I’m pleased to share with you the significant enhancements we made today on Prosper. As you know, we’ve been working hard over the past year to improve the lender and borrower experience. Loss rates have significantly improved, and actual lender returns are currently averaging 10.4%*.

Today’s enhancements include a new look for the website and some exciting new features that will improve your experience as a lender. The biggest change is that we have eliminated the auction for all new loan listings – from now on listings will have pre-set interest rates. While many lenders enjoyed the auction system conceptually, we heard consistent feedback that in practice, auctions made the deployment of funds more time consuming with little gain in lender returns. The change to pre-set pricing means that listings will close faster and that you can’t be outbid – so your investments will start earning great returns more quickly!

Log in to invest and try out the new enhancements.

What’s New:

• Pre-set borrower rates simplify the process
• Listings automatically fund at 100% – no need to wait for auctions to end
• Listing period has been extended to 14 days – giving you more time to review listings that haven’t yet funded
• Listings that expire and are at least 70% funded may still originate – enabling more of your investments to fund
• You cannot be outbid – your stake in a listing is guaranteed if the loan funds
• HR listings not currently available
• Auctions will still exist in our secondary market – you can still sell your loans to the highest bidder

We’re excited about these changes and hope they will make your investment experience with us even more prosperous.

Sincerely,

Chris Larsen
CEO
Prosper Marketplace, Inc

If you have any questions or need further clarification on these changes, please call us at 1-866-615-6319; Monday-Friday; 8am to 5pm PST.

*Net Annualized Returns represent the actual returns on Borrower Payment Dependent Notes (“Notes”) issued and sold by Prosper since July 15, 2009. To be included in the calculation of Net Annualized Returns, Notes must be associated with a borrower loan originated more than 10 months ago; this calculation uses loans originated through December 31, 2009. To calculate Net Annualized Returns, all payments received on borrower loans corresponding to eligible Notes, net of principal repayment, credit losses and servicing costs for such loans, are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans. To annualize this cumulative return, the cumulative number is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. Net Annualized Returns are not necessarily indicative of the future performance of any Notes. All calculations made as of October 31, 2010.

Notes offered by Prospectus.