Peer-to-peer lending site Prosper gets second wind in California

For the last six months, peer-to-peer lending service Prosper has suspended transactions while it waits for the Securities and Exchange Commission to approve its new system for online lending. But now, with the blessing of the California Department of Corporations, the company has legally resumed activity — as long as the lenders in question are located in the golden state (borrowers can be from anywhere in the U.S.)

Even as its future hinges on the SEC’s sign-off, Prosper has kicked off its own secondary market, dubbed the Open Market Initiative, reports VentureWire. The plaform allows lending companies (e.g. Banks, credit unions, specialty lenders who focus on serving specific consumer segments or types of loans, etc.) to sell existing loans. The upshot is these lending companies can get much needed liquidity, so they can extend credit to more people, and investors on Prosper (both individuals and institutions) can help rebuild the US economy.

The company’s prime competitor, Lending Club, also offers a secondary market, but it isn’t as extensive as Open Market.

Prosper has raised $40 million in capital to date from Accel Partners and Benchmark Capital among others.

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