Need operating capital or money to launch your green business venture?

Consider open-market funding options through a new internet auction based financial service, Prosper.com.

With the contracting housing market, plummeting home equity, and the associated collapse of the sub-prime credit market, it has become a challenge for new small businesses to secure start-up funding.
 
Until recently, the alternative funding options for new business owners consisted largely off friends and family, private investors, or credit cards. Each of these choices has a list of positives, but just as many negatives. When it comes to the common tactic of funding your new business with credit cards, the negative includes possible financial ruin!

If the standard list of alternative funding sources holds little appeal to you, there is a new option to consider - open bidding on your loan be the general investing public.

Prosper.com is a unique animal in the financial world. A cross between a bank, a venture capital firm, an online auction site, and a social networking site, Prosper can be a savior for the right borrower.

To use Prosper.com, a potential borrower posts a profile, their loan needs, and the maximum interest rate that they are willing to pay. Then individual investors "bid" on the loan. Bids range from a few dollars to the full amount of the loan, though Prosper encourages investors to mitigate their risk of default by spreading their investments out among many borrowers and by keeping individual lending amounts per borrower small.

Each borrower is rated in risk categories according to a confidential credit application filed with the company. Not to worry, Prosper handles all the loan administration, prepares the credit ratings, and the divvying up of your loan payments among lenders. A borrower's true identity or other sensitive information is never revealed to the public or to lenders.


The more attractive a borrower is in terms of credit rating and the better the intended purpose of the money, the greater the likely interest in a loan. The more bids a loan receives, the greater the competition for a borrower's business, the lower the final interest rate will be.

Potential borrowers can further increase the attractiveness of a loan offer by joining one of the many groups on the site. Groups form around interest areas, occupations, geographical areas, businesses, or any of a long list of common threads. Each group is administered by a group leader who reviews loan requests, and new member profiles. Officially, a group must invite new members to join, but it appears that, in practice, joining is more of an application/approval process. Allying yourself with a good group with an attractive risk and repayment history can greatly increase your chances of getting funded, and of garnering an attractive interest rate.

The standard terms are for loans up to $25,000 repaid over three years. The interest rates change over time, but currently they average 8.05% for borrowers listed as AA lending risk, all the way to an average of 29% for high risk (E grade) borrowers.

Snooping through the loans available, as well as those that have recently closed after being fully funded on Prosper recently, the true potential of this lending model becomes obvious. The site is full of people with less than stellar credit histories who are attempting to get money for the purpose of paying down their out of control credit card debts. The potential borrowers with reasonably good credit, and an attractive plan for the money (like growing a green small business) look exceptionally attractive.

If Prosper looks like a good choice for you, complete an application, join a good borrower's group, and create an attractive plan for using the money (without getting too specific).

Make sure you mention the stellar growth of green businesses in dozens of sectors. You could have the money you need to launch or grow your Green Business in a matter of days.