to expand nationwide in the near future.

For the uninitiated, Peer to Peer Lending (P2P) is a service that connects individuals with money to those in need of a loan without using a bank. This type of lending is very popular amongst individuals looking to consolidate their debt or start a small business with these segments making up almost 70% of the loans funded before Prosper began its SEC process.
A big part of the re-launch, Prosper has instituted several investor-friendly changes which should stimulate both the lending and the borrowing markets at Prosper. To start with, Prosper has raised the minimum credit score for borrowers to 620; a move which mirrors the stricter credit guidelines of many banks. Prosper will also be giving all borrowers a "Prosper Rating" which will give lenders a better understanding of the risk that each loan entails. Along with these changes, the minimum investment in a loan has been reduced to $25 in order to make it easier for users to diversify their investments with Prosper.

On top of these changes, perhaps the most exciting, especially to members who invested before Prosper entered the quiet phase, is the ability to sell loans made on Prosper through Foliofn. The addition of this secondary market for loans to Prosper resolves one of the biggest issues would be investors had with the service; being locked in until a loan was paid off. Thanks to the ability to sell loans investors have an easy way to exit Peer to Peer lending if they decide to change their investment strategy. This will also allow users who cannot continue lending thanks to the current state restrictions to cash out of Prosper.

With an average rate of return of just over 7% and the new lender friendly features, Prosper is an exciting investment service for individuals looking to take a more active role in how their money is put to work. For Borrowers, the new Prosper remains a valuable resource to connect on a more personal level with investors; and maybe even score a lower interest rate while you're at it.