Matt just put up a great article on Prosper, I know I just wrote about this company last week but I can’t stop thinking about it. Larsen really is on to something here by filling a gap left wide open by banks… the place you used to go for small loans before everyone start draining the equity out of their homes. I’d be tempted to call this a wisdom of crowds thing as well, but I don’t think it’s that simple… maybe this is rooted in the notion that the vast majority of people are basically honest and trustworthy and the risk that any lender is exposed to is a lot smaller than one would initially think.

MercuryNews.com | 04/03/2006 | Online venture connects borrowers, lenders:

Then Watson heard about Prosper, a new online venture based in San Francisco that uses some old Vietnamese lending concepts to connect ordinary people who have extra money with borrowers who need it. Borrowers get cheaper loans if they belong to a group of other debtors who pay their bills on time. The group essentially puts its reputation on the line, vouching for the trustworthiness of its members. If one member pays late, the whole group suffers.

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