Today’s Cool Website Spotlight shines on Prosper.com, a site that links up people who want to borrow money with people who want to lend money. The borrowers either don’t want to use a traditional bank or have poor credit and can’t get a loan. They provide their financial details, get a credit score, and write up a request for a loan amount and suggested interest rate. Then the lenders look over the requests on the site, including their credit score and debt/income ratio. Then they bid on a piece of the loan, offering maybe $100 toward the loan at 10%, 25%, or whatever the appropriate rate is. Most lenders lend small amounts to many people to spread out the risk of default. If and when the loan is fully funded, the lenders start bidding down the interest rate until the “auction” closes. The borrower gets the money and starts paying it back to the lenders with interest over a 3-year term. If they default, Prosper sends a collection agency after them. It’s a fascinating concept, and if you can tolerate significant risk, it can provide excellent returns for you as a lender. Behold the power of the Internet!