STEP 2
Loan Funding
In Step 2, Adoption Made Possible funds a loan through the Prosper.com Peer-to-Peer lending platform to cover expenses between the home study and adoption referral.
The Prosper loan origination process follows these general activities.
1. Before a loan is posted on a platform’s website, a prospective borrower submits an application to the platform for initial screening by the platform provider.
2. The platform obtains a credit report on the applicant and uses this information to assign a risk grade to the proposed loan and set an interest rate corresponding to the assigned risk grade.
3. If accepted, a loan request is posted on the platform’s website, where investors can search for loans that meet their desired risk/return characteristics.
4. Loans marketed at Prosper can be funded wholly by institutional investors or fractionally by individual investors (peers).
5. Once there are enough investors to fund the loan, the loan is then originated. The platform's bank entity then sells the proportional notes to each investor that has agreed to fund all or a fraction of the loan.
Please do not proceed with the loan application without first receiving application acceptance and loan instructions from Adoption Made Possible.
Peer-to-peer (P2P) lending is a crowd funding mechanism that facilitates loan originations outside of the traditional consumer banking system by connecting borrowers directly with lenders through an internet platform.
Prosper.com issues peer funded loans in amounts ranging from $1,000 to $35,000 with fixed interest rates and maturities of three to five years.
Prosper.com markets loans to lenders based on credit ratings and loan purpose and provides loan investors with a variety of borrow information obtained from a credit report. The lending platform receives origination fees (usually 1% to 2%) and servicing fees (typically 1% of the outstanding loan balance) to cover expenses associated with administration of the loan.
Once the loan is originated and repayments begin, the lenders receive principal and interest on monthly basis for loans in a non-delinquent status.
APPLYING FOR A LOAN
An applicant who completes Step 1 and receives notification from Adoption Made Possible may then apply for a loan through the Prosper.com platform. The application process is quite simple and begins with a requested loan amount, which must be for the amount agreed between the applicant and Adoption Made Possible. The applicant selects Baby & Adoptions as the purpose of the loan. The illustration below shows the welcome screen for borrowers.
The application process continues with personal information and log-in creation as below. There may be additional input screens and agreement acknowledgements required in order to complete the application process.
With the application information, Prosper creates a lender profile to prepare to market your loan. Prosper generates a credit rating and gathers information on the application from the various credit reporting agencies to include in the loan profile. Once Prosper completes the necessary vetting of the borrower and confirms the proposed loan amount is investment grade, the applicant is presented with the terms of the loan offer. When the applicant accepts the loan terms, a loan listing is created and the loan is presented to all Prosper investors for the funding process.
The loan listing ID number will allow Adoption Made Possible to review the application information as part of Adoption Made Possible's vetting processing and fund the remaining portion of the loan not yet allocated to other investors or institutions. There is a possibility that if the loan is fully funding immediately by an institutional investor, Adoption Made Possible will not be able to participate as an investor in the loan. Should this occur, this will not preclude the applicant from proceeding to step 3 to receive the adoption grant.
Below is an example “Baby & Adoption” loan listing available to investors on the Prosper site. The listing shows the ID, amount, credit rating, interest, percent funded as well as the closing time for the crowd funding.
After selecting the Listing ID, further details on the loan and the applicant are available to Adoption Made Possible. Credit rating, debt to income ratio, etc. can be used as selection criteria for Adoption Made Possible applicants. Key credit report information such as open lines of credit and date of first line of credit are useful data that will allow Adoption Made Possible to further vet applicants against the information provided in the Adoption Made Possible application. Adoption Made Possible can then fund the loan for the agreed loan amount or the remaining principal amount, whichever is less.
Adoption Made Possible, as an investor on the Prosper.com platform will be able to fund, monitor and manage loans through the investor website. The Prosper platform provides a full-service solution to administering the loan portion of the Adoption Made Possible's funding model. Loans funded through the Prosper platform carry the similar terms and conditions of a traditional bank loan. The applicant must fully understand and agree to the terms and conditions of the Prosper loan. The loan is a contractual agreement between the applicant and lender and Adoption Made Possible will not be able to intercede for the applicant should the loan enter delinquency or default status.