AsUNITED ~~filed~~STATES ~~with~~SECURITIES ~~the~~AND ~~Securities~~EXCHANGE ~~and Exchange Commission on March 7, 2012~~COMMISSION

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM~~Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Prosper Funding LLC Prosper Marketplace, Inc. (Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)



45-4526070		73-1733867
(I.R.S. Employer Identification Number)		(I.R.S. Employer Identification Number)

Delaware		6199		45-4526070
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Delaware

~~111~~(State ~~Sutter~~or ~~Street,~~other ~~22nd~~jurisdiction ~~Floor~~of incorporation or organization)

~~San Francisco, CA 94104~~6199

(Primary Standard Industrial Classification Code Number)

221 Main Street, 3^rd Floor

San Francisco, CA 94105

(415) 593-5400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

~~area~~Julie ~~code~~Hwang, ~~of registrant’s principal executive offices)~~ Esq.

Sachin Adarkar, Esq.

Secretary

~~111~~221 ~~Sutter~~Main Street, ~~22nd~~3rd Floor

San Francisco, CA ~~94104~~ 94105

(415) 593-5400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

area code, of agent for service)

Copies to:

Keir D. Gumbs, Esq.

Brian K. Rosenzweig

Covington & Burling LLP

~~1201~~One ~~Pennsylvania~~CityCenter, ~~Avenue~~850 Tenth Street, NW

Washington, DC ~~20004~~20001-4956

(202) 662-6000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company x

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

Title of Securities being Registered	Proposed Maximum Aggregate Offering Price (1)(2)		Amount of Registration Fee
Title of Each Class ofSecurities to beRegistered	Amount to beRegistered			Proposed MaximumAggregate OfferingPrice per Unit			Proposed MaximumAggregate OfferingPrice			Amount ofRegistrationFee
Prosper Funding LLC Borrower Payment Dependent Notes	$500,000,000		$57,300
Borrower Payment Dependent Notes	$	1,000,000,000	(1)		100%		$	1,000,000,000	(1)	$	6,848	(1)
PMI Management Rights (2)		N/A	(2)		N/A	(2)		N/A	(2)		N/A	(2)

(1)~~The~~ Pursuant to Rule 415(a)(6) under the Securities Act, the securities registered ~~hereby~~pursuant ~~consist~~to ofthis ~~Prosper~~Registration ~~Funding~~Statement ~~LLC~~include unsold securities previously registered by the Registrants on the Registrants’ Registration Statements (File Nos. 333-204880 and 333-204880-01), originally filed on June 11, 2015 and declared effective on September 29, 2015 (the “Prior Registration Statements”). The Prior Registration Statements registered the offer and sale of Borrower Payment Dependent Notes, each issued with a PMI Management Right that was attached to and not be separable from the Borrower Payment Dependent Note having an aggregate initial offering price not to exceed $1,500,000,000 (collectively, the “~~Notes~~Shelf Securities”). ~~The~~ ~~Notes~~Of ~~represent~~these ~~special~~Shelf Securities, ~~limited~~the ~~obligations~~Company sold an aggregate of $555,000,000 of securities, and as a result, $945,000,000 of Shelf Securities remain unsold as the ~~registrant~~date of filing of this Registration Statement (the “Unsold Securities”). ~~Each~~ ~~Note~~The ~~corresponds~~Registrants have determined to ainclude ~~single~~such ~~consumer~~Unsold ~~loan~~Securities ~~originated~~in ~~through~~this ~~the~~Registration ~~platform~~Statement. ~~that~~The Registrants are also registering new shelf securities on this Registration Statement with an aggregate initial offering price of $55,000,000 (the ~~registrant~~“New ~~operates~~Securities”). Pursuant to Rule 415(a)(6) under ~~license~~the ~~from~~Securities ~~its~~Act, ~~parent~~the ~~entity~~filing fee of $109,809 ~~Prosper~~relating ~~Marketplace~~to the Unsold Securities under the Prior Registration Statements, ~~Inc. The~~which ~~registrant~~was paid under the Prior Registration Statements, will ~~only~~continue to be ~~obliged~~applied to ~~make~~the ~~payments~~Unsold Securities registered pursuant to this Registration Statement. Accordingly, the amount of the registration fee in the "Calculation of Registration Fee" table has been calculated based on the proposed maximum offering price of the additional $55,000,000 of New Securities registered on this Registration Statement. As a ~~Note~~result, ifa filing fee of $6,848 is being paid herewith. To the extent that, after the filing date hereof and prior to the ~~extent~~effectiveness itof ~~receives~~this ~~payments~~Registration onStatement, the ~~consumer~~Registrants ~~loan~~sell ~~corresponding~~any Unsold Securities pursuant to ~~that~~the ~~Note. Each~~Prior ~~Note~~Registration ~~may~~Statements, ~~have~~the Registrants will identify in a ~~separate~~pre-effective ~~term,~~amendment ~~principal~~to this Registration Statement the updated amount of Unsold Securities from the Prior Registration Statements to be included in this Registration Statement pursuant to Rule 415(a)(6) and ~~applicable~~the ~~interest~~updated ~~rate~~amount of New Securities to be registered on this Registration Statement. Pursuant to Rule 415(a)(6) under the Securities Act, the offering of the Unsold Securities under the Prior Registration Statements will be deemed terminated as of the date of effectiveness of this Registration Statement.

(2)~~Estimated~~ ~~solely~~Each ~~for~~Borrower ~~purposes~~Payment ofDependent ~~computing~~Note ~~the~~will ~~amount~~be ofissued ~~the~~with ~~registration~~a ~~fee~~PMI ~~pursuant~~Management Right that is attached to ~~Rule 457(o)~~and ~~under~~will not be separable from the ~~Securities~~Borrower ~~Act~~Payment Dependent Note. No separate consideration is being paid for or value assigned to the PMI Management Rights and accordingly, no additional registration fee is being paid herewith.

~~Indicate~~The byRegistrants ~~check~~hereby ~~mark~~amend ~~whether~~this registration statement on such date or dates as may be necessary to delay its effective date until the ~~registrant~~Registrants isshall file a ~~large~~further ~~accelerated~~amendment ~~filer,~~which anspecifically ~~accelerated~~states ~~filer,~~that athis ~~non-accelerated~~registration ~~filer,~~statement orshall athereafter ~~smaller~~become ~~reporting~~effective ~~company. See~~in accordance with Section 8(a) of the ~~definitions~~Securities Act of ~~“large~~1933 ~~accelerated~~or ~~filer,”~~until ~~“accelerated~~the ~~filer”~~registration ~~and~~statement ~~“smaller~~shall ~~reporting~~become ~~company”~~effective inon ~~Rule 12b-2~~such ~~under~~date as the ~~Securities~~Commission, ~~Exchange~~acting ~~Act~~pursuant ofto ~~1934.~~said ~~(Check~~Section ~~one~~8(a):, may determine.

~~Large~~The ~~Accelerated~~information ~~Filer~~in othis ~~Accelerated~~prospectus ~~Filer~~is onot ~~Non-accelerated~~complete ~~Filer~~and ýmay ~~Smaller~~be ~~Reporting~~changed. ~~Company~~Prosper oFunding LLC and Prosper Marketplace, Inc. may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

~~The~~SUBJECT ~~registrant~~TO hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933COMPLETION, asDATED ~~amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section~~June ~~8(a)~~21, ~~may~~2018 ~~determine.~~

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED MARCH 7, 2012

PROSPER FUNDING LLC

$~~500~~1,000,000,000 Borrower Payment Dependent Notes

~~This~~PROSPER ~~is a public offering to lender members of Prosper Funding LLC of up to $500~~MARKETPLACE,~~000,000~~ ~~in principal amount of Borrower Payment Dependent Notes, or “Notes”~~INC.

~~Each~~PMI ~~series~~Management of Notes will be dependent for payment on payments we receive on a specific borrower loan described in a listing posted on our peer-to-peer online credit platform, which we refer to as the “platform.” All listings on the platform are posted by individual consumer borrower members of Prosper Funding LLC requesting individual consumer loans, which we refer to as “borrower loans.”Rights

PROSPER FUNDING LLC

$1,000,000,000 Borrower Payment Dependent Notes

PROSPER MARKETPLACE, INC.

PMI Management Rights

This is a public offering to investors of Prosper Funding LLC of up to $1,000,000,000 in principal amount of Borrower Payment Dependent Notes, or "Notes." Each Note will come attached with a PMI Management Right issued by Prosper Marketplace, Inc. Prosper Funding LLC will be the sole issuer of the Notes and Prosper Marketplace, Inc. will be the sole issuer of the PMI Management Rights. For the purposes of this prospectus, the Notes and the PMI Management Rights will be collectively referred to as "the Securities."

Except as the context requires otherwise, as used in this prospectus, "we," "us," "our," and "Registrants" refer to Prosper Marketplace, Inc. ("PMI"), a Delaware corporation, and its wholly owned subsidiary, Prosper Funding LLC ("PFL"), a Delaware limited liability company; and "Prosper" refers to PMI and its wholly owned subsidiaries, PFL, BillGuard, Inc. ("BillGuard"), a Delaware corporation, and Prosper Healthcare Lending LLC ("PHL"), a Delaware limited liability company, on a consolidated basis. In addition, the unsecured, consumer loans originated through our marketplace are referred to as "Borrower Loans."

Payments for each series of Notes will be dependent on payments PFL receives on a specific Borrower Loan described in a listing posted to our marketplace. All listings on our marketplace are posted by individual consumer borrowers of PFL requesting individual consumer loans. In addition, each listing will be described in a prospectus supplement.

Important terms of the Notes include the following, each of which is described in detail in this prospectus:

·• The Notes are special, limited obligations of ~~Prosper~~PFL ~~Funding LLC~~ only and are not obligations of its parent company, ~~Prosper Marketplace, Inc., or “~~PMI”, or of the borrowers under the corresponding ~~borrower~~Borrower ~~loans~~Loans. · Our obligation to make payments on a Note will be limited to an amount equal to the Note holder’s pro rata share of amounts we receive with respect to the corresponding borrower loan, net of any servicing fees. Neither we nor PMI guarantees payment of the Notes or the corresponding borrower loans.

·• ~~The~~PFL's ~~Notes~~obligation to make payments on a Note will ~~bear~~be ~~interest~~limited ~~from~~to an amount equal to the ~~date~~Note holder's pro rata share of ~~issuance,~~amounts ~~have~~PFL areceives ~~fixed~~with ~~rate~~respect to the corresponding borrower loan, benet ~~payable~~of ~~monthly~~any ~~and~~servicing ~~have~~fees anand ~~initial~~other ~~maturity~~costs ofand ~~one~~fees, ~~three~~if orapplicable. ~~five~~Neither ~~years~~Prosper ~~from~~Funding ~~issuance~~LLC nor Prosper Marketplace, Inc. Weguarantees ~~may~~payment ~~add~~of ~~additional~~the ~~Note~~Notes ~~terms~~or ~~from~~the ~~time~~corresponding toBorrower ~~time~~Loans.

·• AThe ~~Note~~Notes ~~holder’s~~will ~~recourse~~bear ~~will~~interest from the date of issuance, have a fixed rate, be ~~extremely~~payable ~~limited~~monthly inand ~~the~~have ~~event~~an ~~that~~initial ~~borrower~~maturity ~~information~~of isthree ~~inaccurate~~or ~~for~~five ~~any~~years ~~reason~~from issuance. PFL may add additional Note terms from time to time.

We• ~~will~~A ~~offer~~Note ~~the~~holder's ~~Notes~~recourse ~~to our lender members at 100% of their principal amount. The Notes~~ will be ~~offered~~extremely ~~only~~limited ~~through~~in ~~our~~the ~~website,~~event ~~and~~that ~~there~~borrower ~~will~~information beis noinaccurate ~~underwriters~~for orany ~~underwriting discounts~~reason.

~~The~~Important ~~Notes~~terms ~~will~~of ~~be issued in electronic form only and will not be listed on any securities exchange. The Notes will not be transferable except through~~ the ~~Folio~~PMI ~~Investing~~Management ~~Note~~Rights ~~Trader~~include ~~platform, or~~ the ~~“Note Trader Platform~~following,” ~~operated~~each ~~and~~of ~~maintained~~which byis ~~FOLIOfn~~described ~~Investments,~~in ~~Inc.,~~detail ain ~~registered~~this ~~broker-dealer. There can be no assurance, however, that a market for Notes will develop on the Note Trader platform. Therefore, note purchasers must be prepared to hold their Notes to maturity.~~prospectus:

~~This~~• ~~offering~~The isPMI ~~highly~~Management ~~speculative~~Rights ~~and~~will ~~the~~not ~~Notes~~be ~~involve~~separable afrom ~~high~~the ~~degree~~Notes ofoffered ~~risk. Investing~~on in the ~~Notes~~marketplace ~~should~~and bewill ~~considered~~not ~~only~~be byassigned ~~persons~~a ~~who~~value ~~can~~separate ~~afford~~from the ~~loss of their entire investment~~Notes. ~~See “Risk Factors” on page 10.~~

•

The PMI Management Rights are "investment contracts" issued by PMI directly to Note holders. The phrase "investment contract" is a concept under federal securities law that refers to an arrangement where investors invest money in a common enterprise with the expectation of profits, primarily from the efforts of others. Here, the "investment contracts" that PMI is registering as PMI Management Rights arise from the services that PMI has provided and will provide, as described in the Administration Agreement, the Indenture, the Investor Registration Agreement, and in this prospectus, which services include, but are not limited to:


◦	the existence and operation of the marketplace;


◦	verification of borrower information;


◦	evaluation and validation of the Prosper Score and Prosper Rating;


◦	remitting borrower payments; and


◦	collecting on delinquent accounts.

•

Investors who purchase PMI Management Rights will have rights under the federal securities laws as a purchaser of a registered security. Investors will have limited contractual rights, collectively through the indenture trustee, to enforce PMI's contractual obligations under the Administration Agreement. Such contractual rights exist under state law and will not, in any way, affect the rights of investors under the federal securities laws.

•

PMI's obligations to provide services under the Administration Agreement may be terminated by PMI or by PFL under certain circumstances described in this prospectus. For more information, see "Summary of Indenture, Form of Notes, PMI Management Rights and Administration Agreement-Administration Agreement-Indenture Trustee as Third-Party Beneficiary." Termination of the Administration Agreement would not affect the rights of holders of previously-issued PMI Management Rights under the federal securities laws.

PFL will offer the Notes to its investors at 100% of their principal amount.

The Notes and PMI Management Rights will be issued in electronic form only and will not be listed on any securities exchange. Notes and PMI Management Rights may only be transferred through an approved online trading platform. Currently, no trading platform exists for the transfer of the Notes and PMI Management Rights and there can be no assurance a trading platform for the transfer of Notes and PMI Management Rights will develop in the future. Therefore, note purchasers must be prepared to hold their Notes and PMI Management Rights to maturity. For more information, see “Risk Factors-Risks Inherent in Investing in the Notes-The Notes will not be listed on any securities exchange and can be held only by PFL’s investors. Further, no trading platform

for the transfer of Notes exists and there can be no assurance a trading platform for the transfer of Notes will develop in the future. Therefore, investors should be prepared to hold the Notes they purchase until maturity.”

This offering is highly speculative and the Notes involve a high degree of risk. Investing in the Notes should be considered only by persons who can afford the loss of their entire investment. See "Risk Factors" for more information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is ~~_____~~_________, ~~2012~~2018.

~~PROSPER FUNDING LLC~~5

TABLE OF CONTENTS

PART I
ABOUT THIS PROSPECTUS	7
ABOUT THIS PROSPECTUS		ii
WHERE YOU CAN FIND MORE INFORMATION	7
WHERE YOU CAN FIND MORE INFORMATION		iv
PROSPECTUS SUMMARY	8
PROSPECTUS SUMMARY		1
THE OFFERING	13
THE OFFERING		3
FORWARD - LOOKING STATEMENTS	17
FORWARD – LOOKING STATEMENTS		8
RISK FACTORS	18
RISK FACTORS		10
RISKS RELATED TO BORROWER DEFAULT	19
RISKS RELATED TO BORROWER DEFAULT		10
RISKS INHERENT IN INVESTING IN THE NOTES	25
RISKS INHERENT IN INVESTING IN THE NOTES		16
RISKS RELATED TO PFL AND PMI, OUR MARKETPLACE AND OUR ABILITY TO SERVICE THE NOTES	29
RISKS RELATED TO US, THE PLATFORM AND OUR ABILITY TO SERVICE THE NOTES		18
RISKS RELATING TO COMPLIANCE AND REGULATION	39
RISKS RELATING TO COMPLIANCE AND REGULATION		25
RATIO OF EARNINGS TO FIXED CHARGES	44
USE OF PROCEEDS	45	30
PLAN OF DISTRIBUTION	45	30
FINANCIAL SUITABILITY REQUIREMENTS	45	30
ABOUT THE PLATFORM		31
ABOUT THE MARKETPLACE	46
SUMMARY OF INDENTURE, FORM OF NOTES AND SERVICING AGREEMENT		63
SUMMARY OF INDENTURE, FORM OF NOTES AND ADMINISTRATION AGREEMENT	80
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS	93	73
INFORMATION ABOUT PROSPER FUNDING LLC	98	79
GOVERNMENT REGULATION		84
INFORMATION ABOUT PROSPER MARKETPLACE, INC.	102
MANAGEMENT		87
GOVERNMENT REGULATION	107
EXECUTIVE COMPENSATION		90
MANAGEMENT	107
TRANSACTIONS WITH RELATED PARTIES		90
EXECUTIVE COMPENSATION	113
PRINCIPAL SECURITYHOLDERS		90
TRANSACTIONS WITH RELATED PARTIES	113
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		91
PRINCIPAL SECURITYHOLDERS	115
LEGAL MATTERS		95
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	115
EXPERTS		95
LEGAL MATTERS	115
INDEX TO FINANCIAL STATEMENTS		F-1
EXPERTS	115
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL STATEMENTS	116

Table of Contents

PART II
Item 13. Other Expenses of Issuance and Distribution		II-1
Item 14. Indemnification of Directors and Officers		II-1
Item 15. Recent Sale of Unregistered Securities		II-1
Item 16. Exhibits and Financial Statement Schedules		II-2
Item 17. Undertakings		II-3
SIGNATURES		S-1
EXHIBIT INDEX		E-1
EX- 3.1 Limited Liability Company Agreement of Prosper Funding LLC, dated March 1, 2012
EX- 4.2 Form of Indenture, dated ________, 2012, between Prosper Funding LLC and Wells Fargo Bank, National Association
EX -10.4 Form of Servicing Agreement between Prosper Funding LLC and Prosper Marketplace, Inc., date __________, 2012
EX- 23.1 Consent of Odenberg, Ullakko, Muranishi & Co. LLP, an independent registered public accounting firm

Table of Contents

ABOUT THIS PROSPECTUS

This prospectus describes ~~our~~Prosper Funding LLC's offering of Borrower Payment Dependent Notes, or “"Notes.” " In addition, a PMI Management Right issued by Prosper Marketplace, Inc. is attached to each Note issued by Prosper Funding LLC. Such PMI Management Right will not be separable from the Note to which it is attached and will not be assigned any value separate from such Note. This prospectus is part of a registration statement filed with the Securities and Exchange Commission, which weis ~~refer~~referred to herein as the “"SEC.”" This prospectus, and the registration statement of which it forms a part, speak only as of the date of this prospectus. We Prosper Funding LLC and Prosper Marketplace, Inc. will supplement this ~~registration~~prospectus ~~statement~~ from time to time as described below.

~~Unless~~The offering described in this prospectus is a continuous offering pursuant to Rule 415 under the ~~context~~Securities ~~otherwise~~Act ~~requires~~of 1933, weas ~~use~~amended (the ~~terms~~"Securities “Act"). The Securities are offered continuously and sales of the ~~Company,”~~Securities ~~“our~~through ~~company,”~~the ~~“we~~marketplace occur on a daily basis. When PFL posts a loan request on the marketplace,” ~~“us”~~that ~~and~~posting ~~“our”~~constitutes an offer by PFL to sell the series of Notes corresponding to that request. As used in this prospectus, toa "loan listing" or a "listing" shall refer to ~~Prosper~~a ~~Funding~~posted ~~LLC~~loan request. PFL may allocate some of its loan requests to other investor funding channels, aincluding, ~~Delaware~~for ~~limited~~example, ~~liability~~loans ~~company~~that it sells privately to certain investors. We ~~are~~If it does so, it will allocate loan requests among its various investor channels automatically, based upon a ~~wholly-owned~~random ~~subsidiary~~allocation methodology determined by PFL or PMI. Some loan listings may have been allocated to one of ~~Prosper~~the ~~Marketplace,~~other ~~Inc~~investor funding channels first. All such loan listings will be identified for investors. PFL and PMI prepare regular supplements to this prospectus, awhich ~~Delaware~~are ~~corporation~~called "listing reports." In each listing report, orPFL “and PMI” provide information about the most recent loan listings posted on the marketplace and the series of Notes that correspond to those listings. PFL and PMI will also regularly file prospectus supplements that are called "sales reports," describing funding, interest rate and maturity date for each series of Notes sold through the marketplace. These prospectus supplements will provide information about the Notes that will correspond to the information contained in the corresponding borrower listings. Listing reports will also be posted on PFL's website.

~~The~~PFL ~~offering~~and ~~described~~PMI inwill prepare prospectus supplements to update this prospectus isfor aother ~~continuous~~purposes, ~~offering~~such ~~pursuant~~as to ~~Rule 415~~disclose ~~under~~changes to the ~~Securities~~terms ~~Act~~ of ~~1933,~~the asoffering ~~amended~~of (the ~~“Securities Act”). We offer~~ Notes ~~continuously~~, ~~and~~provide ~~sales~~quarterly updates of ~~Notes~~financial ~~through~~and ~~the~~other ~~platform~~information ~~occur~~included onin athis ~~daily~~prospectus ~~basis. When~~and wedisclose ~~post~~other amaterial ~~loan~~developments. ~~request~~These onprospectus ~~our~~supplements ~~website,~~will ~~that~~be ~~posting~~filed ~~constitutes~~with anthe ~~offer~~SEC bypursuant us to ~~sell~~Rule ~~the~~424(b) ~~series~~and ofwill ~~Notes~~be ~~corresponding~~posted toon ~~that~~PFL's ~~request~~website. We ~~refer~~When torequired aby ~~posted~~SEC ~~loan~~rules, ~~request~~such as awhen ~~“loan~~there ~~listing”~~is or a ~~“listing”. We~~"fundamental ~~prepare~~change" ~~regular~~in ~~supplements~~the tooffering ~~this~~or ~~prospectus,~~the ~~which~~information wecontained ~~refer~~in tothis asprospectus, ~~“listing~~or ~~reports”. In~~when ~~each~~an ~~listing~~annual ~~report,~~update weof ~~provide~~financial information ~~about~~is ~~the~~required ~~most~~by ~~recent~~the ~~loan~~Securities ~~listings~~Act ~~posted~~or onSEC ~~our~~rules, ~~website~~PFL and ~~the~~PMI ~~series’~~will offile ~~Notes~~post-effective ~~that~~amendments ~~correspond~~ to ~~those~~the ~~listings. We~~registration ~~will~~statement ~~also~~of ~~regularly~~which ~~file~~this prospectus ~~supplements~~forms ~~that~~a ~~we refer to as “sales reports”~~part, ~~describing~~which ~~the~~will ~~bidding~~include ~~history~~either ~~and~~a ~~maturity~~prospectus ~~date~~supplement ~~for~~or ~~each~~an ~~series~~entirely ofnew ~~Notes~~prospectus ~~sold~~to ~~through~~replace ~~the~~this ~~platform~~prospectus. ~~These~~ ~~prospectus~~PFL ~~supplements~~and ~~will~~PMI ~~provide~~currently ~~information~~anticipate ~~about~~that ~~the~~post-effective ~~Notes~~amendments ~~that~~ will ~~correspond~~be torequired, ~~the~~among ~~information~~other ~~contained~~times, inwhen ~~the~~there ~~corresponding~~are ~~borrower~~changes ~~listings. We~~to ~~will~~the ~~also~~material ~~post~~terms ~~these~~of ~~listing~~the ~~and sales reports on our website~~Notes.

WeThe ~~will~~Securities ~~prepare~~are ~~prospectus~~not ~~supplements~~available ~~to update this prospectus~~ for ~~other~~offer ~~purposes,~~and ~~such~~sale as to ~~disclose~~residents ~~changes~~of toevery ~~the~~state. ~~terms~~PFL's ofwebsite ~~our~~indicates ~~offering of~~ the ~~Notes,~~states ~~provide~~where ~~quarterly~~residents ~~updates~~may ofpurchase ~~our~~the ~~financial and other information included in this prospectus and disclose other material developments~~Securities. We ~~will~~PFL ~~file~~posts ~~these prospectus supplements with the SEC pursuant to Rule 424(b) and post them~~ on ~~our~~its website~~. When~~ ~~required~~any byspecial ~~SEC~~suitability ~~rules,~~standards ~~such as when there is a “fundamental change” in our offering~~ or ~~the~~other ~~information~~conditions ~~contained~~applicable into ~~this~~purchases ~~prospectus, or when an annual update~~ of ~~our financial information is required by~~ the Securities ~~Act~~in orcertain ~~SEC~~states ~~rules,~~that weare ~~will~~not ~~file~~otherwise ~~post-effective~~set ~~amendments~~forth toin ~~the registration statement of which~~ this prospectus ~~forms a part, which will include either a prospectus supplement or an entirely new prospectus to replace this prospectus~~. ~~We currently anticipate that post-effective amendments will be required, among other times, when we change material terms of the Notes.~~

The Notes are not available for offer and sale to residents of every state. Our website will indicate the states where residents may purchase Notes. We will post on our website any special suitability standards or other conditions applicable to purchases of Notes in certain states that are not otherwise set forth in this prospectus.

iii

Table of Contents

WHERE YOU CAN FIND MORE INFORMATION

WePFL and PMI have filed a registration statement on Form S-1 with the SEC in connection with this offering. In addition, wePFL and PMI are required to file annual, quarterly and current reports and other information with the SEC. You may read and copy the registration statement and any other documents wePFL ~~have~~or PMI has filed at the SEC’'s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. ~~Our~~ PFL and PMI's SEC filings are also available to the public at the SEC’'s Internet site at http://www.sec.gov.

This prospectus is part of the registration statement and does not contain all of the information included in the registration statement and the exhibits, schedules and amendments to the registration statement. Some items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to usPFL, PMI and the ~~Notes~~Securities, weplease refer ~~you~~ to the registration statement and to the exhibits and schedules to the registration statement filed as part of the registration statement. Whenever a reference is made in this prospectus to any of ~~our~~PFL or PMI's contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are a part of the registration statement.

ivPFL and PMI "incorporate" into this prospectus information filed with the SEC in their Annual Report on Form 10-K for the fiscal year ended December 31, 2017 ("Annual Report") filed on March 26, 2018, except for the information that has been

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our financial statements and related notes, and the risk factors beginning on page 10, before deciding whether to purchase our Notes.

Prosper Funding LLC operates a peer-to-peer online credit platform, which we refer to as the “platform”, that enables its borrower members to borrow money and its lender members to purchase Borrower Payment Dependent Notes, or Notes, issued by Prosper Funding LLC, the proceeds of which facilitate the funding of the loans made to borrower members. Prosper Funding LLC is a wholly-owned subsidiary of Prosper Marketplace, Inc. We use the terms “we”, “us” and “our” to refer to Prosper Funding LLC, and we use the term “PMI” to refer to Prosper Marketplace, Inc.

About the Platform

PMI developed the platform and owns the proprietary technology that makes operation of the platform possible. We have entered into a Servicing Agreement with PMI pursuant to which PMI has licensed to us the right to operate the platform, and we have appointed PMI to provide certain administrative services relating to the platform (the “Servicing Agreement”). Prior to the commencement of this offering, PMI operated the platform directly, facilitated the origination of loans by WebBank through the platform and issued and sold notes corresponding to those loans. We refer to borrower loans originated and notes issued and sold through the platform prior to the commencement of this offering as “PMI Borrower Loans” and “PMI Notes”, respectively.

Loan Listings. A loan listing, or a listing, is a request by a borrower member for a borrower loan in a specified amount that is posted on the platform by the borrower member. We refer to a borrower member who posts a loan listing as an “applicant” and an applicant who obtains a loan through the platform as a “borrower”. Each listing sets forth the desired loan amount, interest rate and corresponding yield percentage, the minimum amount of total bids required for the loan to fund, the Prosper Rating and estimated loss rate for the listing, the applicant’s debt-to-income ratio, certain credit information from the applicant’s credit report, the applicant’s numerical credit score range, and the applicant’s self-reported annual income range, occupation and employment status.

The Prosper Rating is a proprietary credit rating that we assign to each listing. The Prosper Rating is a letter that indicates the level of risk associated with a listing and corresponds to an estimated average annualized loss rate range for the listing. There are currently seven Prosper Ratings, represented by seven letter scores, but this, as well as the loss ranges associated with each, may change over time as the marketplace dictates. The estimated loss rate for each listing is based on two scores: a consumer reporting agency score and an in-house custom score calculated using the historical performance of previous borrower loans with similar characteristics. We will use these two scores to determine an estimated loss rate for each listing, which correlates to a Prosper Rating. This rating system allows us to maintain consistency when assigning a rating to a listing. See “About the Platform – Risk Management.” for more information.

Bidding on Listings. A bid on a listing is a lender member’s commitment to purchase a Note in the principal amount of the lender member’s bid that will be dependent for payment on the payments we receive on the borrower loan described in the listing. After a listing is posted, lender members can place bids on that listing until the listing has received bids totaling the requested loan amount. Currently, a bid may be between $25 and the full amount of the requested loan amount. A lender member who wishes to bid on a listing must have funds in the amount of the bid in his lender member account at the time the bid is made. See “About the Platform - Structure of Lender Member Accounts and Treatment of Lender Member Balances” for more information. Once a bid is placed, it is irrevocable, and the amount of the bid may not be withdrawn from the lender member’s account, unless the bidding period expires without the listing having received enough bids to be funded. Once the listing has received bids totaling the requested loan amount, no further bids can be placed. The maximum length of the bidding period is 14 days. If the listing does not receive bids equal to or exceeding the minimum amount required for the listing to fund by the close of the fourteenth day after the listing is posted, the listing will terminate and will not be funded.

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Borrower Loans. If at the end of the bidding period the listing has received bids equal to or exceeding the minimum amount required to fund, a loan will be made to the applicant in an amount equal to the total amount of all winning bids. All borrower loans are unsecured obligations of individual borrower members with a fixed interest rate set by us and a loan term currently set at one, three or five years, although we may expand the range of available loan terms in the future to between three months and seven years. The minimum and maximum principal amounts for borrower loans are currently $2,000 and $25,000, respectively. All borrower loans are funded by WebBank, a Federal Deposit Insurance Corporation (“FDIC”) insured, Utah-chartered industrial bank. After funding a loan, WebBank sells and assigns the loan to us, without recourse to WebBank, in exchange for the principal amount of the borrower loan. WebBank has no obligation to Note holders.

For all borrower loans, we verify the applicant’s identity against data from consumer reporting agencies and other identity and anti-fraud verification databases. Loan listings can be posted without our obtaining any documentation of the applicant’s ability to afford the loan. In some instances, we verify the income or employment information provided by applicants in listings. This verification is normally done after the listing has been created but before the loan is funded, and therefore the results of the verification process are not reflected in the loan listings. See “About the Platform – Borrower Identity and Financial Information Verification.”

The Notes. We issue and sell a series of Notes for each borrower loan that is funded on the platform. The Notes are sold to the lender members who successfully bid on the corresponding loan listing in the principal amounts of their respective bids. Each series of Notes is dependent for payment on payments we receive on the corresponding borrower loan. We use the proceeds of each series of Notes to purchase that loan from Web Bank.

We will pay each Note holder principal and interest on the Note in an amount equal to each such Note’s pro rata portion of the principal and interest payments, if any, we receive on the corresponding borrower loan, net of our servicing fee, which is currently set at 1%, but which we may increase in the future to an amount that is greater than 1% but less than or equal to 3%. We will pay Note holders any other amounts we receive on the corresponding borrower loans, including late fees and prepayments, subject to our servicing fee, except that we will not pay to Note holders any non-sufficient funds fees for failed borrower payments that we receive. In addition, the funds available for payment on the Notes will be reduced by the amount of any collection fees a third-party collection agency charges for services rendered in connection with the corresponding borrower loan.. Notwithstanding the foregoing, no payments will be made on any Note after its final maturity date. See “The Offering - Final maturity date/Extension of maturity date.”

Under our lender member registration agreement, in the event of a material default under a series of Notes due to verifiable identity theft of the named borrower’s identity, we will repurchase such Notes from the relevant lender members. In the event we breach any of our other representations and warranties in the lender registration agreement pertaining to the Notes, and such breach materially and adversely affects a series of Notes, we will either indemnify the lender members, repurchase that series of Notes or cure the breach. See “About the Platform—Our Note Repurchase and Indemnification Obligations.”

Servicing. We are responsible for servicing the borrower loans and Notes. We refer borrower loans that become more than 30 days past-due to a third party collection agency for collection proceedings. See “About the Platform – Loan Servicing and Collection.”

Quick Invest. The platform includes a loan search tool, Quick Invest, that makes it easier for lender members to identify Notes that meet their investment criteria. A lender member using Quick Invest is asked to indicate (i) the Prosper Rating or Ratings she wishes to use as search criteria, (ii) the total amount she wishes to invest and (iii) the amount she wishes to invest per Note. Quick Invest then compiles a basket of Notes for her consideration that meet her search criteria. If the pool of Notes that meet her criteria exceeds the total amount she wishes to invest, Quick Invest selects Notes from the pool based on how far the listings corresponding to the Notes have progressed through the loan verification process, i.e., Notes from the pool that correspond to listings for which we have completed the verification process will be selected first. If the pool of Notes that meet the lender member’s criteria and for which we have completed verification still exceeds the amount she wishes to invest, Quick Invest selects Notes from that pool based on the principle of first in, first out, i.e., the Notes from the pool with the corresponding listings that were posted earliest will be selected first. If the lender member’s search criteria include multiple Prosper Ratings, Quick Invest divides the lender’s basket into equal portions, one portion representing each Prosper Rating selected.

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To the extent available Notes with these Prosper Ratings are insufficient to fill the lender member’s order, the lender member is advised of this shortfall and given an opportunity either to reduce the size of her order or to modify her search criteria to make her search more expansive. The Auto Quick Invest feature allows lender members (i) to have Quick Invest searches run on their designated criteria automatically each time new listings are posted on the platform, and (ii) to have bids placed automatically on any Notes identified by each such search. See “About the Platform—How to Bid to Purchase Notes—Quick Invest.”

Corporate Information

PMI was incorporated in the State of Delaware in March 2005, and formed Prosper Funding LLC in the State of Delaware in February 2012. Our principal executive offices are located at 111 Sutter Street, 22nd Floor, San Francisco, California 94104. Our telephone number at this location is (415) 593-5400. Our website address is www.prosper.com. The information contained on our website is not incorporated by reference into this prospectus.

We have been organized and will be operated in a manner that is intended (i) to minimize the likelihood that we will become subject to bankruptcy proceedings, and (ii) to minimize the likelihood that we would be substantively consolidated with PMI, and thus having our assets subject to claims by PMI’s creditors, if PMI files for bankruptcy. This is achieved by placing certain restrictions on our activities and implementing certain formalities designed to expressly reinforce our status as a distinct corporate entity from PMI. See “Information About Prosper Funding LLC.”

THE OFFERING

Issuer		Prosper Funding LLC
Securities offered		Borrower Payment Dependent Notes, or “Notes,” issued in series, with each series dependent for payment on payments we receive on a specific borrower loan.
Offering price		100% of the principal amount of each Note.
Initial maturity date		Maturities are for one, three or five years and match the maturity date of the corresponding borrower loan. We may in the future extend the range of available loan terms to between three months and seven years, at which time the Notes will have terms between three months and seven years.
Final maturity date/Extension of maturity date		The final maturity date of each Note is the date that is one year after the initial maturity date. Each Note will mature on the initial maturity date, unless any principal or interest payments in respect of the corresponding borrower loan remain due and payable to us upon the initial maturity date, in which case the maturity of the Note will be automatically extended to the final maturity date. If there are any amounts under the corresponding borrower loan still due and owing to us after the final maturity date, we will have no further obligation to make payments on the Notes even if we receive payments on the corresponding borrower loan after the final maturity date. However, because we may, in our sole discretion and subject to our servicing standard, amend, modify, sell to a third-party debt purchaser or charge-off the borrower loan at any time after the 31st day of its delinquency, and because we generally charge-off a loan after it becomes more than 120 days past due, a borrower loan may never reach its final maturity date.
Interest rate		Each series of Notes will have a stated, fixed interest rate equal to its yield percentage determined by us, which is the interest rate for the corresponding borrower loan, net of servicing fees.

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Setting interest rate for Notes	Interest rates vary among the Notes, but each series of Notes that corresponds to a single borrower loan will have the same interest rate. We set the interest rates for borrower loans based on their Prosper Ratings, as well as additional factors such as loan terms, group affiliations, the economic environment and competitive conditions. The interest rate on each Note is equal to the interest rate on the corresponding borrower loan, net of servicing fees. See “About the Platform—Setting Interest Rates.”
Payments on the Notes	We will pay principal and interest on any Note a lender member purchases in an amount equal to the lender member’s pro rata portion of the principal and interest payments, if any, we receive on the corresponding borrower loan, net of servicing fees and other charges. See “—Servicing Fees and Other Charges.” Each Note will provide for monthly payments over a term equal to the corresponding borrower loan. The payment dates for the Notes will fall on the sixth business day after the due date for each installment of principal and interest on the corresponding borrower loan. See “Summary of Material Agreements—Indenture as Form of Notes” for more information.
Borrower loans	Lender members will designate us to apply the proceeds from the sale of each series of Notes to our purchase of the corresponding borrower loan from WebBank. Each borrower loan is a fully amortizing consumer loan made by WebBank to an individual borrower member. Borrower loans currently have a term of one, three or five years, but we may in the future extend the range of available loan terms to between three months and seven years. Borrower members may request loans within specified minimum and maximum principal amounts (currently between $2,000 and $25,000), which are subject to change from time to time. WebBank subsequently sells and assigns the borrower loans to us without recourse in exchange for the principal amount of the borrower loan. Borrower loans are repayable in monthly installments and are unsecured and unsubordinated. Borrower loans may be repaid at any time by the borrowers without prepayment penalty. We verify each applicant’s identity against data from consumer reporting agencies and other identity and anti-fraud verification databases. Loan listings can be posted without our obtaining any documentation of the applicant’s ability to afford the loan. We sometimes verify the income or employment information provided by applicants. This verification is normally done after the listing has been created but before the loan has funded, and therefore the results of the verification are not reflected in the listings. See “About the Platform – Borrower Identity and Financial Information Verification” for more information.

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Security Interest—Ranking		The Notes will not be contractually senior or contractually subordinated to other indebtedness, if any, that we incur. All Notes will be special, limited obligations of Prosper Funding LLC. We were formed by PMI so that, in the event of PMI’s bankruptcy, the borrower loans we own should be shielded from claims by PMI’s creditors, thereby protecting the interests of Note holders in those borrower loans. This is achieved by placing certain restrictions on our activities, including restrictions in our organizational documents on our ability to incur additional indebtedness, and implementing certain formalities designed to expressly reinforce our status as a distinct corporate entity from PMI. Nevertheless, the Notes themselves do not restrict our incurrence of other indebtedness or the grant or imposition of liens or security interests on our assets, and holders of the Notes do not themselves have a security interest in the corresponding borrower loan or the proceeds of that loan. Accordingly, in the event of a bankruptcy or similar proceeding of Prosper Funding LLC, the relative rights of a holder of a Note may be uncertain. To further limit the risk of our insolvency, we have therefore granted the indenture trustee, for the benefit of the Note holders, a security interest in all of the borrower loans,, all payments and proceeds we receive on the borrower loans and in the bank account in which the borrower loan payments are deposited. The indenture trustee may exercise its legal rights to the collateral only if an event of default has occurred under the indenture, which would include our becoming subject to a bankruptcy or similar proceeding. Only the indenture trustee, not the holders of the Notes, has a security interest in the above collateral. If the indenture trustee were to exercise its legal rights to the collateral, the indenture provides that amounts collected on a borrower loan (minus allowable fees and expenses) are to be applied to amounts due and owing on the corresponding Note. There can be no assurance, however, that the indenture trustee, or ultimately the Note holders, would realize any amounts from the collateral. See “Risk Factors—Risks Related to Prosper Funding LLC, the Platform and Our Ability to Service the Notes” for more information.
Servicing fees and Other Charges		We subtract a servicing fee from every loan payment we receive. The amount of the servicing fee with respect to a particular payment is calculated by (a) multiplying the applicable annual servicing fee rate by a fraction, the numerator of which is equal to the number of days since the borrower’s last payment and the denominator of which is 365, and (b) multiplying the product obtained by the outstanding principal balance of the loan prior to applying the current payment. The annual servicing fee rate is currently set at 1%, but we may increase that in the future to a rate greater than 1% but less than or equal to 3%. Listings set forth the applicable servicing fee. Because servicing fees reduce the effective yield to lenders, the yield percentage displayed in each listing is net of servicing fees. Any non-sufficient funds fees charged to a borrower’s account will be retained by us as additional servicing compensation. If a borrower loan enters collection, the collection agency will charge a collection fee of between 17% and 30% of any amounts that are obtained, in addition to any legal fees incurred in the collection effort. The collection fee will vary depending on the collection agency used. The collection fees charged by the various collection agencies can be accessed through hyperlinks from the bidding page on the platform. These fees will correspondingly reduce the amounts of any payments lender members receive on the corresponding Notes and are not reflected in the yield percentage displayed in listings. We will pay lender members any late fees we receive on borrower loans.
Use of proceeds		We will use the proceeds of each series of Notes to purchase the corresponding borrower loan.
Electronic form and transferability		The Notes will be issued in electronic form only and will not be listed on any securities exchange. The Notes will not be transferable except through the Folio Investing Note Trader platform operated and maintained by FOLIOfn Investments, Inc., a registered broker-dealer. There can be no assurance that a market for the Notes will develop on the Note Trader platform and, therefore, lender members must be prepared to hold their Notes to maturity. See “About the Platform—Note Trader Platform” for more information.

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U.S. federal income tax consequences		Although the matter is not free from doubt, we intend to treat the Notes as our debt instruments that have original issue discount (“OID”) for U.S. federal income tax purposes. Accordingly, if you hold a Note, you will be required to include OID currently as ordinary interest income for U.S. federal income tax purposes (which may be in advance of interest payments on the Note) if the Note has a maturity date of more than one year, regardless of your regular method of tax accounting. If the Note has a maturity of one year or less, (1) if you are a cash-method taxpayer, in general, you will not have to include OID currently in income on your Note unless you elect to do so, and (2) if you are an accrual-method taxpayer, in general, you will have to include OID currently in income on your Note. You should consult your own tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership, and disposition of the Notes (including any possible differing treatments of the Notes). See “Material U.S. Federal Income Tax Considerations” for more information..
Financial suitability		To purchase Notes, lender members located in Idaho or Missouri must meet one or more of the following suitability requirements: a) (i) You must have an annual gross income of at least $70,000; (ii) your net worth must be at least $70,000; and (iii) the total amount of Notes you purchase cannot exceed 10% of your net worth; or b) (i) Your net worth must be at least $250,000; and (ii) the total amount of Notes you purchase cannot exceed 10% or your net worth. For purposes of these suitability requirements, you and your spouse are considered to be a single person. In addition, the following definitions apply: "annual gross income" means the total amount of money you earn each year, before deducting any amounts for taxes, insurance, retirement contributions or any other payments or expenses; "net worth" means the total value of all your assets, minus the total value of all your liabilities. The value of an asset is equal to the price at which you could reasonably expect to sell it. In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly-traded stock. You shouldn't include any illiquid assets, such as homes, home furnishings or cars; "net investment" means the principal amount of Notes purchased, minus principal payments received on the Notes. Lender members should be aware that we may apply more restrictive financial suitability standards or maximum investment limits to residents of certain states. If established, before making commitments to purchase Notes, each lender member will be required to represent and warrant that he or she meets these minimum financial suitability standards and maximum investment limits. See “Financial Suitability Requirements” for more information.

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The following diagram illustrates the basic structure of the platform for a single series of Notes. This graphic does not demonstrate many details of the platform, including the effect of prepayments, late payments, late fees or collection fees. See “About the Platform” for more information.

~~Table~~superseded in Exhibit 99.1 to the Registration Statement of ~~Contents~~which this prospectus is a part, their Quarterly Report on Form 10-Q for the three-month periods ended March 31, 2018 ("Quarterly Report") filed on May 14, 2018, and their Current Report on Form 8-K filed on February 28, 2018 ("Current Report"). This means that PFL and PMI disclose important information to you by referring you to their Annual Report, Quarterly Report, and their Current Reports, all of which are available at www.prosper.com. The information incorporated by reference is considered to be part of this prospectus. Information contained in this prospectus automatically updates and supersedes previously filed information.

~~FORWARD~~You may request a copy of PFL and PMI's Annual Report, Quarterly Reports, and Current Reports, which will be provided to you at no cost, by writing, telephoning or emailing PFL or PMI. Requests should be directed to Customer Support, 221 Main Street, 3rd Floor, San Francisco, CA 94105; telephone number (415) 593-~~LOOKING~~5400; ~~STATEMENTS~~or emailed to support@prosper.com. In addition, PFL and PMI's Annual Reports, Quarterly Reports and Current Reports are available at www.prosper.com.

~~This~~PROSPECTUS prospectus includes forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. In particular, information appearing under “About the Platform,” “Risk Factors” or “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus includes forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management and is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:SUMMARY

·This summary highlights information contained elsewhere in this prospectus. You should read the ~~performance~~following ofsummary ~~our~~together ~~Borrower~~with ~~Payment~~the ~~Dependent~~more ~~Notes~~detailed orinformation ~~“Notes”,~~appearing ~~which~~in this prospectus, inincluding ~~addition~~the tofinancial ~~being~~statements ~~speculative~~and ~~investments~~related notes, ~~are~~and ~~special,~~the ~~limited~~risk ~~obligations~~factors, ~~that~~before ~~are~~deciding ~~not~~whether ~~guaranteed~~to orpurchase ~~insured;~~the Notes.

·PFL ~~our~~operates ~~ability~~a peer-to-peer ~~make~~online ~~payments~~credit onmarketplace, which this prospectus refers to as the "marketplace," that enables PFL's borrowers to borrow money and its investors to purchase Borrower Payment Dependent Notes, ~~including~~or inNotes, issued by PFL, the ~~event~~proceeds ~~that~~of which facilitate the funding of the Borrower Loans made to borrowers. ~~fail~~The peer-to-peer ~~make~~lending ~~payments~~industry onis a very innovative and unique industry, and the ~~corresponding~~application ~~loans;~~of federal and state laws in areas such as securities and consumer finance to PFL's business is still evolving. PFL is a wholly-owned subsidiary of PMI.

·About the ~~reliability of the information about borrowers that is supplied by borrowers;~~Marketplace

·PMI ~~our~~developed ~~ability~~the tomarketplace ~~service~~and owned the ~~loans,~~proprietary ~~and~~technology ~~our~~that ~~ability~~makes oroperation of the ~~ability~~marketplace ofpossible. aIn ~~third~~connection ~~party~~with ~~debt~~this ~~collector~~offering, toPMI ~~pursue~~transferred ~~collection~~ownership ~~against~~of ~~any~~the ~~borrower~~marketplace, including inall of the ~~event~~rights related to the operation of ~~fraud~~the ormarketplace, ~~identity~~to ~~theft;~~PFL.

·PMI ~~credit~~and ~~risks~~WebBank ~~posed~~entered byinto a Marketing Agreement, pursuant to which PMI, as agent of WebBank, manages the ~~creditworthiness~~operation of the marketplace in connection with the submission of loan applications by potential borrowers, the ~~lack~~making of arelated ~~maximum~~loans ~~debt-~~by WebBank and the funding of such loans by WebBank. In the future, PMI and/or PFL may enter into agreements with other banks that would act in addition to~~-income~~, ~~ratio~~or ~~for~~in ~~borrowers~~lieu of, WebBank, in connection with making Borrower Loans through the marketplace. PFL and PMI entered into an Administration Agreement, pursuant to which PMI has agreed to manage all other aspects of the ~~effectiveness~~marketplace on behalf of ~~our~~PFL. ~~credit~~Prior ~~rating~~to ~~systems;~~the commencement of this offering, PMI operated the marketplace, facilitated the origination of loans by WebBank through the marketplace and issued and sold notes corresponding to those loans. Notes issued and sold through the marketplace prior to the commencement of this offering are referred to as "PMI Notes".

·Loan ~~actions~~Listings. A loan listing, or a listing, is a request by ~~some~~a ~~borrowers~~PFL borrower for a Borrower Loan in a specified amount that is posted on the marketplace by the borrower. A borrower who posts a loan listing on the marketplace is referred to ~~defraud~~as ~~lender~~an ~~members~~"applicant" and ~~risks~~an ~~associated~~applicant ~~with~~who ~~identity~~obtains ~~theft;~~a loan through the marketplace as a "borrower." PMI adds to each listing additional information, including the desired loan amount, interest rate and corresponding yield percentage, the minimum amount of total bids required for the loan to fund, the Prosper Rating and Prosper Score for the listing, the applicant's debt-to-income ratio, certain credit information from the applicant's credit report, the applicant's numerical credit score range, and the applicant's self-reported annual income range, occupation and employment status. Neither PFL nor PMI guarantees payment of the Notes or the corresponding Borrower Loans.

·The ~~our~~Prosper ~~limited~~Rating ~~operational~~is ~~history~~a ~~and~~proprietary ~~lack~~credit rating that we assign to each listing. The Prosper Rating is a letter that indicates the level of ~~significant~~risk associated with a listing and corresponds to an estimated average annualized loss rate range for the listing. There are currently seven Prosper Ratings, represented by seven letter scores, but this, as well as the loss ranges associated with each, may change over time as the marketplace dictates. The estimated loss rate for each listing is based on two scores: a consumer reporting agency score and an in-house custom score calculated using the historical performance ~~data~~of ~~about~~previous ~~borrower~~Borrower ~~performance;~~Loans with similar characteristics (a "Prosper Score"). We will use these two scores to determine an estimated average annualized loss rate

· the impact of current economic conditions on the performance of the Notes and loss rates of the Notes;

· payments by borrowers on the loans in light of the facts that the loans do not impose restrictions on additional borrower debt and do not include cross-default provisions;

·	our compliance with applicable local, state and federal law, including the Investment Advisers Act of 1940, the Investment Company Act of 1940 and other laws;
·	potential efforts by state regulators or litigants to characterize us or PMI, rather than WebBank, as the lender of the borrower loans;

· the application of federal and state bankruptcy and insolvency laws to borrowers, us and PMI;

· the impact of borrower defaults and prepayments on the returns on the Notes;

· the lack of a public trading market for the Notes and any inability to resell the Notes on the Note Trader platform;

· the federal income tax treatment of an investment in the Notes;

~~Table~~for ofeach ~~Contents~~listing, which correlates to a Prosper Rating. This rating system allows for consistency when assigning ratings to listings. See "About the Marketplace - Risk Management" for more information. For loan listings begun on or after December 21, 2016, the borrower's Prosper Rating and Prosper Score have been determined based on information obtained from his or her TransUnion credit report. For all listings begun prior to December 21, 2016, the Prosper Rating and Prosper Score were determined using information obtained from Experian.

·Bidding ~~our~~on ~~ability~~Listings. A bid on a listing is an investor's commitment to ~~prevent~~purchase ~~security~~a ~~breaches,~~Note ~~disruptions~~in the principal amount of the investor's bid that will be dependent for payment on the payments PFL receives on the Borrower Loan described in ~~service~~the listing. After a listing is posted, ~~and~~investors ~~comparable~~can ~~events~~place bids on that ~~could~~listing ~~compromise~~until the ~~personal~~listing ~~and~~has ~~confidential~~received ~~information~~bids ~~held~~totaling the requested loan amount. The minimum amount an investor may bid is $25. All bids may be up to 100% of the requested loan amount. An investor who wishes to bid on ~~our~~a ~~data~~listing ~~systems~~must have funds in the amount of the bid in his investor account at the time the bid is made. Once a bid is placed, ~~reduce~~it is irrevocable, and the ~~attractiveness~~amount of the ~~platform~~bid may not be withdrawn from the investor's account, unless the bidding period expires without the listing having received enough bids to be funded. Once the listing has received bids totaling the requested loan amount, no further bids can be placed. The maximum length of the bidding period is 14 days. If the listing does not receive bids equal to or ~~adversely~~exceeding ~~impact~~the ~~our~~minimum ~~ability~~amount required for the listing to ~~service~~fund ~~loans;~~by the close of the fourteenth day after the listing is posted, the listing will terminate and the requested loan will not be funded.

·Borrower Loans. If at the ~~resolution~~end of ~~pending~~the ~~litigation~~bidding ~~involving~~period ~~PMI~~the listing has received bids equal to or exceeding the minimum amount required to fund, ~~including~~a ~~any~~loan ~~state~~will generally be made to the applicant in an amount equal to the total amount of all winning bids. All Borrower Loans are unsecured obligations of individual borrowers with a fixed interest rate set by us and a loan term currently set at three or ~~federal~~five ~~securities~~years, ~~litigation;~~although we may expand the range of available loan terms in the future to between three months and seven years. The minimum and maximum principal amounts for Borrower Loans are currently $2,000 and $40,000, respectively. We may expand the range of the minimum and/or maximum principal amounts for Borrower Loans in the future to $1,000 and/or $45,000, respectively. All Borrower Loans are originated by WebBank, a Federal Deposit Insurance Corporation ("FDIC") insured, Utah-chartered industrial bank. After originating a Borrower Loan, WebBank sells and assigns such Borrower Loans to PFL, without recourse to WebBank, in exchange for the principal amount of the Borrower Loan. WebBank has no obligation to Note holders.

·For ~~our~~all Borrower Loans, we verify the applicant's identity against data from consumer reporting agencies and other identity and anti-fraud verification databases. Loan listings can be posted without us obtaining any documentation of the applicant's ability to ~~compete~~afford ~~successfully~~the loan. In some instances, we verify the income or employment information provided by applicants in listings. This verification is normally done after the ~~peer-~~listing has been created but before the loan is funded, and therefore the results of the verification process are not reflected in the loan listings. If we are unable to verify material information with respect to an applicant or listing, we will cancel or refuse to post the listing or cancel any or all commitments against the listing. We may also delay funding of a Borrower Loan in order to verify the accuracy of information provided by an applicant in connection with the listing, or to determine whether there are any irregularities with respect to the listing. If we identify material misstatements or inaccuracies in the listing or in other information provided by the applicant, we will cancel the listing or related loan. For more information, see "About the Marketplace-~~peer~~Borrower Identity and ~~consumer~~Financial ~~lending~~Information ~~industry~~Verification."

~~There~~The ~~may~~Notes. bePFL ~~other~~generally ~~factors~~issues ~~that~~and ~~may~~sells ~~cause~~a ~~our~~series ~~actual~~of ~~results~~Notes tofor ~~differ~~each ~~materially~~Borrower ~~from~~Loan ~~the~~that ~~forward-looking~~is ~~statements.~~funded Wethrough ~~can~~the ~~give~~marketplace. noThe ~~assurances~~Notes ~~that~~are ~~any~~sold ofto the ~~events~~investors ~~anticipated~~who bysuccessfully ~~the~~bid ~~forward-looking~~on ~~statements~~the ~~will~~corresponding ~~occur~~Borrower ~~or,~~Loan iflisting ~~any~~in ofthe ~~them~~principal ~~does~~amounts ~~occur,~~of ~~what~~their ~~impact~~respective ~~they~~bids. ~~will~~Each ~~have~~series onof ~~our~~Notes ~~results~~is ofdependent ~~operations~~for ~~and~~payment ~~financial~~on ~~condition.~~payments ~~You~~PFL ~~should~~receives ~~carefully~~on ~~read~~ the ~~factors~~corresponding ~~described~~Borrower inLoan. ~~the~~PFL ~~“Risk~~uses ~~Factors”~~the ~~section~~proceeds of ~~this~~each ~~prospectus~~series ~~for a description~~ of ~~certain~~Notes ~~risks~~to ~~that~~purchase ~~could,~~the ~~among~~corresponding ~~other~~Borrower ~~things,~~Loan ~~cause our actual results to differ~~ from ~~these forward-looking statements~~WebBank.

~~All~~PFL ~~forward-looking~~will ~~statements~~pay ~~speak~~each ~~only~~Note asholder ofprincipal and interest on the ~~date~~Note in an amount equal to each such Note's pro rata portion of ~~this~~the ~~prospectus~~principal and ~~are~~interest ~~expressly~~payments, ~~qualified~~if inany, ~~their~~that ~~entirety~~PFL byreceives on the ~~cautionary~~corresponding ~~statements~~Borrower ~~included~~Loan, innet ~~this~~of ~~prospectus~~PFL's servicing fee, which is currently set at 1% per annum of the outstanding principal balance of the corresponding Borrower Loan prior to applying the current payment. WePFL ~~undertake~~may noin ~~obligation~~the future increase the servicing fee to ~~update~~a percentage that is greater than 1% but less than or ~~revise~~equal ~~forward-looking~~to ~~statements~~3% ~~that~~per ~~may~~annum. beAny ~~made~~change to ~~reflect~~PFL's ~~events~~servicing orfee ~~circumstances~~will ~~that~~only ~~arise~~apply to Notes offered and sold after the date ~~made~~of orthe change. PFL will pay Note holders any other amounts it receives on the corresponding Borrower Loans, including late fees and prepayments, subject to ~~reflect~~its servicing fee, except that it will not pay Note holders any non-sufficient funds fees for failed borrower payments that it receives. In addition, the ~~occurrence~~funds available for payment on the Notes will be reduced by the amount of ~~unanticipated~~any ~~events~~attorneys' fees or collection fees PFL, ~~other~~a ~~than~~third-party asservicer ~~required~~or bya ~~law~~collection agency imposes in connection with collection efforts related to the corresponding borrower loan. Notwithstanding the foregoing, no payments will be made on any Note after its final maturity date. See "The Offering-Final maturity date/Extension of maturity date."

~~Table~~Under the Indenture, if a "Repurchase Event" occurs with respect to a Note, PFL will, at its sole option, either repurchase the Note from the holder or indemnify the holder of ~~Contents~~the Note for any losses resulting from nonpayment of the Note or from any claim, demand or defense arising as a result of such Repurchase Event. A "Repurchase Event" occurs with respect to a Note if (i) a Prosper Rating different from the Prosper Rating actually calculated by PFL was included in the listing for the corresponding Borrower Loan and the interest of the holder in the Note is materially and adversely affected, (ii) a Prosper Rating different from the Prosper Rating that should have appeared was included in the listing for the corresponding Borrower Loan because either PFL inaccurately input data into, or inaccurately applied, the formula for determining the Prosper Rating and, as a result, the interest of the holder in the Note is materially and adversely affected, or (iii) the corresponding Borrower Loan was obtained as a result of verifiable identify theft on the part of the purported borrower and a material payment default under the corresponding Borrower Loan has occurred.

~~RISK~~Under ~~FACTORS~~PFL's investor registration agreement, PFL represents and warrants that (i) if an investor uses an automated bidding tool or order execution service offered by PFL, such as Auto Invest or Recurring Investment (formerly known as Auto Quick Invest), to identify Notes for purchase, each Note purchased will conform to the investment criteria provided by the investor through such tool or service, and (b) each Note that an investor purchases from PFL will be in the principal amount of the bid such investor placed and will correspond to the Borrower Loan on which such investor bid. If PFL breaches either of these representations and warranties and, as a result, the Note sold to an investor is materially different from the Note that would have been sold had the breach not occurred or if the investor would not have purchased the Note at all absent such breach, PFL will, at its sole option, either indemnify the investor from any losses resulting from such breach, repurchase the Note or cure the breach, if the breach is susceptible to cure. If PFL breaches any of its other representations and warranties in the investor registration agreement and such breach materially and adversely affects an investor's interest in a Note, PFL will, at its sole option, either indemnify the investor, repurchase the affected Note from such investor or cure the breach. If PFL repurchases any Notes, PMI will concurrently repurchase the related PMI Management Right for zero consideration. For more information about PFL's repurchase and indemnification obligations under the indenture and the investor registration agreements, see "About the Marketplace-Note Repurchase and Indemnification Obligations."

~~Our~~PMI ~~Notes~~Management ~~involve~~Rights. aThe ~~high~~PMI ~~degree~~Management ofRights ~~risk. You~~are ~~should~~"investment ~~carefully~~contracts" ~~consider~~issued ~~the~~by ~~risks~~PMI ~~described~~directly ~~below~~to ~~before~~Note ~~making~~holders. The phrase "investment contract" is a ~~decision~~concept under federal securities law that refers to an arrangement where investors invest money in ~~the~~a ~~Notes. If~~common ~~any~~enterprise with the expectation of profits, primarily from the ~~following~~efforts ~~risks~~of ~~actually~~others. ~~occurs~~Here, ~~you~~the ~~might~~"investment ~~lose~~contracts" ~~all~~that orPMI ~~part~~is ofregistering ~~your~~as ~~investment~~PMI Management Rights arise from the services that PMI has provided and will provide, as described in the ~~Notes.~~ Administration Agreement, the Indenture, the Investor Registration Agreement, and in this prospectus, which services include, but are not limited to:

~~Risks~~• ~~Related~~the toexistence ~~Borrower~~and ~~Default~~operation of the marketplace;

~~The~~• ~~Notes~~verification ~~are~~of ~~risky~~borrower ~~and speculative investments for suitable investors only.~~information;

~~You~~• ~~should~~evaluation ~~be aware that the Notes offered through the platform are risky~~ and ~~speculative~~validation ~~investments. The Notes are special, limited obligations~~ of ~~ours and depend entirely on payments to us of obligations of borrower members under~~ the ~~corresponding~~Prosper ~~borrower~~Score ~~loans. Notes~~and ~~are~~Prosper ~~suitable only for lender members of adequate financial means. If you cannot afford to lose the entire amount of your investment in the Notes you purchase, you should not invest in the Notes.~~ Rating;

~~Payments~~• onremitting ~~the Notes depend entirely on payments we receive on corresponding~~ borrower ~~loans. If a borrower fails to make any~~ payments; ~~on the corresponding borrower loan related to your Note, you will not receive any payments on your Note.~~and

We• ~~will~~collecting ~~only make payments pro rata~~ on adelinquent ~~series of Notes after we receive a borrower’s payment on the corresponding borrower loan, net of our servicing fees~~accounts. We will not pay lender members any non-sufficient funds fees we receive, and the funds available for payment on the Notes will be reduced by the amount of any collection fees a third-party collection agency charges. Under the terms of the Notes, if we do not receive payments on the corresponding borrower loan, you will not receive any payments on your Note.

~~Information~~Investors ~~supplied~~who bypurchase ~~applicants~~PMI ~~may~~Management beRights ~~inaccurate~~will orhave ~~intentionally~~rights ~~false~~under the federal securities laws as a purchaser of a registered security. ~~Information~~Investors ~~regarding~~will ~~income~~have ~~and~~limited ~~employment~~contractual isrights, ~~not~~collectively ~~verified~~through the indenture trustee, to enforce PMI's contractual obligations under the Administration Agreement. Such contractual rights exist under state law and will not, in ~~many~~any ~~cases~~way, affect the rights of investors under the federal securities laws.

~~Applicants~~The ~~supply~~PMI aManagement ~~variety~~Rights ofarise ~~information~~from ~~regarding~~ the ~~purpose~~services ofthat ~~the~~PMI ~~loan,~~will ~~income,~~provide ~~occupation,~~to ~~and~~PFL ~~employment~~under ~~status~~the ~~that~~Administration isAgreement ~~included~~as described in ~~borrower~~this ~~listings~~prospectus. We doPursuant ~~not~~to ~~verify~~ the ~~majority~~Administration ~~of this information~~Agreement, ~~which~~PMI ~~may~~will beprovide ~~inaccurate~~three orkinds ~~intentionally false. Applicants may misrepresent their intentions for the use~~ of ~~borrower~~services ~~loan proceeds. Neither we nor WebBank verifies any statements by applicants as~~ to ~~how~~PFL: ~~loan~~(i) ~~proceeds~~PMI ~~are~~will tomanage ~~be used and do not confirm after loan funding how loan proceeds were used. All listings are posted on~~ the ~~platform~~operation ~~without~~of ~~our verifying~~ the ~~information~~marketplace ~~provided~~itself by(credit ~~the~~policy ~~applicant~~revisions, ~~including~~systems ~~the borrower’s stated income~~maintenance, ~~employment~~etc.) ~~status~~(the or"Loan ~~occupation. Lender~~Marketplace ~~members~~Administration ~~should~~Services"); ~~not~~(ii) ~~rely~~PMI onwill anprovide ~~applicant’s self~~back-~~reported~~office ~~information~~services ~~such~~to asPFL ~~income,~~(maintaining ~~employment~~books ~~status~~and records, ~~or occupation in~~ making ~~investment~~periodic ~~decisions. In~~regulatory ~~the~~filings, ~~cases~~performing inlimited ~~which~~cash wemanagement ~~select applicants for income and employment verification~~functions, ~~the verification is normally done after the listing has been created but prior to the time the borrower loan is funded~~etc. ~~From~~) (the ~~period~~"Corporate ~~from~~Administration ~~July~~Services"); ~~14,~~and ~~2009~~(iii) ~~to September 30, 2011~~ PMI ~~verified~~will ~~employment~~service ~~and/or income on approximately 42% of~~ the ~~PMI~~ Borrower Loans and Notes originated through the ~~platform~~marketplace ~~on a unit basis~~ (~~6,316~~the ~~out~~"Loan ~~of 15,139)~~ and ~~approximately~~Note ~~65%~~Servicing ~~of originations on a dollar basis ($55,766,041 out of $85,985,988~~Services"). ~~PMI~~ ~~selected~~Holders ~~these listings based on the same combination~~ of ~~factors~~PMI weManagement ~~use~~Rights inwill ~~selecting~~have ~~listings~~a ~~for~~limited ~~additional~~contractual ~~verification~~ability, ~~including~~collectively ~~amount~~through ofthe ~~loan~~indenture ~~requested~~trustee, ~~Prosper Rating, debt-~~to~~-income~~ ~~ratio~~enforce ~~and~~PMI's ~~stated~~obligations ~~income. Listings~~under dothe ~~not~~Administration ~~disclose~~Agreement. ~~the~~However, ~~identity~~holders of ~~applicants,~~PMI ~~and~~Management ~~lender~~Rights ~~members~~also have norights ~~ability~~under tothe ~~obtain~~federal orsecurities ~~verify~~laws ~~applicant~~that ~~information~~are ~~either~~not ~~before or after they purchase a Note. If you rely on false~~limited, ~~misleading~~contractually or ~~unverified~~otherwise. ~~information~~PMI's ~~supplied~~obligations ~~by applicants in deciding~~ to ~~purchase~~provide ~~Notes,~~services ~~you~~under ~~may lose part or all of~~ the ~~purchase~~Administration ~~price you pay for a Note. See “About the Platform—Borrower Identity and Financial Information Verification” for more information.~~

~~Table~~Agreement may be terminated by PMI or by PFL under certain circumstances described in this prospectus. For more information, see "Summary of ~~Contents~~Indenture, Form of Notes, PMI Management Rights and Administration Agreement-PMI Management Rights."

~~The~~Termination ~~Notes~~of ~~are~~the ~~special,~~Administration ~~limited~~Agreement ~~obligations~~would not affect the rights of ~~Prosper~~holders ~~Funding~~of ~~LLC~~previously ~~only~~issued ~~and~~PMI ~~are~~Management ~~not~~Rights ~~directly~~under ~~secured~~the byfederal ~~any~~securities ~~collateral~~laws. If PFL or ~~guaranteed~~PMI were to terminate PMI's obligations to provide services under the Administration Agreement, PMI would cease to issue new PMI Management Rights. PFL has entered into a back-up servicing agreement with a loan servicing company who is willing and able to transition loan and Note servicing responsibilities from PMI, but it is unlikely that the back-up servicer would be able to perform functions other than servicing the outstanding Borrower Loans and Notes. Therefore, PFL might have to suspend the facilitation of new Borrower Loans and the issuance of new Notes until it could find another party or ~~insured~~parties bythat ~~any~~could ~~third~~perform the services PMI had been performing under the Administration Agreement. PFL believes it could find another party or parties to perform such services, but the search could take time. For more information, see "Risk Factors-Risks Related to PFL and PMI, Our Marketplace and Our Ability to Service the Notes."

The ~~Notes will not represent an obligation of borrowers,~~ PMI orManagement ~~any~~Rights ~~other~~will ~~party~~be ~~except~~attached ~~Prosper~~to ~~Funding~~the ~~LLC~~Notes, ~~and~~will ~~are special, limited obligations of Prosper Funding LLC. The Notes are~~ not ~~directly~~be ~~secured~~separable byfrom ~~any collateral and are not guaranteed or insured by any governmental agency or instrumentality or any third party. Although we have granted~~ the ~~indenture~~Notes ~~trustee, for the benefit of the Note holders, a security interest in all of the borrower loans, all payments~~ and ~~proceeds~~will ~~received by us on the borrower loans and in the bank account in which the borrower loan payments are deposited, the Note holders do~~ not ~~themselves~~be ~~have~~assigned a ~~security~~value ~~interest~~separate infrom the borrower loans or the right to payment thereunder. If an event of default under the indenture were to occur, the Note holders would be dependent on the indenture trustee’s ability to realize on the collateral and make payments on the Notes ~~in the manner contemplated by the indenture~~.

~~The~~Servicing ~~borrower~~and ~~loans~~Loan ~~are~~Marketplace ~~not~~Administration. ~~secured~~PFL byis ~~any~~responsible ~~collateral~~for orservicing ~~guaranteed~~the orBorrower ~~insured~~Loans byand ~~any~~Notes. ~~third~~Following ~~party~~its purchase of Borrower Loans and sale of Notes corresponding to the Borrower Loans, PFL begins servicing the Borrower Loans and ~~you~~Notes. ~~must~~If ~~rely~~a Borrower Loan becomes one or more days past due, PFL may collect on usit directly or refer it to a third- party servicer or collection agency tofor ~~pursue~~ collection. ~~against~~See ~~any~~"About ~~borrower~~the Marketplace- Loan Servicing and Collection" for more information.

~~Borrower~~PFL ~~loans~~has ~~are~~entered ~~unsecured~~into ~~obligations~~an ofAdministration ~~borrower~~Agreement ~~members. They~~with ~~are not secured by any collateral~~PMI, ~~and~~pursuant they are not guaranteed or insured by any third party or backed by any governmental authority in any way. We and our designated third-party collection agencies will, therefore, be limited in our ability to ~~collect~~which onPFL ~~borrower~~has ~~loans. Moreover,~~engaged ~~borrower~~PMI ~~loans are obligations of borrowers~~ to ~~Prosper~~assist ~~Funding~~it ~~LLC~~in asservicing ~~successor~~the toBorrower ~~WebBank~~Loans, ~~not~~managing ~~obligations to~~ the ~~holders~~marketplace, ~~of Notes. Holders of the Notes will have no recourse to the borrowers~~ and noin ~~ability~~performing toother ~~pursue borrowers to collect payments under borrower loans~~duties. ~~Holders~~ ofPursuant ~~the Notes may look only~~ to ~~Prosper Funding LLC for payment of~~ the ~~Notes. Furthermore,~~Administration ~~if a borrower fails to make any payments on the borrower loan~~Agreement, ~~the~~PMI ~~holders of the Notes corresponding to that borrower loan~~ will ~~not~~provide ~~receive~~a ~~any~~variety ~~payments on their Notes. The holders~~ of ~~such~~administrative ~~Notes~~and ~~will~~management ~~not~~services, beincluding, ~~able~~but ~~to pursue collection against the borrower and will~~ not belimited ~~able~~ to, ~~obtain~~supervision ~~the identity~~ of ~~the borrower in order to contact the borrower about the defaulted borrower loan.~~ :

~~Some~~• of the ~~borrowers on the platform have “subprime” credit ratings~~management, ~~are~~maintenance ~~considered higher than average credit risks,~~ and ~~may~~operation ~~present a high risk~~ of ~~loan~~the ~~delinquency or default.~~marketplace;

~~Some~~• of the ~~borrowers on the platform are people who have had difficulty obtaining loans from other sources~~issuance, ~~including~~sale ~~banks~~ and ~~other~~payment ~~financial~~of institutions, on favorable terms, or on any terms at all, due to credit problems, limited credit histories, adverse financial circumstances, or high debt-to-income ratios. Therefore, acquiring Notes that are dependent on payments we receive on the ~~corresponding borrower loans of such borrowers may present a high risk of loan delinquency or default.~~ Notes;

~~Prior~~• toPFL's ~~the~~purchase ~~commencement~~ of this offering, PMI operated the platform directly, facilitated the origination of loans by WebBank through the platform and issued and sold notes corresponding to those loans. We refer to borrower loans originated and notes issued and sold by PMI as “PMI Borrower Loans” and “PMI Notes”, respectively. From July 13, 2009 to September 30, 2011, PMI facilitated 15,001 PMI Borrower loans with an average original principal amount of $5,583 and an aggregate original principal amount of $83,754,411 on the platform. As of September 30, 2011, of these 15,001 PMI Borrower Loans, 77.2% were current or had not reached their first billing cycle, 15.3% were paid in full, 1.8% were 1- 30 days past due, 2.0% were more than 30 days past due, and 3.7% had defaulted (a PMI Borrower Loan is considered to have defaulted when it is more than 120 days past due or has been discharged in bankruptcy). In addition, of these 15,001 PMI Borrower Loans:;

·• ~~1,282,~~the oroperation ~~9%,~~of ~~have been more than 15 days past due on at least one occasion~~www.prosper.com;

·• ~~952,~~PFL's orcompliance ~~6%,~~with ~~have~~applicable ~~been~~federal ~~more~~and ~~than~~state 30laws ~~days~~(including ~~past~~consumer ~~due~~protection onlaws, atstate ~~least~~lender ~~one~~licensing ~~occasion~~requirements and securities registration requirements);

·• ~~735,~~the orapplicant ~~5%,~~verification ~~have~~and ~~been~~eligibility ~~more than 60 days past due on at least one occasion~~processes;

~~There~~• ~~can be no assurance that historical loss rates for PMI Borrower Loans will be indicative of future loss rates or~~ the ~~likelihood~~posting of ~~the~~listings ~~delinquency or default~~ on ~~our borrower loans. See “About~~ the ~~Platform—Historical~~marketplace; ~~Performance of PMI Borrower Loans”~~ and ~~“Risk Factors—Risks Relating to Prosper Funding LLC, the Platform and Our Ability to Service the Notes” for more information.~~


•	the assignment of a Prosper Rating and an interest rate to each listing.

See "About the Marketplace," "Summary of Indenture, Form of Notes and Administration Agreement-Administration Agreement" and "Information About Prosper Marketplace, Inc." for more information.

Recurring Investment. Our automated loan search tool, Recurring Investment (formerly known as Auto Quick Invest), is an automated loan search tool that allows investors to easily invest in Notes that meet their specific investment criteria by automatically bidding any available funds in their account on Notes that match their selected parameters, in accordance with their instructions. An investor using Recurring Investment is asked to indicate his or her investment criteria by applying one or more of several dozen additional search criteria, such as loan amount, debt-to-income ratio, credit score and Prosper Rating. The investor is then asked to specify the amount he or she wishes to invest per note, and can also set aside a specific amount of his or her funds as a cash reserve that will not be invested by the Recurring Investment tool. After the investor has entered and saved the parameters of his or her search, Recurring Investment automatically (i) runs searches on their designated criteria as new listings are posted on the marketplace, and (ii) places bids on any Notes identified by each such search. For more information about the Recurring Investment tool and how it works, see "About the Marketplace-How to Bid to Purchase Notes-Recurring Investment."

~~Table~~Auto Invest. Our automated loan search tool, Auto Invest, makes it easier for investors to build their desired portfolio of ~~Contents~~Notes by automatically investing any available funds in an investor’s account in Notes that match the investor’s specified investment criteria and allocation targets. An investor using Auto Invest is asked to select (i) a loan allocation target, or a target mix of loans based on Prosper Ratings, and (ii) the amount he or she wishes to invest per Note. The investor has the option of selecting his or her target from Prosper’s series of preset loan allocations based on the recent historical loan inventory on the marketplace, any of which may be customized by changing the individual allocation targets for each Prosper Rating, or he or she can create a custom loan allocation target across Prosper Ratings based on his or her specific risk tolerance. If he or she wishes, the investor can further customize his or her investment criteria by applying additional filters, such as loan term and employment status. The investor can also set aside a percentage of his or her portfolio as a cash reserve that will not be invested by Auto Invest. Investors may update their target allocations, cash reserve and other criteria, and pause and restart Auto Invest, at any time. Once the investor turns on Auto Invest, the tool may immediately begin placing orders for Notes in accordance with the investor’s current and target allocations and other investment criteria. The mix of Notes in any particular order may not match the investor’s individual loan allocation targets, but over time Auto Invest will place orders so that the aggregate holdings in the investor’s portfolio will approximate, to the extent possible, the allocation specified in his or her investment criteria. The frequency with which Auto Invest will place orders on the investor’s behalf is based on the cash balance of his or her account, the availability of listings matching his or her investment criteria, and the demand from other investors. The investor’s account and investment criteria will be reviewed by Auto Invest automatically each time new listings are posted on the marketplace. Auto Invest prioritizes accounts with a higher percentage of cash and places orders for those accounts first. Auto Invest does not prioritize accounts based on overall account size or investment criteria. For more information about the Auto Invest tool and how it works, see "About the Marketplace-How to Bid to Purchase Notes-Auto Invest."

~~There~~Corporate ~~is no maximum debt-to-income ratio for applicants.~~Information

~~There~~Prosper isMarketplace, noInc. PMI ~~maximum~~was ~~debt-to-income~~incorporated ~~ratio~~in ~~(or “DTI”) for applicants who post listings on~~ the ~~platform. DTI~~State ~~is a measurement~~ of aDelaware ~~borrower’s~~on ~~ability~~March to22, ~~take~~2005. onIts ~~additional~~principal ~~debt. Because~~executive ~~there~~offices isare nolocated ~~maximum~~at ~~DTI~~221 ~~for~~Main ~~applicants~~Street, ~~borrower~~3rd ~~loans~~Floor, ~~may~~San ~~have~~Francisco, aCalifornia ~~higher~~94105. ~~risk~~Its oftelephone ~~default~~number ~~than~~at ~~would~~this ~~otherwise~~location beis ~~the~~(415) ~~case if there were a maximum DTI~~593-5400.

~~The~~Prosper ~~credit~~Funding ~~information~~LLC. PMI offormed anProsper ~~applicant~~Funding ~~may~~LLC bein ~~inaccurate~~the orState ~~may~~of ~~not~~Delaware ~~accurately~~on ~~reflect~~February ~~the~~17, ~~applicant’~~2012. PFL's ~~creditworthiness~~principal executive offices are located at 221 Main Street, ~~which~~3rd ~~may~~Floor, ~~cause~~San ~~you~~Francisco, toCalifornia ~~lose~~94105. ~~all~~Its ortelephone ~~part~~number ofat ~~the~~this ~~price~~location ~~you~~is ~~paid~~(415) ~~for~~543-5400. aIts ~~Note~~website address is www.prosper.com. The information contained on its website is not incorporated by reference into this prospectus.

WePFL ~~obtain~~has ~~applicant~~been ~~credit~~organized ~~information from consumer reporting agencies,~~ and ~~assign~~is ~~Prosper~~operated ~~Ratings to listings based~~ in ~~part~~a onmanner ~~the applicant’s credit score. A credit score~~ that ~~forms~~is aintended ~~part~~(i) ~~of the Prosper Rating assigned~~ to aminimize ~~listing may not reflect~~ the ~~applicant’s~~likelihood ~~actual~~that ~~creditworthiness~~it ~~because~~will ~~the~~become ~~credit~~subject ~~score~~to ~~may~~bankruptcy ~~be based on outdated~~proceedings, ~~incomplete~~and or(ii) ~~inaccurate~~to ~~consumer~~minimize ~~reporting data. Similarly,~~ the ~~credit~~likelihood ~~data~~that ~~taken~~it ~~from~~would ~~the~~be ~~applicant’s~~substantively ~~credit~~consolidated ~~report~~with PMI, and ~~displayed~~thus inhave ~~listings~~its ~~may~~assets ~~also~~subject beto ~~based~~claims onby ~~outdated~~PMI's creditors, ~~incomplete~~if orPMI ~~inaccurate~~files ~~consumer~~for ~~reporting data~~bankruptcy. We doThis ~~not~~is ~~verify~~achieved ~~the~~by ~~information~~placing ~~obtained~~certain ~~from~~restrictions ~~the~~on ~~applicant’~~PFL's ~~credit report. Moreover~~activities, ~~lender~~including ~~members~~its dotransactions ~~not~~with PMI, and ~~will~~implementing ~~not,~~certain ~~have~~formalities ~~access~~designed to ~~financial~~expressly ~~statements~~reinforce ofPFL's ~~applicants~~status oras toa ~~other~~distinct ~~detailed~~corporate ~~financial~~entity ~~information~~from ~~about~~PMI. ~~applicants~~See "Information About Prosper Funding LLC. "

The Prosper Rating may not accurately set forth the risks of investing in the Notes and no assurances can be provided that actual loss rates for the Notes will come within the expected loss rates indicated by the Prosper Rating.

We will indemnify a Note holder or repurchase a Note if we include the wrong Prosper Score in a listing or calculate the Prosper Score for a listing incorrectly. We will not, however, have any indemnity or repurchase obligation as a result of any other inaccuracy with respect to a listing’s Prosper Score or Prosper Rating. For example, the Prosper Rating for a listing could be inaccurate because the applicant’s credit report contained incorrect information. A Prosper Rating is not a recommendation by us to buy, sell or hold a Note. In addition, no assurances can be provided that actual loss rates for the Notes will fall within the expected loss rates indicated by the Prosper Rating. See “About the Platform—Our Note Repurchase and Indemnification Obligations” for more information.

Some borrowers may use the platform to defraud lender members, which could adversely affect your ability to recoup your investment.

We use identity and fraud checks with external databases to authenticate each borrower’s identity. Although we use diligent efforts in this regard, there is a risk that our fraud checks could fail and fraud may occur. In addition, applicants may misrepresent their intentions regarding loan purpose or other information contained in listings, and we do not verify the majority of this information. While we will repurchase Notes in limited circumstances (including, e.g., a material default on the borrower loan resulting from verifiable identity theft), we are not obligated to repurchase a Note from you if your investment is not realized in whole or in part due to fraud (other than verifiable identity theft) in connection with a loan listing, or due to false or inaccurate statements or omissions of fact in a listing, whether in credit data, a borrower member’s representations, user recommendations, group affiliations or similar indicia of borrower intent and ability to repay the borrower loan. If we repurchase a Note, the repurchase price will be equal to the Note’s outstanding principal balance and will not include accrued interest. See “About the Platform—Our Note Repurchase and Indemnification Obligations” for more information.

The fact that we have the exclusive right and ability to investigate claims of identity theft in the origination of loans creates a significant conflict of interest between us and the lender members.

We have the exclusive right to investigate claims of identity theft and determine, in our sole discretion, whether verifiable identity theft has occurred. Verifiable identity theft triggers an obligation by us to repurchase a Note. As we are the sole entity with the ability to investigate and determine verifiable identity theft, which triggers our repurchase obligation, a conflict of interest exists. Lender members rely solely on us to investigate incidents that might require us to repurchase a loan. The denial of a claim under our identity theft guarantee would save us from our repurchase obligation. See “About the Platform—Our Note Repurchase and Indemnification Obligations” for more information.

~~Table~~THE ~~of Contents~~OFFERING

WeBorrower doPayment ~~not~~Dependent have significant historical performance data about performance on the borrower loans. Loss rates on the borrower loans may increase and prior to investing you should consider the risk of non-payment and default.Notes

We are in the early stages of our development and have a limited operating history. We did not offer borrower loans through the platform prior to this offering. PMI began offering PMI Borrower Loans through the platform in February of 2006, but the performance of PMI Borrower Loans may not be indicative of the future performance of our borrower loans. Due to our limited operational history, we do not have significant historical data regarding the performance of the borrower loans, and we do not yet know what the long-term loan loss experience will be. The estimated loss rates we display on our website and use to determine the Prosper Rating have been developed from PMI’s loss histories of PMI Borrower Loans. Accordingly, borrower loans originated on the platform may default more often than similar PMI Borrower Loans have defaulted in the past, which increases the risk of investing in the Notes.



Issuer		Prosper Funding LLC

Securities offered		Borrower Payment Dependent Notes, or "Notes," issued in series, with each series dependent for payment on payments PFL receives on a specific corresponding Borrower Loan.

Offering price		100% of the principal amount of each Note.

Initial maturity date		Maturities are for three or five years and match the maturity date of the corresponding Borrower Loan. PFL may in the future extend the range of available loan terms to between three months and seven years, at which time the Notes will have terms between three months and/or seven years.

Final maturity date / Extension of maturity date		The final maturity date of each Note is the date that is one year after the initial maturity date. Each Note matures on the initial maturity date, unless any principal or interest payments in respect of the correspond Borrower Loan remain due and payable to PFL upon the initial maturity date, in which case maturity of the Note will be automatically extended to the final maturity date. Each Note will mature on final maturity date, even if principal or interest payments in respect of the corresponding Borrower Loan remain due and payable. PFL will have no further obligation to make payments on the Note after the final maturity date even if it receives payments on the corresponding Borrower Loan after such date.

Interest rate		Each series of Notes will have a stated, fixed interest rate equal to the loan yield percentage specified in related loan listing as determined by PFL, which is the interest rate for the corresponding Borrower Loan, net of servicing fees.

Setting interest rate for Notes		Interest rates vary among the Notes, but each series of Notes will have the same interest rate. We set the interest rates for Borrower Loans based on Prosper Ratings, as well as additional factors such as Borrower Loan terms, the economic environment and competitive conditions. The interest rate on each Note is equal to the interest rate on the corresponding Borrower Loan, net of service fees. See “About the Marketplace-Setting Interest Rates” for more information.

Payments on the Notes		PFL will pay principal and interest on any Note an investor purchases in an amount equal to the investor's pro rata portion of the principal and interest payments, if any, PFL receives on the corresponding Borrower Loan, net of servicing fees and other charges. For more information, see "Offering-Servicing Fees and Other Charges." Each Note will provide for monthly payments over a term equal to the corresponding Borrower Loan. The payment dates for the Notes will fall on the sixth business day after the due date for each installment of principal and interest on the corresponding Borrower Loan although interest will be deemed to accrue thereon only through each corresponding loan payment date. See "Summary of Indenture, Form of Notes and Administration Agreement-Indenture and Form of Notes" for more information.

		Investors will designate PFL to apply the proceeds from the sale of each series of Notes to the purchase of the corresponding Borrower Loan from WebBank. Each Borrower Loan is a fully amortizing consumer loan made by WebBank to an individual borrower. Borrower Loans currently have a term of three or five years, but PFL may in the future extend the range of available loan terms to between three months and seven years. Borrowers may request Borrower Loans within specified minimum and maximum principal amounts (currently between $2,000 and $40,000), which are subject to change from time to time. WebBank subsequently sells and assigns the Borrower Loans to PFL without recourse in exchange for the principal amount of the Borrower Loan. Borrower Loans provide for monthly payments over the term thereof and are unsecured and unsubordinated. Borrower Loans may be repaid at any time by the borrowers without prepayment penalty. PMI verifies each applicant's identity against data from consumer reporting agencies and other identity and anti-fraud verification databases. Loan listings can be posted without either of us obtaining any documentation of the applicant's ability to afford the loan. We sometimes verify the income or employment information provided by applicants. This verification is normally done after the listing has been created but before the loan has funded, and therefore the results of the verification are not reflected in the listings. See "About the Marketplace-Borrower Identity and Financial Information Verification" for more information.

If payments on the corresponding borrower loans relating to your Notes become more than 30 days overdue, it is likely you will not receive the full principal and interest payments that you expect to receive on your Notes, and you may not recover any of your original purchase price.

If a borrower fails to make a required payment on a borrower loan within 30 days of the due date, we will pursue reasonable collection efforts in respect of the borrower loan. Referral of a delinquent borrower loan to a collection agency within five (5) business days after it becomes thirty days past due will be considered reasonable collection efforts.

If we refer a borrower loan to a collection agency, we will not have any other obligation to attempt to collect that borrower loan. We also may handle collection efforts in respect of a delinquent borrower loan directly. If payment amounts on a delinquent borrower loan are received from a borrower more than 30 days after their due date, and the loan has been referred to an outside collection agency, that collection agency will retain a percentage of that payment as a fee before any principal or interest becomes payable to you. Collection fees range from 17% to 30% of recovered amounts.

For some non-performing borrower loans, we will not be able to recover some or all of the unpaid loan balance and, as a result, a lender member who has purchased a corresponding Note will receive little, if any, of the unpaid principal and interest payable under the Note. You must rely on the collection efforts of us, PMI or the applicable collection agency to which such borrower loans are referred. You are not permitted to attempt to collect payments on the borrower loans in any manner.

Loss rates on the borrower loans may increase as a result of economic conditions beyond our control and beyond the control of the borrower member.

Borrower loan loss rates may be significantly affected by economic downturns or general economic conditions beyond our control and beyond the control of individual borrowers. In particular, loss rates on borrower loans may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer confidence, residential real estate values, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors.

In the unlikely event that we receive payments on the borrower loans relating to your Notes after the final maturity date, you will not receive payments on your Notes after maturity.

Each Note will mature on the initial maturity date, unless any principal or interest payments in respect of the corresponding borrower loan remain due and payable to us upon the initial maturity date, in which case the maturity of the Note will be automatically extended to the final maturity date. If there are any amounts under the corresponding borrower loan still due and owing to us after the final maturity date, we will have no further obligation to make payments on the related Notes, even if we receive payments on the corresponding borrower loan after final maturity.

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		Borrowers are able to use the loan proceeds for any purpose other than (i) buying, carrying or trading in securities or buying or carrying any part of an investment contract security, (ii) paying for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term "postsecondary educational expenses is defined in Bureau of Consumer Finance Protection Regulation Z, 12 C.F.R. § 1026.46(b)(3), or (iii) engaging in any illegal activity or gambling, and they warrant, represent and agree that they will not use the proceeds of any loan for such purposes.

		The Notes will not be contractually senior or contractually subordinated to other indebtedness, if any, that PFL incurs. All Notes will be special, limited obligations of PFL. PFL was formed by PMI so that, in the event of PMI's bankruptcy, the Borrower Loans that PFL owns should be shielded from claims by PMI's creditors, thereby protecting the interests of Note holders in those Borrower Loans and the proceeds thereof. This is achieved by placing certain restrictions on PFL's activities, including restrictions in PFL's organizational documents on its ability to incur additional indebtedness, and by implementing certain formalities designed to expressly reinforce its status as a distinct corporate entity from PMI. Nevertheless, the Notes themselves do not restrict PFL's incurrence of other indebtedness or the grant or imposition of liens or security interests on PFL's assets, and holders of the Notes do not themselves have a direct security interest in the corresponding Borrower Loan or the proceeds of that loan. Accordingly, in the event of a bankruptcy or similar proceeding of PFL, the relative rights of a holder of a Note may be uncertain. To further limit the risk of PFL's insolvency, PFL has therefore granted the indenture trustee, for the benefit of the Note holders, a security interest in the Borrower Loans corresponding to the Notes, the payments and proceeds that PFL receives on such Borrower Loans, the bank account in which the Borrower Loan payments are deposited and the FBO funding account. The indenture trustee may exercise its legal rights to the collateral only if an event of default has occurred under the Amended and Restated Borrower Payment Dependent Notes Indenture for the Notes (the "indenture"), which would include PFL's becoming subject to a bankruptcy or similar proceeding. Only the indenture trustee, not the holders of the Notes, has a security interest in the above collateral. If the indenture trustee were to exercise its legal rights to the collateral, the indenture provides that amounts collected on a particular Borrower Loan (minus allowable fees and expenses) are to be applied to amounts due and owing on the corresponding Note. There can be no assurance, however, that the indenture trustee, or ultimately the Note holders, would realize any amounts from the collateral. See "Risk Factors- Risks Related to PFL and PMI, Our Marketplace and Our Ability to Service the Notes" for more information.

Servicing fees and other charges		PFL subtracts a servicing fee from every loan payment it receives. The amount of the servicing fee deducted from a particular payment is equal to (a) the product obtained by multiplying the applicable annual servicing fee rate by a fraction, the numerator of which is equal to the number of days since the borrower's last payment (or, if applicable, since the date on which the relevant loan was funded) and the denominator of which is 365, multiplied by (b) the outstanding principal balance of the loan prior to applying the current payment. The servicing fee rate is currently set at 1% per annum of the outstanding principal balance of the corresponding loan prior to applying the current payment, but PFL may increase that in the future to a rate greater than 1% but less than or equal to 3% per annum. Any change to the servicing fee will only apply to Notes offered and sold after the date of the change. Listings set forth the applicable servicing fee. Because servicing fees reduce the effective yield to investors, the yield percentage displayed in each listing is net of servicing fees.

		PFL will retain any non-sufficient funds fees and check processing fees charged to a borrower's account to cover its administrative expenses. If a Borrower Loan enters collection, either of us, a third party servicer or a collection agency may charge a collection fee of up to 40% of any amounts that are obtained, in addition to any litigation costs and any legal or transaction fees associated with accepting payments incurred in the collection effort. The collection fee will vary depending on whether we use our in-house collections department, a third party servicer's in-house collections department or a collection agency. If a third party servicer or a collection agency is used, the fee will also vary depending on the third party servicer or collection agency used. These fees will correspondingly reduce the amounts of any payments that Note holders receive on the corresponding Notes and are not reflected in the yield percentage displayed in listings.

		PFL will pay investors any late fees it receives on Borrower Loans.

Use of proceeds		PFL will use the proceeds of each series of Notes to purchase the corresponding Borrower Loan.

The borrower loans do not restrict borrowers from incurring additional unsecured or secured debt, nor do they impose any financial restrictions on borrowers during the term of the borrower loan, which may impair your ability to receive the full principal and interest payments that you expect to receive on a Note.

If a borrower incurs additional debt after the date of the borrower loan, the additional debt may impair the ability of that borrower to make payments on his or her borrower loan and your ability to receive the principal and interest payments that you expect to receive on a corresponding Note. In addition, the additional debt may adversely affect the borrower’s creditworthiness generally, and could result in the financial distress, insolvency, or bankruptcy of the borrower. To the extent that the borrower has or incurs other indebtedness and cannot pay all of his or her indebtedness, the borrower may choose to make payments to other creditors, rather than us.

To the extent borrowers incur other indebtedness that is secured, such as a mortgage, a home equity line or an auto loan, the ability of the secured creditors to exercise remedies against the assets of the borrower may impair the borrower’s ability to repay the borrower loan on which your Note is dependent for payment. Borrowers may also choose to repay obligations under secured indebtedness before repaying borrower loans because there is no collateral securing the borrower loans. A lender member will not be notified if a borrower incurs additional debt after the date a loan listing is posted.

A borrower may request that his or her bank “chargeback” a payment on a borrower loan upon which a Note is dependent for payment and request a refund on that payment, resulting in a delinquency on the payment and a possible negative cash balance in your lender member account.

A borrower chargeback is a process by which a borrower who has made a payment on a borrower loan has his or her bank cancel the payment or request a refund of that payment. We withhold payments to lender members up to six business days after a related borrower payment is initiated. If the chargeback occurs between six and 60 days after the initiation of payment, you must rely on us to contest the chargeback if we deem it appropriate. If a borrower successfully processes a chargeback between six and 60 days after initiation of payment, such payment will be deducted from your lender member account, and if you have withdrawn funds in the interim, a negative cash balance may result. Amounts received on borrower loans corresponding to your Notes payments and deposited into your lender member account are subject to set-off against any negative balance or shortfall in your lender member account. See “About the Platform - Structure of Lender Member Accounts and Treatment of Lender Member Balances” for more information.

Peer-to-peer lending is a new lending method and the platform has a limited operating history. Borrowers may not view or treat their obligations to us as having the same significance as loans from traditional lending sources, such as bank loans.

The investment return on the Notes depends on borrowers fulfilling their payment obligations in a timely and complete manner under the corresponding borrower loan. Borrowers may not view peer-to-peer lending obligations originated on the platform as having the same significance as other credit obligations arising under more traditional circumstances, such as loans from banks or other commercial financial institutions. If a borrower neglects his or her payment obligations on a borrower loan upon which payment of your Note is dependent or chooses not to repay his or her borrower loan entirely, you may not be able to recover any portion of your investment in a Note.

The platform may fail to comply with applicable law, which could limit our ability to collect on borrower loans .

The borrower loans are subject to federal and state consumer protection laws. The platform may not always be, and the equivalent platform previously operated by PMI may not always have been, in compliance with these laws. Failure to comply with the laws and regulatory requirements applicable to the platform may, among other things, limit our, PMI’s or a collection agency’s ability to collect all or part of the principal of or interest on borrower loans. See “Government Regulation—Regulation and Consumer Protection Laws” for more information.

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Electronic form and transferability		Notes will be issued in electronic form only and will not be listed on any securities exchange. Notes and PMI Management Rights may only be transferred through an approved online trading platform. Currently, no trading platform exists for the transfer of the Notes and PMI Management Rights and there can be no assurance that a trading platform for the transfer of Notes and PMI Management Rights will develop in the future. Therefore, note purchasers must be prepared to hold their Notes and PMI Management Rights to maturity. See “Risk Factors-Risks Inherent in Investing in the Notes” for more information.

U.S. federal income tax consequences		Although the matter is not free from doubt, PFL will treat the Notes as its debt instruments that have original issue discount ("OID") for U.S. federal income tax purposes. Accordingly, if you hold a Note, you will be required to include OID currently as ordinary interest income for U.S. federal income tax purposes (which may be in advance of interest payments on the Note) if the Note has a maturity date of more than one year, regardless of your regular method of tax accounting. You should consult your own tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership, and disposition of the Notes (including any possible differing treatments of the Notes). See "Material U.S. Federal Income Tax Considerations" for more information.

Financial suitability		Investors that are residents of Alaska, Idaho, Missouri, Nevada, New Hampshire, Oregon, Virginia or Washington must meet one or more of the following suitability requirements:

	a.	(i) You must have an annual gross income of at least $70,000; (ii) your net worth must be at least $70,000 (exclusive of home, home furnishings and automobiles); and (iii) the total amount of Securities you purchase cannot exceed 10% of your net worth (exclusive of home, home furnishings and automobiles); or

	b.	(i) Your net worth must be at least $250,000 (exclusive of home, home furnishings and automobiles); and (ii) the total amount of Securities you purchase cannot exceed 10% of your net worth (exclusive of home, home furnishings and automobiles).

	Investors that are residents of California must meet one or more of the following suitability requirements:

	a.	(i) You must have had an annual gross income of at least $85,000 during the last tax year; (ii) you must have a good faith belief that your annual gross income for the current tax year will be at least $85,000; and (iii) the total amount of Securities you purchase cannot exceed 10% of your net worth; or

	b.	(i) Your net worth must be at least $200,000 (or $300,000 together with your spouse); and (ii) the total amount of Securities you purchase cannot exceed 10% of your net worth; or

	c.	(i) Your net investment in Securities cannot exceed $2,500; and (ii) the total amount of Securities you purchase cannot exceed 10% of your net worth.

	The Maine Office of Securities recommends and the Oregon Division of Finance and Corporate Securities requires that an investor's aggregate investment in this offering and similar offerings by PMI, PFL or its affiliates not exceed 10% of the investor's liquid net worth. For this purpose, "liquid net worth" is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities.

	For purposes of these suitability requirements, you and your spouse are considered to be a single person. In addition, the following definitions apply:

	"annual gross income" means the total amount of money you earn each year, before deducting any amounts for taxes, insurance, retirement contributions or any other payments or expenses;

	"net worth" means the total value of all your assets, minus the total value of all your liabilities. The value of an asset is equal to the price at which you could reasonably expect to sell it. In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly-traded stock. You shouldn't include any illiquid assets, such as homes, home furnishings or cars;

	"net investment" means the principal amount of Securities purchased, minus principal payments received on the Securities.

	Investors should be aware that PFL may apply more restrictive financial suitability standards or maximum investment limits to residents of certain states. If established, before making commitments to purchase Notes each investor will be required to represent and warrant that he or she meets these minimum financial suitability standards and maximum investment limits. See "Financial Suitability Requirements" for more information.

We regularly review the requirements of these laws and take measures aimed at ensuring that the borrower loans originated on the platform meet the requirements of all applicable laws. However, determining compliance with all applicable laws is a complex matter and it is possible that our determination may be inaccurate or incorrect. Also, changes in law, either due to court decisions, regulatory interpretations or rulings, or new legislation, may adversely affect the collectability of a borrower loan.

In general, the borrower loans do not contain any cross-default or similar provisions. If a borrower defaults on any of his or her other debt obligations, our ability to collect on the borrower loan on which your Notes are dependent for payment may be substantially impaired.

The borrower loans do not contain cross-default provisions. A cross-default provision makes a default under certain debt of a borrower an automatic default on other debt of that borrower. Because the borrower loans do not contain cross-default provisions, a borrower’s loan will not be placed automatically in default upon that borrower’s default on any of the borrower’s other debt obligations. If a borrower defaults on debt obligations owed to a third party and continues to satisfy the payment obligations under the borrower loan, the third party may seize the borrower’s assets or pursue other legal action against the borrower before the borrower defaults on the borrower loan.

Borrowers may seek the protection of debtor relief under federal bankruptcy or state insolvency laws, which may result in the nonpayment of your Notes.

Borrowers may seek protection under federal bankruptcy law or similar laws. If a borrower files for bankruptcy (or becomes the subject of an involuntary petition), a stay will go into effect that will automatically put any pending collection actions on the borrower loan on hold and prevent further collection action absent bankruptcy court approval. If we receive notice that a borrower has filed for protection under the federal bankruptcy laws, or has become the subject of an involuntary bankruptcy petition, we will put the borrower’s loan account into “bankruptcy status.” When this occurs, we terminate automatic monthly ACH debits on borrower loans and we will not undertake collection activity without bankruptcy court approval. Whether any payment will ultimately be made or received on a borrower loan after a bankruptcy status is declared depends on the borrower’s particular financial situation. In most cases, however, unsecured creditors such as us receive nothing, or only a fraction of their outstanding debt. See “About the Platform—Loan Servicing and Collection” for more information.

Federal law entitles borrowers who enter active military service to an interest rate cap and certain other rights that may inhibit the ability to collect on loans and reduce the amount of interest paid on the corresponding Notes.

Federal law provides borrowers on active military service with rights that may delay or impair our ability to collect on a borrower loan corresponding to your Note. The Servicemembers Civil Relief Act, or “SCRA,” requires that the interest rate on preexisting debts, such as borrower loans, be set at no more than 6% while the qualified service member or reservist is on active duty. A holder of a Note that is dependent on such a borrower loan for payment will not receive the difference between 6% and the original stated interest rate for the borrower loan during any such period. The SCRA law also permits courts to stay proceedings and execution of judgments against service members and reservists on active duty, which may delay recovery on any borrower loans in default, and, accordingly, payments on the corresponding Notes. If there are any amounts under such a borrower loan still due and owing to us after the final maturity of the corresponding Notes, we will have no further obligation to make payments on the Notes, even if we receive payments on the borrower loan after the final maturity of the Notes. We do not take military service into account in assigning a Prosper Rating to loan listings. In addition, as part of the borrower registration process, we do not request borrower members to confirm if they are qualified service members or reservists within the meaning of the SCRA. See “Government Regulation—Regulation and Consumer Protection Laws—Servicemembers Civil Relief Act” for more information.

The death of a borrower may substantially impair your ability to recoup the full purchase price of Notes or to receive the interest payments that you expect to receive on the Notes.

If a borrower dies while his or her loan is still outstanding, generally, we will seek to work with the executor of the borrower’s estate to obtain repayment of the loan. However, the borrower’s estate may not contain sufficient assets to repay the loan. In addition, if a borrower dies near the end of the term of his or her loan, it is unlikely that any further payments will be made on the corresponding Notes, because the time required for the probate of the borrower’s estate will probably extend beyond the final maturity date of the Notes.

~~Table~~PMI ofManagement ~~Contents~~Rights

WeIssuer Prosper Marketplace, Inc. Securities offered PMI Management Rights issued by PMI and attached to the Notes offered on the marketplace. The PMI Management Rights are "investment contracts" issued by PMI directly to Note holders. The phrase "investment contract" is a concept under federal securities law that refers to an arrangement where investors invest money in a common enterprise with the expectation of profits, primarily from the efforts of others. Here, the "investment contracts" that PMI is registering as PMI Management Rights arise from the services that PMI has provided and will provide, as described in the Administration Agreement, the Indenture, the Investor Registration Agreement, and in this prospectus, which services include, but are not ~~obligated~~limited to: ~~repurchase~~- ~~any~~the existence and operation of the marketplace; - verification of borrower information; - evaluation and validation of the Prosper Score and Prosper Rating; - remitting borrower payments; and - collecting on delinquent accounts. Offering price No separate consideration will be paid for the PMI Management Rights and such securities will not be separable from the Notes. ~~except~~Use of proceeds PMI will not receive any proceeds from the issuance of the PMI Management Rights. Electronic form and transferability The PMI Management Rights will be issued in electronic form only. Enforceability Investors who purchase PMI Management Rights will have rights under the federal securities laws as a purchaser of a registered security. Investors will have limited contractual rights, collectively through the indenture trustee, to enforce PMI's contractual obligations under the Administration Agreement. Such contractual rights exist under state law and will not, in any way, affect the rights of investors under the federal securities laws. PMI's obligations to provide services under the Administration Agreement may be terminated by PMI or by PFL under certain circumstances described in this prospectus. For more information, see "Summary of Indenture, Form of Notes, PMI Management Rights and Administration Agreement-Administration Agreement-Indenture Trustee as Third-Party Beneficiary." U.S. federal income tax consequences PMI expects that the purchase, sale and holding of the PMI Management Rights will not have any U.S. federal income tax consequences Financial suitability See "The Offering-Borrower Payment Dependent Notes-Financial Suitability."

We are not obligated to repurchase any Note except in limited circumstances, including (1) a material default occurring on a Note as a result of verifiable identity theft, (2) a borrower loan materially failing to comply with applicable federal and state law at origination, or (3) any other breach of our representations and warranties under our lender registration agreement. Under this agreement, in the event of a breach of the type described in clause (1), we are required to repurchase the Note, and in the event of any breach described in clause (2) or (3) that materially and adversely affects a lender member’s interest in a Note, we are required to cure the breach, repurchase the Note or indemnify and hold the lender member harmless against losses resulting from the breach. We are not, however, obligated to repurchase a Note from a lender member if his or her investment is not realized in whole or in part due to fraud other than identity theft, or due to false or inaccurate statements or omissions of fact in a listing, whether in credit data, borrower representations, user recommendations, group affiliations or similar indicia of borrower intent and ability to repay the loan. Even if we are obligated to repurchase a Note, there can be no assurance that we will be able to meet our repurchase obligation. If we are unable to meet our repurchase obligation, you may lose all of your investment in the Note.

Risks Inherent in Investing in the Notes

If you decide to invest through the platform and concentrate your investment in a single Note, you may increase your risk of borrower defaults.

Your expected return on your investment in the Notes depends on the performance of the borrowers under the corresponding borrower loans. There are a wide range of Prosper Ratings and listings on the platform and we expect some borrowers to default on their loans. If you decide to invest through the platform and concentrate your investment in a single Note, your entire return will depend on the performance of a single borrower loan. For example, if you plan to purchase $200 of Notes, and choose to invest the entire $200 in a single Note instead of in eight $25 Notes corresponding to the borrower loans of eight different borrowers, your entire $200 investment will depend on the performance of a single borrower loan. It may be desirable to diversify your portfolio in order to reduce the risk that you could lose your entire investment due to a single default, or a small number of defaults. However, diversification does not eliminate the risk that you may lose some, or all, of your investment in the Notes.

The platform allows a borrower member to prepay a borrower loan at any time without penalty. Borrower loan prepayments will extinguish or limit your ability to receive additional interest payments on a Note.

Borrower loan prepayment occurs when a borrower decides to pay some or all of the principal amount on a borrower loan earlier than originally scheduled. Borrowers may decide to prepay all or a portion of the remaining principal amount at any time without penalty. In the event of a prepayment of the entire remaining unpaid principal amount of a borrower loan on which your Notes are dependent for payment, you will receive your share of such prepayment but further interest will not accrue after the date on which the payment is made. If the borrower prepays a portion of the remaining unpaid principal balance, the term of the borrower loan will not change, but interest will cease to accrue on the prepaid portion, and you will not receive all of the interest payments that you originally expected to receive on your Notes. In addition, you may not be able to find a similar rate of return on another investment at the time at which the borrower loan is prepaid. Prepayments are subject to our servicing fee, even if the prepayment occurs immediately after issuance of your Note.

Prevailing interest rates may change during the term of your Notes. If this occurs, you may receive less value from your purchase of the Note in comparison to other ways you may invest your money. Additionally, borrowers may prepay their borrower loans due to changes in interest rates, and you may not be able to redeploy the amounts you receive from prepayments in a way that offers you the return you expected to receive from the Notes.

The borrower loans on which the Notes are dependent for payment bear fixed, not floating, rates of interest. If prevailing interest rates increase, the interest rates on Notes you purchase might be less than the rate of return you could earn if you invested the purchase price in a different investment.

~~Table~~The following diagram illustrates the basic structure of ~~Contents~~the marketplace for a single series of Notes. This graphic does not demonstrate many details of the marketplace, including the effect of prepayments, late payments, late fees or collection fees. See "About the Marketplace" for more information.

WeFORWARD-LOOKING ~~may not set appropriate interest rates for borrower loans.~~STATEMENTS

IfThis weprospectus ~~set~~includes ~~interest~~forward-looking ~~rates~~statements. ~~for~~Forward-looking ~~borrower~~statements ~~loans~~include ~~too~~all ~~low~~statements that do not relate solely to historical or current facts, ~~lender~~and ~~members~~can generally be identified by the use of words such as "may," ~~not~~"believe," be"expect," ~~compensated~~"project," ~~appropriately~~"estimate," ~~for~~"intend," ~~the~~"anticipate," ~~level~~"plan," "continue" or similar expressions. In particular, information appearing under "Business," "Risk Factors" and "Management's Discussion and Analysis of ~~risk~~Financial ~~that~~Condition ~~they~~and ~~are~~Results ~~assuming~~of Operations" in ~~purchasing~~this ~~a Note~~prospectus, ~~while~~as ~~setting~~well as the ~~interest~~information ~~rate~~appearing ~~too~~under ~~high~~"Management's ~~may~~Discussion ~~increase~~and ~~the~~Analysis ~~risk~~of Financial Condition and Results of ~~non-payment~~Operations" in Item 7 of Exhibit 99. In1 ~~either~~to ~~case~~the Registration Statement of which this prospectus is a part, ~~failure~~and toin ~~set~~PFL ~~rates~~and ~~appropriately~~PMI’s ~~may~~Quarterly ~~adversely~~Report ~~impact~~for the ~~ability~~three-month ofperiod ~~lender~~ended ~~members~~March 31, 2018, pages 47 to ~~receive~~61, ~~returns~~which onare ~~their~~incorporated ~~Notes~~by ~~that~~reference ~~are~~in ~~commensurate~~this ~~with~~prospectus, ~~the~~includes forward-looking statements. Forward-looking statements inherently involve many risks ~~they~~and ~~have~~uncertainties ~~assumed~~that incould ~~acquiring~~cause ~~such~~actual ~~Notes~~results to differ materially from those projected in these statements. Where, in any forward-looking statement,

The Notes will not be listed on any securities exchange, will not be transferable except through the Note Trader platform, and can be held only by our lender members. You should be prepared to hold the Notes you purchase until they mature.

The Notes will not be listed on any securities exchange. All Notes must be held by our lender members. The Notes will not be transferable except through our Note Trader platform and there can be no assurance that a market for Notes will continue to develop on the Note Trader platform, or that the Note Trader platform will continue in operation. Therefore, lender members must be prepared to hold their Notes to maturity. See “About the Platform—Note Trader Platform” for more information. .

If the Note Trader platform fails to develop, or if the Note Trader platform develops but you cannot find a purchaser for the Notes that you wish to sell, you will be forced to hold the Notes for their remaining term.

We cannot guarantee that the Note Trader platform will continue to develop. A Note offered for sale on the Note Trader platform must be purchased in its entirety by a single lender member, and Notes with a high outstanding principal balance may be more difficult to sell due to the smaller number of lender members with the ability to purchase such Notes.

If you choose to post your Notes for sale on the Note Trader platform, you may not realize the expected return on your investment due to changes in the creditworthiness of the borrower under the corresponding borrower loan.

The ability to sell your Note on the Note Trader platform does not guarantee that you will be able to find a lender member willing to buy the Note at a price acceptable to you, or at all. If the borrower becomes delinquent in payments under the corresponding borrower loan upon which your Note is dependent for payment, your ability to sell the Note on our Note Trader platform will be substantially impaired. You may have to offer the Note for sale at a substantial discount, and there is no guarantee that you will receive the expected value of the Note or any value at all. Additionally, lender members may be less willing to bid for and purchase your Note if prevailing interest rates have changed or other investing activities have proven more attractive while you have held the Note.

You do not earn interest on funds held in your lender member account.

Your lender member account represents an interest in a pooled bank account that does not earn interest. See “About the Platform—Structure of Lender Member Accounts and Treatment of Lender Member Balances” for more information.

~~Table~~PFL or PMI expresses an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of ~~Contents~~our respective managements, expressed in good faith and is believed to have a reasonable basis. Nevertheless, there can be no assurance that the expectation or belief will result or be achieved or accomplished.

The ~~U.S.~~following ~~federal~~include ~~income~~some ~~tax~~but ~~consequences~~not all of anthe ~~investment~~factors inthat ~~the~~could ~~Notes~~cause ~~are~~actual ~~uncertain.~~results or events to differ materially from those anticipated:

~~There~~• ~~are no statutory provisions, regulations, published rulings or judicial decisions that directly address~~ the ~~characterization~~performance of the Notes ~~or instruments similar to the Notes for U.S. federal income tax purposes. However~~, ~~although the matter is not free from doubt because payments on the Notes are dependent on payments on the corresponding borrower loan~~which, wein ~~intend~~addition to ~~treat~~being ~~the~~speculative ~~Notes as our debt instruments that have original issue discount (“OID”) for U.S. federal income tax purposes. Where required~~investments, weare ~~intend to file information returns with the IRS in accordance with such treatment unless there is a change or clarification in the law~~special, bylimited ~~regulation~~obligations ~~or otherwise,~~ that would require a different characterization of the Notes. You should be aware, however, that the U.S. Internal Revenue Service (“IRS”) is not bound by our characterization of the Notes and the IRS or a court may take a different position with respect to the Notes’ proper characterization. For example, the IRS could determine that, in substance, each lender member owns a proportionate interest in the corresponding loan for U.S. federal income tax purposes or, for example, the IRS could instead treat the Notes as a different financial instrument (including an equity interest or a derivative financial instrument). Any different characterization could significantly affect the amount, timing, and character of income, gain or loss recognized in respect of a Note. For example, if the Notes are ~~treated as our equity, (1) we would be subject to U.S. federal income tax on income, including interest, accrued on the corresponding loans but would~~ not beguaranteed ~~entitled to deduct interest~~ or OID on the Notes, and (2) payments on the Notes would be treated by the holder for U.S. federal income tax purposes as dividends (that may be ineligible for reduced rates of U.S. federal income taxation or the dividends-received deduction) to the extent of our earnings and profits as computed for U.S. federal income tax purposes. A different characterization may significantly reduce the amount available to pay interest on the Notes. You are strongly advised to consult your own tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership, and disposition of the Notes (including any possible differing treatments of the Notes).insured;

~~Our~~• PFL's ability to ~~pay~~make ~~principal~~payments ~~and interest~~ on athe ~~Note~~Notes, ~~may~~including bein ~~affected by our ability to match~~ the ~~timing~~event ofthat ~~our~~borrowers ~~income~~fail ~~and~~to ~~deductions~~make ~~for~~payments ~~U.S.~~on ~~federal~~the ~~income~~corresponding ~~tax~~Borrower ~~purposes.~~Loans;

~~You~~• ~~should be aware that~~ our ability to ~~pay~~attract ~~principal~~potential ~~and~~borrowers ~~interest on a Note may be affected by our ability, for U.S. federal income tax purposes,~~ to match the timing of income we receive from a corresponding loan that we hold and the timing of deductions that we may be entitled to in respect of payments made on the Notes that we issue. For example, if the Notes are treated as contingent payment debt instruments for U.S. federal income tax purposes but the corresponding borrower loans are not, there could be a potential mismatch in the timing of our ~~income and deductions for U.S. federal income tax purposes, which could affect our ability to make payments on the Notes.~~marketplace;

~~Participation~~• in the ~~funding~~reliability of ~~loans~~the ~~could~~information beabout ~~viewed~~borrowers asthat ~~creating~~is asupplied ~~conflict~~by ofborrowers ~~interest.~~including actions by some borrowers to defraud investors;

As• ~~is the practice with other peer-to peer lending companies, including~~ our ~~competitor,~~ability ~~LendingClub, from time~~ to ~~time,~~service ~~we or PMI may fund portions of qualified loan requests on~~ the ~~platform~~Borrower Loans, and ~~hold~~our ~~any~~ability ~~Notes that we~~ or ~~PMI purchase as a result of such funding for our or PMI’s own account. Even though we and PMI will participate in loans on~~ the ~~platform~~ability ~~under the same terms and conditions and through the use~~ of ~~the same information that is made available to other potential lenders on the platform, such participation may be perceived as involving~~ a ~~conflict~~third ofparty ~~interest. For~~debt ~~example,~~collector ~~our or PMI’s funding of a loan may cause the loan~~ to ~~fund,~~pursue ~~and~~collection inagainst ~~some~~any ~~cases~~borrower, ~~fund~~including ~~faster, than it would fund~~ in the ~~absence~~event of ~~our~~fraud or ~~PMI’s~~identity ~~participation, which could benefit us to the extent that it ensures that we generate the revenue associated with the loan.~~theft;

~~Risks~~• ~~Related~~credit torisks ~~Us,~~posed by the ~~Platform~~creditworthiness ~~and~~of ~~Our~~borrowers ~~Ability~~and tothe ~~Service~~effectiveness of the ~~Notes~~credit rating systems;

~~PMI~~• ~~faces~~our acompliance ~~contingent~~with ~~liability~~applicable ~~for~~regulations ~~securities~~and ~~law~~regulatory ~~violations~~developments inor ~~respect~~court ofdecisions ~~PMI~~affecting ~~Borrower~~our ~~Loans sold to its lender members from inception until October 16, 2008. This contingent liability may impair its ability to perform its obligations under the Servicing Agreement.~~business;

~~PMI~~• ~~Borrower~~potential ~~Loans~~efforts ~~sold~~by tostate ~~PMI’s~~regulators ~~lender~~or ~~members~~litigants ~~through~~to ~~PMI’s~~impose ~~platform~~liability ~~from~~that ~~November~~could ~~2005~~affect ~~until~~PFL's ~~October 16,~~(or ~~2008~~any ~~may~~subsequent beassignee's) ~~viewed~~ability asto ~~involving~~continue anto ~~offering~~charge ofto ~~securities~~borrowers ~~that~~the ~~was~~interest ~~not~~rates ~~registered~~that orthey ~~qualified~~agreed ~~under~~to ~~federal~~pay orat ~~state~~origination ~~securities~~of ~~laws.~~ their loans;

On• November 26, 2008, plaintiffs, Christian Hellum, William Barnwell and David Booth, individually and on behalf of all other plaintiffs similarly situated, filed a class action lawsuit against PMI and certain of its executive officers and directors in the ~~Superior~~impact ~~Court~~ of ~~California,~~current ~~County~~economic ofconditions ~~San Francisco, California. The suit was brought~~ on ~~behalf of all purchasers of loan notes from PMI on~~ the ~~platform~~performance ~~from January 1, 2006 through October 14, 2008. The lawsuit alleges that PMI offered and sold unqualified and unregistered securities in violation~~ of the ~~California~~Notes and ~~federal~~loss ~~securities~~rates ~~laws. The lawsuit seeks class certification, damages and the right~~ of ~~rescission against PMI and~~ the ~~other named defendants, as well as treble damages against PMI and the award of attorneys’ fees, experts’ fees and costs, and pre-judgment and post-judgment interest.~~Notes;


•	our compliance with applicable local, state and federal law, including the Investment Advisers Act of 1940, the Investment Company Act of 1940 and other laws;


•	potential efforts by state regulators or litigants to characterize PFL or PMI, rather than WebBank, as the lender of the Borrower Loans originated through the marketplace;


•	the application of federal and state bankruptcy and insolvency laws to borrowers, PFL and PMI;


•	the impact of borrower delinquencies, defaults and prepayments on the returns on the Notes;


•	the lack of a public trading market for the Notes and the inability to resell the Notes at all;


•	the federal income tax treatment of an investment in the Notes and the PMI Management Rights; and


•	our ability to prevent security breaches, disruptions in service, and comparable events that could compromise the personal and confidential information held on our data systems, reduce the attractiveness of the marketplace or adversely impact our ability to service Borrower Loans.

There may be other factors that may cause actual results to differ materially from the forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does occur, what impact they will have on either of our results of operations and financial conditions. You should carefully read the factors described in the "Risk Factors" section of this prospectus for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.

All forward-looking statements speak only as of the date of this prospectus and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other than as required by law.

RISK FACTORS

~~Table~~The Notes and PMI Management Rights involve a high degree of ~~Contents~~risk. You should carefully consider the risks described below before making a decision to invest in the Notes and PMI Management Rights. If any of the following risks actually occurs, you might lose all or part of your investment in the Notes and PMI Management Rights. In addition to the disclosures below, please read carefully the sections entitled "Item 1A. Risk Factors" beginning on page 16 of PFL and PMI's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 previously filed with the SEC and incorporated by reference into this prospectus, and the sections entitled "Item 1A. Risk Factors" included in any subsequent Annual or Quarterly Report that may be incorporated by reference into this prospectus. Before making an investment decision, you should carefully consider these risks. While we believe the risks and uncertainties described below include all material risks currently known by us, it is possible that these may not be the only ones we face. If any of the risks actually occur, our business, financial condition, operating results and prospects could be materially and adversely affected.

~~PMI~~RISKS ~~intends~~RELATED toTO ~~vigorously~~BORROWER defend the class action lawsuit. PMI cannot, however, presently determine or estimate the final outcome of the lawsuit, and there can be no assurance that it will be finally resolved in PMI’s favor. If the class action lawsuit is not resolved in PMI’s favor, PMI might be obliged to pay damages, and might be subject to such equitable relief as a court may determine.DEFAULT

AsThe aNotes ~~result~~are ofrisky ~~PMI’s prior operations, a lender member who holds a loan originated on the platform prior to October 15, 2008 may be entitled to rescind her purchase~~ and bespeculative ~~paid~~investments the unpaid principal amount of her borrower loan, plus statutory interest. PMI has not recorded an accrued loss contingency in respect of this contingent liability, although it intends to continue to monitor the situation. Generally, the federal statute of limitations for ~~noncompliance~~suitable ~~with~~investors ~~the requirement to register securities under the Securities Act is one year from the violation; however, the statute of limitations periods under state laws may extend for a longer period of time~~only. Under the Servicing Agreement we have entered into with PMI (the “Servicing Agreement”), PMI is generally responsible for managing the operation of the platform on our behalf. See “Summary of Indenture, Form of Notes and Servicing Agreement—Servicing Agreement”. If a significant number of PMI’s former lender members sought rescission, or if the class action securities lawsuit is successful, PMI’s ability to perform its obligations under the Servicing Agreement may be adversely affected and, in such event, our ability to continue to make payments on the Notes could be materially impaired.

~~PMI~~Investors ~~has~~should ~~incurred~~be ~~operating~~aware ~~losses~~that ~~since~~the ~~inception~~Notes offered through our marketplace are risky and wespeculative ~~anticipate~~investments. ~~that~~The ~~PMI~~Notes ~~will~~are ~~continue~~special, limited obligations of PFL and depend entirely for payment on PFL's receipt of payments under the corresponding Borrower Loans. Notes are suitable only for investors of adequate financial means. If an investor cannot afford to ~~incur~~lose ~~net~~the ~~losses~~entire ~~through~~amount atof ~~least~~such ~~2012~~investor's investment in the Notes, the investor should not invest in the Notes.

~~PMI~~Payments ~~has~~on ~~incurred~~the ~~operating~~Notes ~~losses~~depend ~~since~~entirely ~~its~~on ~~inception~~payments ~~and~~PFL wereceives ~~anticipate~~on ~~that~~corresponding ~~PMI~~Borrower ~~will~~Loans. ~~continue~~If ~~to incur net losses for~~ a ~~number~~borrower offails ~~years~~to asmake itany ~~grows~~payments ~~its~~on ~~business. For~~ the ~~nine~~corresponding ~~months~~Borrower ~~ended~~Loan ~~September~~related ~~30,~~to ~~2011~~a ~~and 2010 PMI had negative cash flows from operations of $6.7 million and $7.3 million~~Note, ~~respectively. Additionally,~~payments ~~from~~on ~~its~~such ~~inception~~Note ~~through~~will ~~September~~be ~~30,~~correspondingly ~~2011, PMI had an accumulated deficit of $56~~reduced.~~7 million.~~

~~PMI~~PFL ~~had~~will ~~financed~~only ~~its~~make ~~operations~~payments topro ~~date~~rata ~~primarily~~on ~~with~~a ~~proceeds~~series ~~from~~of Notes after it receives a borrower's payment on the ~~sale~~corresponding Borrower Loan, net of ~~equity~~servicing ~~securities~~fees. At ~~September~~PFL ~~30,~~also ~~2011,~~will ~~PMI~~retain ~~had~~from ~~approximately~~the ~~$13.6~~funds ~~million~~received infrom ~~unrestricted~~the ~~cash~~relevant borrower and ~~cash~~otherwise ~~equivalents. PMI~~available isfor ~~dependent~~payment ~~upon~~on ~~raising~~the ~~additional~~Notes ~~capital~~any ornon-sufficient ~~debt~~funds ~~financing~~fees toand ~~fund~~the ~~its~~amounts ~~current~~of ~~operating~~any ~~plan. PMI’s~~attorneys' ~~failure~~fees toor ~~obtain~~collection ~~sufficient~~fees ~~debt~~our ~~and~~in-house ~~equity~~collections ~~financings and~~department, ~~ultimately,~~a tothird-party ~~achieve~~servicer ~~profitable~~or ~~operations~~collection ~~and~~agency ~~positive~~imposes ~~cash~~in ~~flow~~connection ~~from~~with ~~operations~~collection ~~could~~efforts. ~~adversely~~Under ~~affect~~the ~~its~~terms ~~ability~~of tothe ~~perform~~Notes, ~~its~~if ~~obligations~~PFL ~~under~~does not receive any or all payments on the ~~Servicing~~corresponding ~~Agreement~~Borrower ~~and~~Loan, payments on the Note will be correspondingly reduced in ~~such~~whole ~~event,~~or ~~our~~in ~~ability~~part. toIf ~~continue~~the torelevant borrower does not make ~~payments~~a payment on ~~the~~a ~~Notes~~specific ~~could~~monthly loan payment date, no payment will be ~~materially~~made ~~impaired~~on the Note on the corresponding succeeding Note payment date.

WeInformation ~~and~~supplied ~~PMI~~by ~~both~~applicants ~~have~~may ~~limited~~be ~~operating~~inaccurate ~~histories. As~~or anintentionally ~~online~~false. ~~company~~Information inregarding ~~the~~income ~~early~~and ~~stages~~employment ofis ~~development,~~not weverified ~~face~~in ~~increased~~many ~~risks, uncertainties, expenses and difficulties~~cases.

AsApplicants supply a variety of information regarding the ~~number~~purpose of ~~borrowers~~the loan, ~~lender~~income, ~~members~~occupation, and employment status that is included in borrower ~~loans~~listings. ~~originated~~We ondo not verify the ~~platform~~majority ~~increases~~of this information, ~~PMI~~which ~~will~~may ~~need~~be incomplete, inaccurate or intentionally false. Applicants may misrepresent their intentions for the use of Borrower Loan proceeds. Neither we nor WebBank verifies any statements by applicants as to ~~increase~~how ~~its~~loan ~~facilities,~~proceeds ~~personnel~~are ~~and~~to ~~infrastructure~~be inused ~~order~~nor do we or WebBank confirm after loan funding how loan proceeds were used. All listings are posted to ~~accommodate~~our marketplace without our verifying the ~~greater~~information ~~servicing~~provided ~~obligations~~by ~~and~~the ~~demands~~applicant, onincluding the ~~platform~~borrower's stated income, employment status or occupation. ~~PMI~~ ~~must~~Investors ~~constantly~~should ~~add~~not ~~new~~rely ~~hardware~~on ~~and~~an ~~update~~applicant's ~~its~~self-reported ~~software~~information ~~and~~such ~~our~~as ~~website~~income, ~~expand~~employment ~~its~~status, ~~customer~~or ~~support~~occupation ~~services,~~in making investment decisions. In the cases in which we select applicants for income and ~~add~~employment ~~new~~verification, ~~employees~~the verification is normally done after the listing has been created but prior to ~~maintain~~the time the ~~operations~~Borrower ofLoan is funded. For the ~~platform~~period asfrom ~~well~~July as13, 2009 to ~~satisfy~~March 31, ~~our~~2018, ~~servicing~~we ~~obligations~~verified employment and/or income on approximately 65% of the ~~borrower~~Borrower Loans originated through our marketplace on a unit basis (594,363 out of 911,015) and approximately 76% of originations on a dollar basis ($8.9 billion out of $11.8 billion). Of these loans, we canceled 11% of the loan listings for which we verified employment and/or income information because the ~~Notes~~listings contained inaccurate or insufficient employment or income information. We selected these listings based on a combination of factors, including amount of loan requested, Prosper Rating, debt-to-income ratio and stated income. If ~~PMI~~we isidentify ~~unable~~inaccurate information in a listing that does not trigger cancellation of the listing, we do not update the listing to ~~increase~~include the ~~capacity~~corrected ofinformation. Listings do not disclose the ~~platform~~identity of applicants, and ~~maintain~~investors ~~the~~have ~~necessary~~no ~~infrastructure~~ability to obtain or verify applicant information either before or after they purchase a Note. If an applicant supplies false, ~~you~~misleading or inaccurate information, an investor may ~~experience~~lose ~~delays~~part inor ~~receipt~~all of ~~payments~~the onpurchase ~~your~~price ~~Notes~~paid for a Note. Under PFL's Administration Agreement with PMI, PMI is required to perform borrower identity and ~~periodic~~financial ~~downtime~~information ofverification ~~our~~services ~~website~~for PFL. See "About the Marketplace-Borrower Identity and Financial Information

The market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.

The consumer lending market is competitive and rapidly changing. With the introduction of new technologies and the influx of new entrants, we expect competition to persist and intensify in the future, which could harm our ability to increase volume on the platform.

Our principal competitors include major banking institutions, credit unions, credit card issuers and other consumer finance companies, as well as other peer-to-peer lending platforms, including LendingClub. Competition could result in reduced volumes, reduced fees or the failure of the platform to achieve or maintain more widespread market acceptance, any of which could harm our business. In addition, in the future we may experience new competition from more established Internet companies, such as eBay Inc., Google Inc., or Yahoo! Inc., possessing large, existing customer bases, substantial financial resources and established distribution channels. If any of these companies or any major financial institution decided to enter the peer-to-peer lending business, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed.

~~Table~~Verification" for more information. The number or percentage of ~~Contents~~applicants whose income and employment information is verified in relation to future listings may differ from the historical information supplied above. No assurance is made that such information will be verified with respect to any particular applicant or borrower. Neither the indenture trustee nor holders of any Notes will have any contractual or other relationship with any borrower that would enable the indenture trustee or such holder to make any claim against such borrower for fraud or breach of any representation or warranty in relation to any false, incomplete or misleading information supplied by such borrower in relation to the relevant Borrower Loan or Note.

~~Most~~The ofBorrower ~~our~~Loans ~~current~~are ornot ~~potential~~secured ~~competitors~~by ~~have~~any ~~significantly~~collateral ~~more~~or ~~financial,~~guaranteed ~~technical,~~or ~~marketing~~insured ~~and~~by ~~other~~any ~~resources~~third ~~than we do and may be able to devote greater resources to the development~~party, ~~promotion, sale~~ and ~~support~~investors ofmust ~~their~~rely ~~platforms~~on ~~and~~us ~~distribution~~or ~~channels. Our~~a ~~potential~~third-party ~~competitors~~collection ~~may~~agency ~~also have longer operating histories, more extensive customer bases, greater brand recognition and broader customer relationships than we have. These competitors may be better able~~ to ~~develop~~pursue ~~new~~collection ~~products,~~against toany ~~respond quickly to new technologies and to undertake more extensive marketing campaigns~~borrower. ~~Our industry is driven by constant innovation. If we are unable to compete with such companies and meet the need for innovation, the use of the platform could stagnate or substantially decline.~~

IfBorrower weLoans ~~fail~~are tounsecured ~~promote~~obligations of borrowers. They are not secured by any collateral, and ~~maintain~~they ~~our~~are ~~brand~~not guaranteed or insured by PFL, PMI or any third party or backed by any governmental authority in aany ~~cost~~way. We and our third-~~effective~~party ~~manner~~collection agencies will, wetherefore, ~~may~~be ~~lose~~limited ~~market~~in ~~share~~our ability to collect on Borrower Loans. Moreover, Borrower Loans are obligations of borrowers to PFL as successor to WebBank, not obligations to the holders of Notes. Holders of the Notes will have no recourse to the borrowers and ~~our~~no ~~revenue~~ability to pursue borrowers to collect payments under Borrower Loans. Holders of the Notes may ~~decrease~~look only to PFL for payment of the Notes. Furthermore, if a borrower fails to make any payments on the Borrower Loan, the holders of the Notes corresponding to that Borrower Loan will not receive any payments on their Notes. The holders of such Notes will not be able to pursue collection against the borrower and will not be able to obtain the identity of the borrower in order to contact the borrower about the defaulted Borrower Loan.

WeThe ~~believe~~maximum ~~that developing and maintaining awareness of the Prosper brand in a cost~~debt-~~effective manner is critical~~ to achieving widespread acceptance of the platform and attracting new borrower and lender members. Furthermore, we believe that the importance of brand recognition will increase as competition in the peer-~~to-peer~~income ~~lending~~ratio ~~industry~~for ~~increases. Successful~~applicants ~~promotion~~is ~~of our brand will depend largely on the effectiveness of our marketing efforts and the member experience on the platform~~50%. These brand promotion activities may not yield increased revenues. If we fail to successfully promote and maintain our brand, we may lose our existing members to our competitors or be unable to attract new members, which would cause our revenue to decrease and may impair our ability to maintain the platform.

IfDebt-to-income we("DTI") ~~are~~is ~~unable~~a measurement of a borrower's ability to ~~increase~~take ~~transaction~~on ~~volumes,~~additional debt. While there is an upper limit of 50% on the DTI ratio for eligible borrowers in our ~~business~~marketplace, ~~and~~borrowers ~~results~~with higher DTI ratios may represent a greater risk of ~~operations~~default ~~will~~than beborrowers ~~affected~~with ~~adversely~~lower DTI ratios. Note that the measure of DTI for eligibility decisions does not include the amount of the requested Borrower Loan, whereas the measure of DTI presented in a listing includes the amount of the requested Borrower Loan.

ToThe ~~succeed,~~credit weinformation ~~must increase transaction volumes on the platform by attracting a large number~~ of ~~borrowers~~an ~~and~~applicant ~~lender~~may members in a cost-effective manner, many of whom have not previously participated in peer-to-peer lending. If we are not able to attract qualified borrowers and sufficient lender members purchase commitments, we will not be ~~able~~inaccurate ~~to increase our transaction volumes. Additionally, we rely on a variety of methods to drive traffic to our website. If we are unable to use any of our current~~ or ~~future~~may ~~marketing~~not ~~initiatives~~accurately orreflect the ~~cost~~applicant's ~~of these initiatives were to significantly increase~~creditworthiness, wewhich may ~~not~~cause bean ~~able~~investor to ~~attract~~lose ~~new~~all ~~borrowers~~or ~~and~~part ~~lender~~of ~~members~~the inprice apaid ~~cost-effective~~for ~~manner and, as~~ a ~~result, our revenue and results of operations would be affected adversely, which may impair our ability to maintain the platform~~Note.

We ~~are~~obtain ~~subject~~applicant tocredit ~~extensive~~information ~~federal,~~from ~~state~~consumer reporting agencies, and ~~local~~assign ~~regulation~~ Prosper Ratings to listings based in part on the applicant's credit score. A credit score that ~~could~~forms ~~adversely~~a ~~impact~~part ~~our~~of ~~ability~~the Prosper Rating assigned to ~~service~~a listing may not reflect the ~~borrower~~applicant's ~~loans~~actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate consumer reporting data. Similarly, the credit data taken from the applicant's credit report and displayed in listings may also be based on outdated, incomplete or inaccurate consumer reporting data. We do not verify the information obtained from the applicant's credit report. Moreover, investors do not, and will not, have access to financial statements of applicants or to other detailed financial information about applicants.

WeThe ~~are~~Prosper ~~subject~~Rating tomay ~~extensive~~not ~~federal,~~accurately ~~state~~set ~~and~~forth ~~local~~the ~~regulation,~~risks ~~non-compliance~~of ~~with~~investing ~~which~~in ~~could~~the ~~have~~Notes, ano ~~negative~~assurances ~~impact~~can onbe ~~our~~provided ~~ability~~that toactual ~~service~~loss rates for the Notes, ~~provide~~will acome ~~trading~~within ~~market~~the ~~for~~estimated loss rates indicated by the ~~Notes~~Prosper Rating, orand ~~maintain~~investors have limited rights to cause Prosper to repurchase the ~~platform~~Notes.

~~Additionally,~~The ~~PMI~~Prosper ~~holds~~Rating ~~lending~~assigned ~~licenses~~to ora ~~similar~~loan ~~authorizations~~listing inmay 16not ~~states,~~accurately ~~all~~reflect the risks of ~~which~~investing ~~have~~in the ~~authority~~Notes, and is not a recommendation by us to ~~supervise~~buy, ~~and~~sell ~~examine~~or ~~PMI’s~~hold ~~activities~~a Note. ~~Because~~For weexample, ~~rely~~the onProsper ~~PMI,~~Rating asfor ~~Servicer~~a ~~under~~listing could be inaccurate because the ~~Servicing~~applicant’s ~~Agreement~~credit report contained incorrect information. Similarly, although most of the information provided by applicants that is relevant to ~~manage~~the Prosper Rating is verified by us before calculating the ~~operation~~Prosper ofRating, we do not verify all such information. For example, we do not verify the ~~platform~~income information on ~~our~~all ~~behalf~~applications. Further, ifthe ~~PMI~~Prosper Rating does not ~~comply~~reflect ~~with~~PFL’s ~~applicable~~credit ~~laws~~risk as a debtor (such credit risk exists even though, itas ~~could~~the ~~lose~~debtor ~~one~~on orthe ~~more~~Notes, PFL’s only obligation is to pay to the Note holders their pro rata shares of ~~these~~collections ~~licenses~~received oron ~~authorizations~~the related Borrower Loans net of applicable fees). In addition, ~~which~~no ~~may~~assurances ~~have~~can anbe ~~adverse~~provided ~~effect~~that onactual ~~our~~loss ~~ability~~rates tofor ~~continue~~the toNotes ~~perform~~will ~~our~~fall ~~servicing~~within ~~obligations~~the orexpected ~~maintain~~loss rates indicated by the ~~platform~~Prosper Rating. ~~See~~ ~~“Government~~The ~~Regulation—Regulation~~interest ~~and~~rates ~~Consumer~~on ~~Protection~~the ~~Laws”~~Notes might not adequately compensate Note investors for ~~more~~these ~~information~~additional risks.

The Federal Fair Debt Collection Practices Act and similar state debt collection laws regulate debt collection practices by “debt collectors” and prohibit debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans. While we obligate the collection agencies we use to comply with applicable law in collecting borrower loans, it is possible that improper collection practices may occur that could adversely impact the collectability of particular borrower loans originated through the platform.

~~Table~~If we include in a listing a Prosper Rating that is different from the Prosper Rating calculated by us or calculate the Prosper Rating for a listing incorrectly, and such error materially and adversely affects a holder’s interest in the related Note, PFL will indemnify the holder or repurchase the Note. PFL will not, however, have any indemnity or repurchase obligation under the Amended and Restated Indenture, the Notes, the investor registration agreement or any other agreement associated with the Note Channel as a result of ~~Contents~~any other inaccuracy with respect to a listing’s Prosper Score or Prosper Rating. PFL’s contractual repurchase obligations do not affect a Note holder’s rights under federal or state securities laws. See "About the Marketplace-Note Repurchase and Indemnification Obligations" for more information.

~~Our~~Investors ~~arrangements~~who ~~for~~use ~~back-up~~the ~~servicing~~Recurring ~~are~~Investment ~~limited. If~~or ~~PMI~~Auto ~~fails~~Invest totools ~~maintain~~may ~~operations,~~face ~~you~~additional ~~will~~risk ~~experience a delay and increased cost in respect~~ of ~~your~~funding ~~expected~~Borrower ~~principal~~Loans ~~and~~that ~~interest~~have ~~payments~~been onerroneously ~~your~~selected ~~Notes,~~by ~~and~~the ~~we may be unable to collect and process repayments from borrowers~~tool.

IfSince ~~PMI~~it ~~were~~was tofirst ~~fail~~implemented orin ~~become~~July ~~insolvent,~~2011 wethrough ~~would~~March 31, ~~attempt~~2018, ~~to transfer servicing obligations on~~ the ~~borrower~~Recurring ~~loans~~Investment ~~and~~tool ~~Notes~~(formerly toknown aas ~~third~~Auto ~~party~~Quick ~~pursuant~~Invest) tohas ~~our~~experienced ~~contractual~~programming ~~agreements~~errors ~~with~~that ~~lender~~affected ~~members. We~~8,630 ~~and~~Notes ~~PMI have entered into a back-up servicing agreement with a loan servicing company who is willing~~ and ~~able to transition servicing responsibilities in the event~~ PMI ~~can~~Notes noout ~~longer do so. There can be no assurance that this back-up servicer will be able to adequately perform the servicing~~ of the ~~outstanding borrower loans. If this back-up servicer assumes the servicing of the borrower loans~~10,418,244 ~~the~~Notes ~~back-up~~and ~~servicer~~PMI ~~may~~Notes ~~impose~~purchased. ~~additional~~The ~~servicing~~Auto ~~fees,~~Invest ~~reducing~~tool ~~the~~was ~~amounts~~first ~~available~~implemented ~~for payments~~ on ~~the~~June ~~Notes. Additionally~~2, ~~transferring~~2016. ~~these~~Since ~~servicing~~such ~~obligations~~time tothrough ~~the back-up servicer may result in delays in the processing of information with respect to amounts owed on the borrower loans or~~March 31, ~~if the platform becomes inoperable~~2018, ~~may prevent~~ the ~~back-up~~Auto ~~servicer~~Invest ~~from~~tool ~~servicing~~has ~~the~~experienced ~~borrower~~programming ~~loans~~errors ~~and~~that ~~making~~affected ~~principal~~2 ~~and interest payments on the~~ Notes~~. If~~ ~~the~~out ~~back-up~~of ~~servicer is not able to service~~ the ~~borrower loans effectively~~2,990,279 ~~your ability to receive principal and interest payments on your~~ Notes ~~may be substantially impaired~~purchased.

~~PMI~~In ~~does~~the event of any errors in Recurring Investment or Auto Invest that cause an investor to purchase a Note from PFL that such investor would not otherwise have ~~patent~~purchased ~~protection~~or ~~for~~that ~~all~~differs ofmaterially ~~its~~from ~~proprietary~~the ~~technology. It~~Note ~~may~~such beinvestor ~~difficult~~would ~~and~~have ~~costly~~purchased ~~for~~had ~~PMI~~there tobeen ~~protect~~no ~~its~~error, ~~intellectual~~PFL ~~property~~will ~~rights~~either repurchase the Note, indemnify the investor against losses suffered on that Note or cure such error. See "Risk Factors-Risks Related to PFL and PMI ~~may~~Our ~~not~~Marketplace beand ~~able~~Our Ability to ~~ensure~~Service ~~their~~the ~~protection~~Notes" for more information.

~~PMI~~The ~~developed~~Recurring ~~the~~Investment ~~platform~~ and ~~owns~~Auto ~~the~~Invest ~~proprietary~~tools ~~technology~~may ~~that~~invest ~~makes~~all ~~operation~~available offunds ~~the platform possible. PMI’s ability to maintain the platform and perform its obligations under the Servicing Agreement depends,~~ in ~~part,~~an upon its proprietary technology. PMI may not protect its proprietary technology effectively, which would allow competitors to duplicate our products and adversely affect our ability to compete with them. A third party may attempt to reverse engineer or otherwise obtain and use PMIinvestor’s ~~proprietary technology without its consent. In addition~~account, ~~the~~including ~~platform may infringe upon claims of third-party patents and we or PMI may face intellectual property challenges from such other parties. We or PMI may not be successful in defending against~~ any ~~such~~principal ~~challenges or in obtaining licenses to avoid or resolve any intellectual property disputes. Furthermore, PMI’s technology may become obsolete,~~ and ~~there~~interest ispayments nothe ~~guarantee~~investor ~~that~~receives ~~PMI~~on ~~will~~existing ~~be able to successfully develop~~Notes, ~~obtain~~in oraccordance ~~use new technologies to adapt the platform to compete~~ with ~~other peer-to-peer lending platforms. If PMI cannot protect~~ the ~~proprietary technology embodied in and used by the platform from intellectual property challenges, or if the platform becomes obsolete, PMI~~investor’s ~~ability~~investment to maintain the platform and perform its servicing obligations under the Servicing Agreement could be adversely affected and, in such event, our ability to continue to make payments on the Notes could be materially impairedcriteria.

WeThe ~~rely~~Recurring Investment (formerly known as Auto Quick Invest) and Auto Invest tools may invest all available funds in an investor’s account, including any principal and interest payments the investor receives on ahis ~~third-party~~existing ~~commercial~~Notes, ~~bank~~in toaccordance ~~process~~with ~~transactions~~the investor’s investment criteria. If Because weNotes are ~~unable~~risky toand ~~continue~~speculative ~~utilizing~~investments, investors using these ~~services~~tools may lose some, ~~our~~or ~~business~~all, of the funds in their account, including any principal and ~~ability~~interest topayments ~~service~~received ~~the~~on Notes. Investors ~~may~~who wish to set aside a portion of their account as cash that will not be ~~adversely~~invested ~~affected~~by Recurring Investment or Auto Invest, as applicable, should set a cash reserve as part of their investment preferences within each tool.

~~Because~~Some weborrowers ~~are~~may ~~not~~use ~~a bank, we cannot belong to or directly access the Automated Clearing House (ACH) payment network. As a result, we currently rely on an FDIC-insured depository institution to process~~ our ~~transactions. If~~marketplace ~~we cannot continue~~ to ~~obtain~~defraud ~~such services from this institution or elsewhere~~investors, orwhich ifcould weadversely ~~cannot~~affect ~~transition~~investors' ~~to another processor quickly, our~~ ability to ~~process~~recoup ~~payments~~their ~~will suffer and your ability to receive principal and interest payments on the Notes will be delayed or impaired~~investment.

~~Although~~We use identity and fraud checks with external databases to authenticate each borrower's identity. There is a risk, however, that these checks could fail and fraud may occur. In addition, applicants may misrepresent their intentions regarding loan purpose or other information contained in listings, and we ~~have~~do ~~been~~not ~~organized~~verify the majority of this information. While PFL will indemnify an investor or repurchase Notes in limited circumstances (including, e.g., a ~~manner~~material ~~that~~payment default on the Borrower Loan resulting from verifiable identity theft), it is ~~intended~~not obligated to ~~minimize~~indemnify an investor or repurchase a Note from an investor if the ~~likelihood~~investment ~~that~~is wenot ~~will~~realized ~~become~~in ~~subject~~whole or in part due to fraud (other than verifiable identity theft) in connection with a ~~bankruptcy~~loan ~~proceeding~~listing, ifor ~~this~~due ~~were~~ to ~~occur~~false or inaccurate statements or omissions of fact in a listing, ~~the~~whether ~~rights~~in credit data, a borrower's representations, similar indicators of borrower intent and ability to repay the ~~holders~~Borrower ofLoan. For the ~~Notes~~period ~~could~~from beJuly ~~uncertain~~13, 2009 to March 31, 2018, we verified employment and/or ~~payments~~income on approximately 65% of the ~~Notes~~Borrower ~~may~~Loans beoriginated ~~limited,~~through ~~suspended~~our ormarketplace ~~stopped. The~~on ~~recovery,~~a ifunit ~~any~~basis (594,363 out of a911,015) ~~holder~~and approximately 76% of originations on a ~~Note~~dollar ~~may~~basis ~~therefore~~($8.9 bebillion ~~substantially~~out ~~delayed~~of $11.8 billion). Of these Borrower Loans, we canceled 11% of the loan listings for which we verified employment and/or ~~substantially~~income ~~less~~information ~~than~~because the listings contained inaccurate or insufficient employment or income information. If PFL repurchases a Note, the repurchase price will be equal to the Note's outstanding principal balance and will not include accrued interest. ~~due~~If ~~and~~PFL torepurchases ~~become~~any ~~due~~Notes, onPMI will concurrently repurchase the related PMI Management Rights for zero consideration. See "About the Marketplace-Note Repurchase and Indemnification Obligations" for more information.

Although we have been organized and will be operated in a manner that is intended to minimize the likelihood that we will become subject to a bankruptcy or similar proceeding, if this were to occur, the recovery, if any, of a holder of a Note may be substantially delayed in time and may be substantially less in amount than the principal and interest due and to become due on the Note. For example, we have structured our limited liability company agreement to limit our activities in a manner that is intended to limit the possibility that we could be required to file for bankruptcy. There is no guarantee, however, that we have made the right choices structurally and as a result, we could take actions that ultimately could cause us to file for bankruptcy. Further, although we have granted the indenture trustee, for the benefit of the Note holders, a security interest in all of the borrower loans, all payments and proceeds we receive on the borrower loans and in the bank account in which the borrower loan payments are deposited, the holders of the Notes would still be subject to the following risks associated with our insolvency, bankruptcy or a similar proceeding.

~~Table~~The fact that we have the exclusive right and ability to investigate claims of ~~Contents~~identity theft in the origination of Borrower Loans creates a significant conflict of interest between us and our investors.

IfWe have the exclusive right to investigate claims of identity theft and determine, in our sole discretion, whether verifiable identity theft has occurred. Verifiable identity theft triggers an obligation by PFL to either repurchase the related Notes or indemnify the applicable Note holders. As we ~~become~~are ~~subject~~the sole entities with the ability to ainvestigate ~~bankruptcy~~and determine verifiable identity theft, which triggers PFL's repurchase or ~~similar~~indemnification ~~proceeding~~obligation, ~~borrowers~~a ~~may~~conflict ~~delay~~of ~~payments~~interest exists. Investors rely solely on us to investigate incidents that might require PFL to indemnify the applicable Note holders or ~~cease~~repurchase ~~making~~the ~~payments~~related atNotes. ~~all~~The denial of a claim under PFL's identity theft guarantee would save PFL from its indemnification or repurchase obligation.

~~Borrowers~~Loss ~~may~~rates ~~delay~~on ~~or suspend making payments to us because of~~ the ~~uncertainties~~Borrower ~~occasioned~~Loans bymay ~~our~~increase ~~becoming subject to a bankruptcy or similar proceeding, even if the borrowers have no legal right to do so,~~ and ~~such~~prior ~~delay would reduce, at least for a time, the funds that might otherwise be available~~ to ~~pay~~investing ~~the~~investors ~~Notes~~should ~~corresponding~~consider ~~to those borrower loans. In addition,~~ the ~~commencement~~risk of ~~the~~non-payment bankruptcy or similar proceeding may, as a matter of law, prevent us from making regular payments on the Notes, even if the funds to make such payments are available. Because the indenture trustee would be required to enforce its security interest in the borrower loans in a bankruptcy or similar proceeding, the indenture trustee’s ability to make payments under the Notes would be delayed, which may effectively reduce the value of any recovery that a holder of a Note may receive (and ~~no such recovery can be assured) by the time any recovery is available~~default.

IfBorrower weLoans ~~become~~were ~~subject~~first offered through our marketplace in February 2006. The estimated loss rates used to adetermine ~~bankruptcy~~the orProsper ~~similar~~Rating ~~proceeding~~have been developed from the loss histories of all Borrower Loans originated through our marketplace. However, ~~interest~~future ~~accruing~~Borrower ~~upon~~Loans ~~and~~originated ~~following~~through ~~such~~our ~~bankruptcy~~marketplace ormay default more often than similar ~~proceeding~~Borrower ~~may~~Loans ~~not~~have bedefaulted ~~paid~~in the past, which increases the risk of investing in the Notes.

InIf apayments ~~bankruptcy or similar proceeding for us, interest accruing~~ on the ~~Notes~~Borrower ~~during~~Loan ~~the~~corresponding ~~proceeding~~to ~~may~~an ~~not~~investor's ~~be part of the allowed claim of a holder of a~~ Note~~. If~~ ~~the~~become ~~holder~~more ofthan a30 ~~Note~~days ~~receives a recovery on the Note (and no such recovery can be assured)~~overdue, ~~any~~ such ~~recovery~~investor ~~may~~will be ~~based~~unlikely ~~on, and limited~~ to, ~~the~~receive ~~claim of~~ the ~~holder~~full ~~of the Note for~~ principal and ~~for~~ interest ~~accrued~~payments upthat towere ~~the~~expected ~~date~~on of the ~~bankruptcy or similar proceeding~~Note, ~~but~~and ~~not~~such ~~thereafter. Because~~investor ~~a bankruptcy or similar proceeding~~ may ~~take~~not ~~months~~recover ~~or years to complete, a claim based on principal and on interest only up to~~ the ~~start~~original ofpurchase ~~the~~price ~~bankruptcy or similar proceeding may be substantially less than a claim based~~ on ~~principal and on interest through~~ the ~~end of the bankruptcy or similar proceeding~~Note.

IfWe wemay refer Borrower Loans that become ~~subject~~past due to a ~~bankruptcy~~third party collection agency for collection or ~~similar~~we ~~proceeding~~may collect on such Borrower Loans directly. If a ~~holder~~borrower offails to make a ~~Note~~required ~~may~~payment ~~not~~on ~~have~~a ~~any~~Borrower ~~priority~~Loan ~~right~~within to30 ~~payment~~days ~~from~~of the ~~corresponding~~due ~~borrower loan~~date, ~~may~~we ~~not~~will ~~have~~pursue ~~any~~reasonable ~~right~~collection efforts in respect of the Borrower Loan. Referral of a delinquent Borrower Loan to a collection agency within five business days after it becomes thirty days past due will be considered reasonable collection efforts. If payment amounts on a delinquent Borrower Loan are received from ~~funds~~a inborrower after the ~~master~~loan ~~servicing~~has ~~account~~been referred to our in-house collections department or an outside collection agency, ~~and~~we or that collection agency may ~~not~~retain ~~have~~a percentage of that payment as a fee before any ~~ability~~principal or interest becomes payable to ~~access~~an ~~funds~~investor. Collection fees may be up to 40% of recovered amounts, in ~~the~~addition ~~account~~to weany ~~maintain~~legal ~~for~~fees ~~the~~and ~~benefit~~transaction offees ~~lender~~associated ~~members~~with accepting payments incurred in the collection effort.

IfFor wesome ~~failed~~non-performing toBorrower ~~perfect the security interest properly~~Loans, ~~you~~we may not be ~~required~~able to ~~share~~recover ~~the~~any ~~proceeds~~ of the ~~borrower~~unpaid loan ~~upon~~balance ~~which~~and, ~~your~~as ~~Note~~a isresult, ~~dependent~~an ~~for~~investor ~~payment~~who ~~with~~has ~~our~~purchased ~~other~~a ~~creditors. To~~corresponding ~~the~~Note ~~extent~~may ~~that~~receive ~~proceeds~~little, if any, of the ~~corresponding~~unpaid ~~borrower~~principal ~~loan~~and ~~would~~interest bepayable ~~shared~~under ~~with~~the ~~our~~Note. In ~~other~~all ~~creditors~~cases, ~~any~~investors ~~secured~~must rely on our collection efforts or ~~priority~~the ~~rights~~applicable ofcollection ~~such~~agency ~~other~~to ~~creditors~~which ~~may~~such ~~cause~~Borrower ~~the~~Loans ~~proceeds~~are toreferred, beand ~~distributed~~are not permitted to ~~such~~collect ~~other~~or ~~creditors~~attempt ~~before~~collection ~~any~~of ~~distribution~~payments ison ~~made~~the toBorrower ~~you~~Loans onin ~~your~~any ~~Note~~manner.

IfLate a payment performance is ~~made~~an onearly aindicator ~~borrower~~of ~~loan~~charge ~~corresponding~~off toprobability. aOf ~~Note~~all ~~before~~Borrower ~~our~~Loans ~~bankruptcy~~originated orbetween ~~similar~~July ~~proceeding is commenced~~13, 2009 and ~~those~~March 31, ~~funds~~2018, ~~are~~15.3% ~~held~~have inbeen ~~the~~greater ~~master~~than ~~servicing~~30 ~~account~~days wepast ~~maintain~~due ~~with~~at ~~Wells~~any ~~Fargo~~time ~~Bank,~~and N13.~~A.,~~9% ~~to collect borrower payments and~~ have ~~not~~ been ~~used~~greater bythan us60 todays ~~make~~past ~~payments~~due onat ~~the~~any ~~Note~~time. asOf ofall ~~the~~Borrower ~~date~~Loans ~~the~~originated ~~bankruptcy~~between orJuly ~~similar~~13, ~~proceeding~~2009 isand ~~commenced~~March 31, ~~there~~2018 ~~can~~a betotal noof ~~assurance~~109,210 ~~that we will~~ or ~~will be able to use such funds to make payments on the Note~~12. ~~Other~~0% ~~creditors~~ of ~~ours~~such ~~may~~loans ~~be deemed to~~ have ~~rights~~been tocharged ~~such funds that are equal to or greater than the rights of the holder of the Note~~off. ~~See “About the Platform—Loan Servicing and Collections” for more information.~~

Loss rates on the Borrower Loans may increase as a result of economic conditions beyond our control and beyond the control of the borrower.

Borrower Loan loss rates may be significantly affected by economic downturns or general economic conditions beyond our control and beyond the control of individual borrowers. In particular, loss rates on Borrower Loans may increase due to factors such as prevailing interest rates, the rate of unemployment, the level of consumer confidence, residential real estate values, the value of the U.S. dollar, energy prices, changes in consumer spending, the number of personal bankruptcies, disruptions in the credit markets and other factors.

~~Table~~In ofthe ~~Contents~~unlikely event that PFL receives payments on the Borrower Loan corresponding to an investor's Note after the final maturity date, such investor will not receive payments on that Note after maturity.

WeEach ~~maintain~~Note awill ~~pooled~~mature ~~account~~on atthe ~~Wells~~initial ~~Fargo~~maturity ~~Bank~~date, ~~N.A.~~unless toany ~~hold~~principal ~~the~~or ~~funds~~interest ofpayments ~~lender~~in ~~members. This~~respect ~~account~~of ~~is titled “Prosper Funding LLC for~~ the ~~benefit~~corresponding ofBorrower ~~its~~Loan ~~lender~~remain ~~members”~~due and wepayable ~~refer~~ to itPFL asupon the ~~“FBO~~initial ~~account”. Although~~maturity wedate, ~~believe~~in ~~that~~which ~~amounts~~case ~~funded by lender members into~~ the ~~FBO~~maturity ~~account should not be subject to claims~~ of ~~our creditors other than~~ the ~~lender~~Note ~~members~~will ~~for whose benefit the funds are held, the legal title to the FBO account, and the attendant right to administer the FBO account would~~ be ~~property~~automatically ofextended ~~our bankruptcy estate. As a result, if we were~~ to ~~file for bankruptcy protection,~~ the ~~legal~~final ~~right~~maturity ~~to administer the funds in the FBO account would vest with the bankruptcy trustee or debtor in possession~~date. In ~~that~~If ~~case,~~there ~~while~~are ~~neither~~any weamounts ~~nor~~under ~~our creditors should be able to reach those funds,~~ the ~~indenture~~corresponding ~~trustee~~Borrower orLoan ~~the~~still ~~lender~~due ~~members may have to seek a bankruptcy court order lifting the automatic stay~~ and ~~permitting~~owing ~~them~~ to ~~withdraw~~PFL ~~their~~on ~~funds. Lender members may suffer delays in accessing their funds in~~ the ~~FBO~~final ~~account~~maturity ~~as a result. Moreover~~date, ~~United~~PFL ~~States~~will ~~Bankruptcy Courts~~ have ~~broad~~no ~~powers~~further ~~and,~~obligation ~~if we have failed~~ to ~~properly~~make ~~segregate~~payments oron ~~handle~~the ~~lender~~related ~~members’ funds~~Notes, aeven ~~bankruptcy~~if ~~court~~it ~~could~~receives ~~determine~~payments ~~that~~on ~~some~~the orcorresponding ~~all~~Borrower ~~of such funds were beneficially owned by us and therefore that they became available to our creditors generally. See “About the Platform—~~Loan ~~Servicing~~after ~~and~~such ~~Collections” and “About the Platform—Structure of Lender Member Accounts and Treatment of Lender Member Balances” for more information~~date.

InThe aBorrower ~~bankruptcy~~Loans ordo ~~similar~~not ~~proceeding~~restrict ~~for~~borrowers usfrom incurring additional unsecured or secured debt, nor do they impose any financial restrictions on borrowers during the ~~holder~~term of athe ~~Note~~Borrower Loan, which may bereduce ~~delayed~~the orlikelihood ~~prevented~~that ~~from~~an ~~enforcing~~investor ~~our~~will ~~repurchase~~receive ~~obligations~~the full principal and interest payments that such investor expects to receive on a Note.

InIf a ~~bankruptcy~~borrower orincurs ~~similar~~additional ~~proceeding~~debt ~~for~~after usthe date a loan listing is posted, ~~any~~the ~~right~~additional ofdebt amay ~~holder~~impair the ability of athat ~~Note~~borrower to ~~require~~make uspayments toon ~~repurchase~~his ~~the~~or ~~Note~~her ~~under~~Borrower ~~the~~Loan ~~circumstances~~and, ~~set~~as ~~forth~~such, inreduce the ~~lender~~likelihood ~~registration~~that ~~agreement~~an ~~might~~investor ~~not~~will bereceive ~~enforceable,~~the principal and ~~such~~interest ~~holder’s~~payments ~~claim~~that ~~for~~ such ~~repurchase~~investor ~~may~~expects beto ~~treated~~receive ~~less~~on ~~favorably than~~ a ~~general~~corresponding ~~unsecured~~Note. Moreover, ~~obligation~~the ofadditional ~~ours. For~~debt amay ~~discussion~~adversely ofaffect the ~~restrictions~~borrower's wecreditworthiness ~~have~~generally, ~~imposed~~and ~~upon~~could ~~ourselves~~result ~~and~~in the ~~formalities~~financial wedistress, ~~have~~insolvency, ~~adopted~~or ~~under~~bankruptcy ~~our~~of ~~organizational~~the ~~documents~~borrower. toTo ~~minimize~~the extent that the ~~likelihood~~borrower ofhas ~~our~~or ~~becoming~~incurs ~~subject~~other toindebtedness aand ~~bankruptcy~~cannot pay all of his or ~~similar~~her ~~proceeding~~indebtedness, ~~see~~the ~~“Information~~borrower ~~about~~may ~~Prosper~~choose ~~Funding~~to ~~LLC”~~make payments to other creditors, rather than to PFL.

~~Although~~To wethe ~~have~~extent ~~been~~borrowers ~~organized~~incur inother aindebtedness ~~manner~~ that is ~~intended~~secured, tosuch ~~prevent~~as usa ~~from~~mortgage, ~~being~~a ~~substantively~~home ~~consolidated~~equity ~~with~~line ~~PMI~~or inan auto loan, the ~~event~~ability of ~~PMI’s~~the ~~bankruptcy,~~secured ifcreditors weto ~~were~~exercise ~~substantively~~remedies ~~consolidated~~against inthe ~~this~~assets ~~manner,~~of the ~~rights~~borrower ofmay impair the ~~holders~~borrower's ofability to repay the ~~Notes~~Borrower ~~could~~Loan beon ~~uncertain,~~which ~~and~~an ~~payments~~investor's onNote ~~the~~is ~~Notes~~dependent for payment. Borrowers may bealso ~~limited,~~choose ~~suspended~~to repay obligations under secured indebtedness or ~~stopped The~~other ~~recovery,~~unsecured ifindebtedness ~~any,~~before ofrepaying aBorrower ~~holder~~Loans onbecause athere ~~Note~~is ~~may~~no ~~therefore~~collateral besecuring ~~substantially~~the ~~delayed~~Borrower ~~and~~Loans. ~~substantially~~An ~~less~~investor ~~than~~will ~~the~~not ~~principal~~be ~~and~~notified ~~interest~~if ~~due~~a ~~and~~borrower toincurs ~~become~~additional ~~due~~debt onafter the ~~Note~~date a loan listing is posted.

~~Although~~A weborrower ~~have~~may ~~been~~request ~~organized~~that ~~and~~his ~~will~~or beher ~~operated~~bank in"chargeback" a ~~manner~~payment ~~that~~on isa ~~intended~~Borrower toLoan ~~prevent~~upon uswhich ~~from~~a ~~being~~Note ~~substantively~~is ~~consolidated~~dependent ~~with~~for ~~PMI~~payment inand ~~the~~request ~~event of PMI’s bankruptcy, if PMI became subject to~~ a ~~bankruptcy~~refund oron ~~similar~~that ~~proceeding and we were substantively consolidated with PMI~~payment, ~~the~~resulting ~~risks described~~ in ~~the~~a ~~immediately~~delinquency ~~preceding~~on ~~risk~~the ~~factor regarding (i)~~ payment ~~delays, (ii) uncollectability of interest accrued during the bankruptcy proceeding, (iii) being subordinated to the interests of our other creditors or other creditors of PMI,~~ and ~~(iv)~~a ~~the~~possible ~~indenture~~negative ~~trustee’s~~cash ~~inability~~balance ~~to access funds~~ in ~~the~~an ~~master~~investor's ~~servicing~~ account ~~or the FBO account would all be present~~.

InA ~~addition,~~borrower inchargeback is a ~~bankruptcy~~process orby ~~similar~~which ~~proceeding~~a ofborrower ~~PMI,~~who ~~(1) the~~has ~~implementation~~made ofa ~~back-up~~payment ~~servicing~~on ~~arrangements~~a ~~may~~Borrower beLoan ~~delayed~~has his or ~~prevented,~~her ~~and~~bank ~~(2) PMI’s~~cancel ~~ability~~the topayment ~~transfer~~or ~~its~~request ~~servicing~~a ~~obligations~~refund of that payment. We withhold payments to ainvestors ~~back-~~up ~~servicer~~to ~~may~~six bebusiness ~~limited~~days ~~and~~after ~~subject~~a torelated borrower payment is initiated. If the ~~approval~~chargeback occurs six or more days after the initiation of payment, an investor must rely on us to contest the ~~bankruptcy~~chargeback ~~court~~if orwe ~~other~~deem ~~presiding~~it ~~authority~~appropriate. ~~The~~ ~~bankruptcy~~If ~~process~~a ~~may~~borrower ~~delay~~successfully processes a chargeback six or ~~prevent~~more ~~the~~days ~~implementation~~after initiation of ~~back-up~~payment, ~~servicing~~such payment will be deducted from an investor's account, ~~which~~and ~~may~~if ~~impair~~such investor has withdrawn funds in the ~~collection~~interim, ofa ~~borrower~~negative ~~loans~~cash balance may result. Amounts received on Borrower Loans corresponding to ~~the~~an ~~detriment~~investor's ofNotes ~~holders~~payments ofand deposited into such investor's account are subject to set-off against any negative balance or shortfall in the ~~Notes~~account.

~~For~~Marketplace alending ~~discussion~~is ofa ~~the~~new ~~restrictions~~lending wemethod ~~have imposed upon ourselves~~ and ~~the~~our ~~formalities~~marketplace wehas ~~have~~a ~~adopted~~limited ~~under~~operating ~~our~~history. ~~organizational~~Borrowers ~~documents~~may tonot ~~prevent~~view ~~our~~or ~~being~~treat ~~substantively~~their ~~consolidated~~obligations ~~with~~to ~~PMI~~PFL inas having the ~~event~~same ofsignificance ~~PMI’s~~as ~~bankruptcy,~~loans ~~see~~from ~~“Information~~traditional ~~about~~lending ~~Prosper Funding LLC~~sources.”

IfThe ~~the~~investment ~~security~~return ofon ~~our~~the ~~lender~~Notes ~~members’~~depends ~~and~~on borrowers’ ~~confidential~~fulfilling ~~information~~their ~~stored~~payment obligations in a timely and complete manner under the corresponding Borrower Loan. Borrowers may not view marketplace lending obligations originated through our ~~systems~~marketplace isas ~~breached~~having the same significance as other credit obligations arising under more traditional circumstances. If a borrower neglects his or ~~otherwise~~her ~~subjected~~payment toobligations ~~unauthorized~~on ~~access,~~a ~~your~~Borrower ~~secure~~Loan ~~information~~upon ~~may~~which bepayment ~~stolen,~~of ~~our~~an ~~reputation~~Investor's ~~may~~Note beis ~~harmed~~dependent or chooses not to repay his or her Borrower Loan entirely, ~~and~~such weinvestor may not be ~~exposed~~able to ~~liability~~recover any portion of the investment in a Note.

~~The~~Our ~~platform~~marketplace ~~stores~~may ~~our~~fail lender members’ and borrowers’ bank information and other personally-identifiable sensitive data. Any accidental or willful security breaches or other unauthorized access could cause your secure information to becomply stolen and used for criminal purposes. Security breaches or unauthorized access to secure information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in PMI’s software are exposed and exploited, and, as a result, a third party or disaffected employee obtains unauthorized access to any lender members’ or borrowers’ data, our relationships with ~~our~~applicable ~~members will be severely damaged~~law, ~~and~~which we could ~~incur~~limit significant liability. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we and our ~~third-party~~ability ~~hosting facilities may be unable~~ to ~~anticipate~~collect ~~these~~on ~~techniques~~Borrower ~~or to implement adequate preventative measures~~Loans. In addition, many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause our members to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, and we could lose members.

The Borrower Loans are subject to federal and state consumer protection laws. Our marketplace may not always be, and may not always have been, in compliance with these laws. Failure to comply with the laws and regulatory requirements applicable to our marketplace may, among other things, limit our or a collection agency's ability to collect all or part of the principal of or interest on Borrower Loans.

~~Table~~We regularly review the requirements of ~~Contents~~these laws and takes measures aimed at ensuring that the Borrower Loans originated through our marketplace meet the requirements of all applicable laws. However, determining compliance with all applicable laws is a complex matter and it is possible that our determination may be inaccurate or incorrect. Also, changes in law, either due to court decisions, regulatory interpretations or rulings, or new legislation, may adversely affect the collectability of a Borrower Loan.

~~Any~~In ~~significant~~general, ~~disruption~~the inBorrower ~~service~~Loans ondo ~~our~~not ~~website~~contain any cross-default or insimilar ~~PMI’s~~provisions. ~~computer~~If ~~systems~~a ~~could~~borrower ~~adversely~~defaults ~~affect~~on ~~PMI’s~~any ~~ability~~of tohis ~~perform~~or ~~its~~her other debt obligations, ~~under~~our ability to collect on the ~~Servicing~~Borrower ~~Agreement~~Loan on which an investor's Note is dependent for payment may be substantially impaired.

~~PMI’s~~The ~~ability~~Borrower toLoans ~~perform~~do ~~its~~not ~~obligations~~contain ~~under~~cross-default ~~the~~provisions. ~~Servicing~~A ~~Agreement~~cross-default ~~could~~provision bemakes ~~materially~~a ~~and~~default ~~adversely~~under ~~affected~~certain bydebt ~~events outside~~ of ~~its~~a ~~control. The~~borrower ~~satisfactory~~an ~~performance,~~automatic ~~reliability~~default ~~and~~on ~~availability~~other ofdebt ~~PMI’s technology and its underlying network infrastructure are critical to our operations, level~~ of ~~customer~~that ~~service, reputation and ability to attract new members and retain existing members~~borrower. ~~PMI’s~~ ~~system~~Because ~~hardware~~the isBorrower ~~hosted~~Loans indo anot ~~hosting~~contain ~~facility~~cross-default ~~located in San Francisco~~provisions, ~~California,~~a ~~owned~~Borrower ~~and~~Loan ~~operated~~will bynot ~~Digital~~be ~~Realty~~placed ~~Trust. PMI~~automatically ~~also maintains an off-site backup system located~~ in ~~Las~~default ~~Vegas,~~upon ~~Nevada. Digital Realty Trust does not guarantee~~ that ~~access to our website will be uninterrupted, error-free or secure. PMI’~~borrower's ~~operations~~default ~~depend~~ on ~~Digital~~any ~~Realty~~of ~~Trust’s~~the ~~ability to protect PMI’~~borrower's ~~systems in Digital Realty Trust’s facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity or~~ other ~~environmental~~debt ~~concerns, computer viruses or other attempts to harm PMI’s systems, criminal acts and similar events~~obligations. If ~~PMI’s arrangement with Digital Realty Trust is terminated, or there is~~ a ~~lapse~~borrower ofdefaults ~~service~~on ordebt ~~damage~~obligations owed to Digital Realty Trust’s facilities, PMI could experience interruptions in its service as well as delays and additional expense in arranging new facilities. Any interruptions or delays in PMI’s service, whether as a ~~result of Digital Realty Trust or other~~ third- party ~~error, PMI’s error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with our members~~ and ~~our~~continues ~~reputation. Additionally,~~to insatisfy the ~~event~~payment ofobligations ~~damage or interruption, PMI’s insurance policies may not be sufficient for PMI to adequately compensate us for any losses that we may incur. PMI’s disaster recovery plan has not been tested~~ under ~~actual~~the ~~disaster~~Borrower ~~conditions~~Loan, ~~and PMI may not have sufficient capacity to recover all data and services in~~ the ~~event~~third ofparty anmay ~~outage~~seize at the ~~Digital~~borrower's ~~Realty~~assets ~~Trust~~or ~~facility. These~~pursue ~~factors~~other ~~could~~legal ~~prevent~~action ~~PMI~~against ~~from~~the ~~processing~~borrower orbefore ~~posting payments on~~ the borrower ~~loans~~defaults oron the ~~Notes,~~Borrower ~~damage our brand and reputation~~Loan, ~~divert~~which ~~the~~may ~~attention~~affect ~~of PMI’s employees, reduce~~ our ~~revenue,~~ability ~~subject us~~ to ~~liability~~collect ~~and~~from ~~cause members to abandon~~ the ~~platform,~~borrower ~~any~~when ofor ~~which~~if ~~could~~the ~~adversely~~Borrower ~~affect~~Loan ~~our~~becomes ~~business, financial condition and results of operations~~delinquent.

~~The~~Borrowers ~~platform~~ may beseek ~~vulnerable~~the toprotection ~~computer~~of ~~viruses,~~debtor ~~physical~~relief under federal bankruptcy or ~~electronic~~state ~~break-ins~~insolvency ~~and~~laws, ~~similar~~which ~~disruptions~~may result in the nonpayment of an investor's Notes.

~~The~~Borrowers ~~platform~~ may beseek ~~vulnerable~~protection tounder ~~computer~~federal ~~viruses,~~bankruptcy ~~physical~~law or ~~electronic break-ins and~~ similar ~~disruptions~~laws. If a ~~“hacker”~~borrower ~~were~~files ~~able~~for tobankruptcy ~~infiltrate~~(or becomes the ~~platform~~subject of an involuntary petition), ~~you~~a ~~would~~stay bewill ~~subject~~go tointo effect that will automatically put any pending collection actions on the ~~increased~~Borrower ~~risk~~Loan ofon ~~fraud~~hold orand prevent further collection action absent bankruptcy court approval. If we receive notice that a borrower ~~identity~~has ~~theft~~filed ~~and~~for ~~may~~protection ~~experience~~under ~~losses~~the onfederal bankruptcy laws, or ~~delays~~has inbecome the ~~recoupment~~subject of ~~amounts~~an ~~owed~~involuntary onbankruptcy petition, awe ~~fraudulently~~will ~~induced~~put ~~purchase~~the ofborrower's aaccount ~~Note~~into "bankruptcy status. ~~Additionally~~" When this occurs, ifwe aterminate ~~hacker~~automatic ~~were~~monthly ~~able~~ACH todebits ~~access~~on ~~our~~the ~~secure~~Borrower ~~files,~~Loan heand orwe ~~she~~will ~~might~~not undertake collection activity without bankruptcy court approval. Whether any payment will ultimately be ~~able~~made toor ~~gain~~received ~~access~~on toa ~~your~~Borrower ~~personal~~Loan ~~information~~after a bankruptcy status is declared depends on the borrower's particular financial situation. ~~While~~ weIn ~~have~~most ~~taken~~cases, ~~steps~~however, tounsecured ~~prevent~~creditors such ~~activity~~as ~~from~~PFL ~~affecting~~receive ~~the platform~~nothing, ifor weonly ~~are~~a ~~unable~~fraction toof ~~prevent~~their ~~such~~outstanding ~~activity~~debt and, ~~the~~as ~~value~~a result, an investor who has purchased a corresponding Note may receive none or very little of ~~your~~the ~~investment~~unpaid inprincipal and interest payable on the ~~Notes~~Note. ~~could~~See be"About ~~adversely~~the ~~affected~~Marketplace-Loan Servicing and Collection" for more information.

~~Competition~~Federal ~~for~~law ~~PMI’s~~entitles ~~employees~~borrowers iswho ~~intense,~~enter active military service to an interest rate cap and ~~PMI~~certain other rights that may ~~not~~inhibit bethe ~~able~~ability to ~~attract~~collect ~~and~~on ~~retain~~Borrower ~~the~~Loans ~~highly~~and ~~skilled~~reduce ~~employees~~the itamount ~~needs~~of tointerest ~~perform~~paid ~~under~~on the ~~Servicing~~corresponding ~~Agreement~~Notes.

~~Competition~~Federal ~~for~~law ~~highly~~provides ~~skilled~~borrowers ~~technical~~on ~~and~~active ~~financial~~military ~~personnel~~service iswith ~~extremely~~rights ~~intense. PMI~~that may ~~not~~delay beor ~~able~~impair our ability to ~~hire~~collect on a Borrower Loan corresponding to an investor's Note. The Servicemembers Civil Relief Act ("SCRA") and ~~retain~~other ~~these~~similar ~~personnel~~state laws require that the interest rate on preexisting debts, such as Borrower Loans, be set at ~~compensation~~no ~~levels~~more ~~consistent~~than ~~with~~6% ~~its~~while ~~existing~~the ~~compensation~~qualified ~~and~~service ~~salary~~member ~~structure~~or reservist is on active duty. ~~Many~~ A holder of ~~the~~a ~~companies~~Note ~~with~~that ~~which~~is ~~PMI~~dependent ~~competes~~on such a Borrower Loan for ~~experienced~~payment ~~employees~~will ~~have~~not ~~greater~~receive ~~resources~~the ~~than~~difference ~~PMI~~between ~~has~~6% and ~~may~~the beoriginal ~~able~~stated interest rate for the Borrower Loan during any such period. The SCRA law also permits courts to ~~offer~~stay ~~more~~proceedings ~~attractive~~and ~~terms~~execution of ~~employment~~judgments against service members and reservists on active duty, which may delay recovery on any Borrower Loans in default, and, accordingly, payments on the corresponding Notes.

InBeginning ~~addition~~October 3, ~~PMI~~2016, ~~invests~~the ~~significant~~Military ~~time~~Lending ~~and~~Act ~~expense~~(“MLA”) inprohibits ~~training~~requiring ~~its~~covered ~~employees~~borrowers, which ~~increases~~include ~~their~~active ~~value~~military toservicemembers ~~competitors~~and ~~who~~their ~~may~~dependents, ~~seek~~ to ~~recruit~~waive ~~them. If~~the ~~PMI~~right ~~fails~~ to ~~retain~~legal ~~its~~recourse ~~employees,~~or itto ~~could~~submit ~~incur significant expenses in hiring and training their replacements and the quality of its services and its ability~~ to ~~serve~~arbitration. ~~borrowers~~This ~~and~~may ~~lender~~delay ~~members~~recovery ~~could diminish, resulting in a material adverse effect~~ on ~~its~~any ~~ability~~relevant toBorrower ~~perform~~Loans ~~its~~in ~~obligations~~default, ~~under the Servicing Agreement~~ and, ~~in such event~~accordingly, ~~our ability to continue to make~~ payments on the ~~Notes~~corresponding ~~could be materially impaired~~Notes.

If there are any amounts under such a Borrower Loan still due and owing to PFL after the final maturity of the corresponding Notes, PFL will have no further obligation to make payments on the Notes, even if it receives payments on the Borrower Loan after the final maturity of the Notes. We do not take military service into account in assigning a Prosper Rating to loan listings. In addition, as part of the borrower registration process, we do not request borrowers to confirm if they are qualified service members or reservists within the meaning of the SCRA or the MLA.

~~Table~~As of ~~Contents~~March 31, 2018, 83 Borrower Loans with an unpaid principal balance of $678 thousand, are subject to the SCRA.

~~Purchasers~~The Federal Holder in Due Course Rule may substantially impair an investor’s ability to recoup the full purchase price of ~~Notes~~a ~~will~~Note ~~have~~or noto ~~control~~receive ~~over~~the usinterest ~~and~~payments ~~will~~that ~~not~~such beinvestor ~~able~~expects to ~~influence~~receive ~~our~~on ~~corporate~~the ~~matters~~Note.

WeThe ~~are~~FTC ~~not~~Holder ~~offering~~in ~~and~~Due ~~will~~Course ~~not~~Rule, ~~offer~~which ~~equity~~in ~~interests~~certain incircumstances ~~our~~permits ~~company. Lender~~borrowers ~~members~~to ~~who~~assert ~~purchase~~any ~~Notes~~claims ~~offered~~and ~~through~~defenses ~~the~~that ~~platform~~they ~~will~~would have nohad ~~equity~~against ~~interest~~a inseller ~~Prosper~~of ~~Funding~~goods ~~LLC~~or ~~and~~services noobtained ~~ability~~with tothe ~~vote~~proceeds onof ora ~~influence~~loan ~~our~~against ~~decisions. As~~an aoriginator ~~result,~~or ~~PMI,~~subsequent ~~which~~purchaser ~~owns all~~ of ~~our~~the ~~outstanding~~loan, ~~equity~~could ~~interests,~~allow ~~will~~certain ~~continue~~borrowers to ~~have~~raise ~~sole~~such ~~control~~defenses ~~over~~against ~~our~~PFL ~~governance~~to ~~matters,~~the ~~subject~~extent toof the ~~presence~~outstanding ofloan ~~our~~balance. If ~~independent~~such ~~directors,~~defenses ~~whose~~are ~~consent~~successfully raised, PFL will be ~~required~~unable ~~before~~to wecollect ~~can~~on ~~take~~the ~~certain~~loan ~~extraordinary~~and ~~actions.~~it ~~See~~is ~~“Information~~unlikely ~~About~~that ~~Prosper~~any ~~Funding~~further ~~LLC”~~payment will be made on the corresponding Notes.

~~Events~~The ~~beyond~~death ~~our~~of ~~control~~a borrower may ~~damage~~substantially ~~our~~impair an investor's ability to ~~maintain~~recoup ~~adequate records, maintain~~ the ~~platform~~full orpurchase ~~perform~~price ~~our~~of ~~servicing obligations. If such events result in~~ a ~~system~~Note ~~failure,~~or ~~your ability~~ to receive ~~principal~~the ~~and~~ interest payments onthat ~~the~~such ~~Notes~~investor ~~would~~expects beto ~~substantially~~receive ~~harmed~~on the Note.

If a ~~catastrophic~~borrower ~~event~~dies ~~resulted~~while inhis aor ~~platform~~her ~~outage~~Borrower ~~and~~Loan ~~physical~~is ~~data~~still ~~loss~~outstanding, ~~our~~generally, ~~ability~~we will seek to ~~perform~~work ~~our~~with ~~servicing~~the ~~obligations~~executor ~~would~~of bethe ~~materially~~borrower's ~~and~~estate ~~adversely~~to ~~affected. Such~~obtain ~~events~~repayment ~~include~~of the loan. However, ~~but~~the ~~are~~borrower's estate may not ~~limited~~contain sufficient assets to, ~~fires,~~repay ~~earthquakes~~the loan, ~~terrorist~~or ~~attacks,~~the ~~natural~~related ~~disasters,~~executor ~~computer~~or ~~viruses~~trustee ~~and~~may ~~telecommunications~~prioritize ~~failures~~repayment of other creditors. ~~PMI~~ ~~stores~~In ~~back-up~~addition, ~~records~~if ina ~~offsite~~borrower ~~facilities~~dies ~~located~~near inthe ~~San~~end ~~Francisco,~~of ~~California~~the ~~and~~term ~~Las~~of ~~Vegas,~~his ~~Nevada. If~~or ~~its~~her ~~electronic~~Borrower ~~data~~Loan, ~~storage~~it ~~and~~is ~~back-up~~unlikely ~~data~~that ~~storage~~any ~~system~~further ~~are~~payments ~~affected~~will bybe ~~such~~made ~~events~~on the corresponding Notes, webecause ~~cannot~~the ~~guarantee~~time ~~that~~required ~~you~~for ~~would~~the beprobate ~~able~~of tothe ~~recoup~~borrower's ~~your~~estate ~~investment~~will inprobably extend beyond the final maturity date of the Notes.

~~Risks~~RISKS ~~Relating~~INHERENT toIN ~~Compliance~~INVESTING ~~and~~IN ~~Regulation~~THE NOTES

The ~~platform~~Notes ~~represents~~are ~~a novel approach to borrowing and lending that may fail to comply with federal and state securities laws~~special, ~~borrower~~limited ~~protection~~obligations ~~laws,~~of ~~such~~PFL asonly ~~state lending laws, federal consumer protection laws, such as the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act~~ and ~~the~~are ~~Fair~~not ~~Debt~~directly ~~Collection~~secured ~~Practices~~by ~~Act,~~any ~~and~~collateral ~~the~~or ~~state~~guaranteed ~~counterparts to such consumer protection laws. Borrowers may make counterclaims regarding the enforceability of their obligations under borrower~~ or ~~consumer~~insured ~~protection~~by ~~laws~~PMI ~~after collection actions have commenced,~~ or ~~otherwise~~any ~~seek~~third ~~damages under these laws~~party. ~~Lenders may attempt to rescind their Note purchases under securities laws. Compliance with such regulatory regimes is also costly and burdensome.~~

The ~~platform~~Notes ~~operates~~will anot ~~novel~~represent ~~program~~an ~~that~~obligation ~~must~~of ~~comply~~borrowers, ~~with~~PMI ~~regulatory~~or ~~regimes~~any ~~applicable~~other toparty ~~consumer~~except ~~credit~~PFL, ~~transactions~~and asare ~~well~~special, aslimited ~~with~~obligations ~~regulatory~~of ~~regimes~~PFL. ~~applicable~~The toNotes ~~securities~~are ~~transactions~~not guaranteed or insured by PMI, any governmental agency or instrumentality or any third party. ~~The~~ ~~novelty~~Although PFL has granted the indenture trustee, for the benefit of the ~~platform~~Note ~~means~~holders, ~~compliance~~a ~~with~~security ~~various~~interest ~~aspects~~in ofthe Borrower Loans corresponding to the Notes, the payments and proceeds that PFL receives on such ~~laws~~Borrower isLoans, ~~untested. Certain~~the ~~state~~bank ~~laws~~account ~~generally~~in ~~regulate~~which ~~interest~~such ~~rates~~Borrower Loan payments are deposited, and ~~other~~the ~~charges~~accounts in which investors' funding amounts are deposited, the Note holders do not themselves have a direct security interest in the Borrower Loans or the right to payment thereunder. If an event of default under the Amended and ~~require~~Restated ~~certain~~Indenture ~~disclosures~~were to occur, the Note holders would be dependent on the indenture trustee's ability to realize on the collateral and ~~also~~make ~~require~~payments ~~licensing~~on ~~for~~the ~~certain~~Notes ~~activities~~in the manner contemplated by the Amended and Restated Indenture. In addition, ~~other~~although ~~state~~PFL ~~laws,~~will ~~public~~take ~~policy~~all ~~and~~actions ~~general~~that ~~principles~~it ofbelieves ~~equity~~are ~~relating~~required under applicable law to perfect the ~~protection~~security interest of ~~consumers~~the indenture trustee in the collateral, ~~unfair~~if ~~and~~its ~~deceptive~~analysis ~~practices~~of ~~and~~the ~~debt~~required ~~collection~~actions ~~practices~~is ~~may~~incorrect ~~apply~~or if it fails timely to ~~the~~take ~~origination~~any required action, ~~servicing~~the indenture trustee's security interest may not be effective and ~~collection~~holders of ~~borrower~~the ~~loans~~Notes oncould be required to share the ~~platform. The~~collateral ~~platform~~(and isany ~~also~~proceeds ~~subject~~thereof) towith PFL's other ~~laws~~creditors, ~~such~~or, if a bankruptcy court were to order the substantive consolidation of PMI and PFL (as: described below), PMI's creditors.

·PFL ~~the~~is ~~Federal~~not ~~Truth-in-Lending~~obligated ~~Act~~to ~~and~~indemnify ~~Regulation~~Note Zholders ~~promulgated~~or ~~thereunder,~~repurchase ~~which~~Notes ~~require~~except ~~certain~~in ~~disclosures~~limited ~~to borrowers regarding the terms of their loans;~~circumstances.

·PFL is only obligated to repurchase Notes or indemnify holders of Notes in limited circumstances. These circumstances include if (i) a material payment default under the ~~Federal~~corresponding ~~Equal~~Borrower ~~Credit~~Loan ~~Opportunity~~occurs ~~Act~~as ~~and~~a ~~Regulation~~result Bof ~~promulgated~~verifiable ~~thereunder~~identify theft; (ii) we include a Prosper Rating in a listing that is different from the Prosper Rating we calculated, ~~which~~or ~~prohibit~~we ~~discrimination~~calculate the Prosper Rating incorrectly; or (iii) if any errors in Quick Invest, Recurring Investment, or Auto Invest cause an investor to purchase a Note from PFL that such investor would not otherwise have purchased or that differs materially from the ~~extension~~Note, ofin ~~credit~~which oncases PFL also has the ~~basis~~option to cure such error. PFL is not required to repurchase Notes or indemnify holders of ~~age~~Notes, ~~race~~however, ~~color~~if the holder's investment is not realized in whole or in part due to fraud other than identity theft, ~~sex~~or due to other false or inaccurate statements or omissions of fact in a listing, ~~religion~~whether in credit data, ~~marital~~borrower ~~status~~representations or similar indicia of borrower intent and ability to repay the loan. For the period from July 13, ~~national~~2009 ~~origin~~to March 31, ~~receipt~~2018, ofwe ~~public~~verified ~~assistance~~employment and/or income on approximately 65% of the ~~exercise~~Borrower Loans originated through our marketplace on a unit basis (594,363 out of ~~any~~911,015) ~~right~~and ~~under~~approximately 76% of originations on a dollar basis ($8.9 billion out of $11.8 billion). Of these loans, we canceled 11% of the ~~Consumer~~loan ~~Credit~~listings ~~Protection~~for ~~Act;~~which we verified employment and/or income information because the listings contained inaccurate or insufficient employment or income

· the Federal Fair Credit Reporting Act, which regulates the use and reporting of information related to each applicant’s credit history;

· the Federal Fair Debt Collection Practices Act, which regulates debt collection practices by “debt collectors” and prohibits debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans;

· state counterparts to the above consumer protection laws; and

· state and federal securities laws, which require that we register any non-exempt offers and sales of Notes.

~~Table~~information. Nor is PFL under any obligation to repurchase a Note or indemnify any holder of ~~Contents~~Notes if a correctly-determined Prosper Rating fails to accurately predict the actual losses on a Borrower Loan.

WePFL ~~may~~might ~~not~~incur ~~always~~indemnification beand inrepurchase ~~compliance with these laws. Borrowers may make counterclaims regarding the enforceability of their~~ obligations ~~under~~that ~~borrower~~exceed orits ~~consumer protection laws after collection actions have commenced~~projections, orin ~~otherwise~~which ~~seek~~case ~~damages~~it ~~under these laws. Lenders~~ may ~~attempt~~not tohave ~~rescind~~sufficient ~~their~~capital ~~Note purchases under securities laws, and our failure~~ to ~~comply~~meet ~~with such laws could also result in civil or criminal liability. For example, in 2010 and 2011 PMI failed to timely renew~~ its ~~applications~~indemnification ~~to offer~~ and ~~sell its borrower payment dependent notes in several states, resulting in $35,800 in penalties in four states, and the~~ repurchase ~~of $21,900 of Notes from Florida residents pursuant to a rescission offer~~obligations. Compliance with these requirements is also costly, time-consuming and limits our operational flexibility. See “Government Regulation—Regulation of Consumer Protection Laws” for more information.

~~Noncompliance~~PFL ~~with~~believes ~~laws~~its fee income will be sufficient to meet its reasonably anticipated indemnification and ~~regulations~~repurchase ~~may~~obligations. ~~impair~~In ~~our~~determining ~~ability~~its expected capital needs with respect to ~~facilitate~~indemnification and repurchase obligations, PFL considers the ~~origination~~history of such obligations incurred by it and PMI. Nonetheless, there can be no assurance that if PFL is obligated to repurchase a Note or ~~service~~indemnify ~~borrower~~a ~~loans~~Note holder, that it will be able to meet its repurchase or indemnification obligations. If PFL is unable to meet its indemnification and repurchase obligations with respect to a Note, the investor in such Note may lose all of such investor's investment in the Note.

~~Generally,~~If ~~failure~~an toinvestor ~~comply~~decides ~~with the laws and regulatory requirements applicable~~ to ~~our~~invest ~~business~~through ~~may, among other things, limit~~ our, ~~PMI’s~~marketplace orand aconcentrate ~~collection~~his ~~agency’s ability to collect all~~ or ~~part~~her ofinvestment ~~the~~in ~~principal~~a ~~amount~~single ~~of or interest on the borrower loans on which the Notes are dependent for payment. In addition~~Note, ~~non-compliance~~such ~~could~~investor ~~subject us to damages, revocation of required licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which~~ may ~~harm~~increase ~~our~~his ~~business~~or ~~and~~her ~~ability~~risk toof ~~maintain the platform and may result in borrowers rescinding their~~ borrower ~~loans~~defaults.

~~Where~~The ~~applicable,~~expected wereturn ~~seek~~on toan ~~comply~~investor's ~~with~~investment ~~state~~in ~~lending,~~Notes ~~servicing~~depends ~~and~~on ~~similar~~the ~~statutes. In~~performance ~~all~~of Uthe borrowers under the corresponding Borrower Loans.S. ~~jurisdictions~~There ~~with~~are ~~licensing~~a orwide ~~other~~range ~~requirements~~of weProsper ~~believe~~Ratings ~~may~~and belistings ~~applicable~~in the marketplace and PFL expects some borrowers to ~~the~~default ~~platform,~~on wetheir ~~and~~loans. ~~PMI~~If ~~have~~an ~~obtained~~investor ~~any~~decides ~~necessary~~to ~~licenses~~invest through our marketplace and concentrate his or ~~comply~~her ~~with~~investment in a single Note, such investor's entire return will depend on the ~~relevant~~performance ~~requirements~~of a single Borrower Loan. ~~Nevertheless~~ For example, if wean orinvestor ~~PMI~~plans ~~are~~to ~~found~~purchase to$200 (not ~~comply~~in ~~with~~thousands) ~~applicable~~of ~~laws~~Notes, weand orchooses ~~PMI~~to ~~could~~invest ~~lose~~the ~~one~~entire or$200 ~~more~~(not ofin ~~our~~thousands) ~~licenses~~in ora ~~face~~single ~~other~~Note ~~sanctions,~~instead ~~which~~of ~~may~~in ~~have~~eight an$25 ~~adverse~~(not ~~effect~~in onthousands) ~~our~~Notes ~~ability~~corresponding to ~~continue~~the toBorrower ~~facilitate~~Loans ~~the~~of ~~origination~~eight ofdifferent ~~borrower~~borrowers, ~~loans~~such ~~through~~investor's ~~the~~entire ~~platform,~~$200 ~~perform~~(not ~~our~~in ~~servicing~~thousands) ~~obligations~~investment orwill ~~make~~depend on the ~~platform~~performance ~~available~~of toa ~~borrowers~~single inBorrower ~~particular~~Loan. ~~states,~~Investors ~~which~~ may ~~impair~~find ~~your~~it ~~ability~~desirable to ~~receive~~diversify ~~the~~their ~~payments~~portfolio ofin ~~principal~~order ~~and~~to ~~interest~~reduce onthe ~~your~~risk ~~Notes~~ that ~~you~~they ~~expect~~could lose their entire investment due to ~~receive. See~~a ~~“Government~~single ~~Regulation—Regulation~~default, or a small number of ~~Consumer~~defaults. ~~Protection~~However, ~~Laws—State~~diversification ~~and~~does ~~Federal~~not ~~Laws~~eliminate ~~and~~the ~~Regulations”~~risk ~~for~~that ~~more~~investors ~~information~~may lose some, or all, of their investment in Notes.

Our marketplace allows a borrower to prepay a Borrower Loan at any time without penalty. Borrower Loan prepayments will extinguish or limit an investor's ability to receive additional interest payments on a Note.

Borrower Loan prepayment occurs when a borrower decides to pay some or all of the principal amount on a Borrower Loan earlier than originally scheduled. Borrowers may decide to prepay all or a portion of the remaining principal amount due under a Borrower Loan at any time without penalty. In the event of a prepayment of the entire remaining unpaid principal amount of a Borrower Loan on which an investor's Note is dependent for payment, such investor will receive his or her share of such prepayment but further interest will not accrue on such Borrower Loan or on such Note after the date on which the payment is made. If the borrower prepays a portion of the remaining unpaid principal balance, the term of the Borrower Loan will not change, but interest will cease to accrue on the prepaid portion, and an investor will not receive all of the interest payments that such investor originally expected to receive on the Note corresponding to such Borrower Loan. In addition, such investor may not be able to find a similar rate of return on another investment at the time at which the Borrower Loan is prepaid. Prepayments are subject to PFL's servicing fee, even if the prepayment occurs immediately after issuance of a Note.

Prevailing interest rates may change during the term of the Notes. If this occurs, investors may receive less value from the purchase of Notes in comparison to other ways they may invest their money. Additionally, borrowers may prepay their Borrower Loans due to changes in interest rates, and investors may not be able to redeploy the amounts received from prepayments in a way that offers the return expected from the Notes.

The Borrower Loans on which the Notes are dependent for payment bear fixed, not floating, rates of interest. If prevailing interest rates increase, the interest rates on Notes investors purchase might be less than the rate of return they could earn if they had invested the purchase price in a different investment.

We may not set appropriate interest rates for Borrower Loans.

We set interest rates for all Borrower Loans based on Prosper Ratings, as well as additional factors such as Borrower Loan terms, the economic environment and competitive conditions. If we set interest rates for Borrower Loans too low,

~~Table~~investors may not be compensated appropriately for the level of ~~Contents~~risk that they are assuming in purchasing Notes, while setting the interest rate too high may increase the risk of non-payment. In either case, a failure by us to set rates appropriately may adversely impact the ability of investors to receive returns on their Notes that are commensurate with the risks they have assumed in acquiring such Notes.

WeThe ~~rely~~PMI onManagement ~~our~~Rights ~~agreement~~attached ~~with WebBank~~ to ~~originate~~the ~~loans~~Notes towill ~~qualified~~not ~~borrower~~comprise ~~members~~collateral onfor ~~a uniform basis throughout~~ the ~~United~~Notes ~~States. If~~nor ~~our~~generate ~~relationship~~any ~~with~~funds ~~WebBank~~that ~~were~~will tobe ~~end,~~payable ~~we may need~~ to ~~rely~~the onholders ~~individual~~of ~~state lending licenses to originate borrower loans~~Notes.

~~Borrower~~There ~~loan~~are ~~requests~~no ~~take~~payment obligations on the ~~form~~part of anPMI ~~application~~or any third party under or in relation to ~~WebBank,~~the ~~which~~PMI ~~currently~~Management ~~makes~~Rights ~~all~~that ~~loans~~are in any way related to ~~borrowers~~borrower ~~through~~obligations in relation to the ~~platform,~~Borrower ~~and~~Loans ~~allows~~or ~~the~~in ~~platform~~any way related to bePFL's ~~available~~payment obligations in relation to ~~borrowers~~the onNotes. aThe ~~uniform~~PMI ~~basis~~Management ~~throughout~~Rights attached to the ~~United~~Notes ~~States. If~~will ~~our~~not ~~relationship~~comprise ~~with~~collateral ~~WebBank~~for ~~were~~the toNotes ~~end~~nor orguarantees ifof ~~WebBank~~any ~~were~~Borrower toLoans ~~cease~~or ~~operations~~Notes, wenor ~~may~~generate ~~need~~any tofunds ~~rely~~or onproceeds ~~individual~~that ~~state~~will ~~lending~~be ~~licenses~~payable to ~~originate~~PFL, ~~borrower~~the ~~loans. Because~~indenture wetrustee door ~~not~~holders ~~currently~~of ~~possess~~Notes ~~state~~in ~~lending~~relation ~~licenses~~to inany ~~every~~Borrower ULoans or Notes.S. ~~state,~~Holders weof ~~might~~Notes bewill ~~forced~~have no recourse to ~~limit~~PMI ~~the~~or ~~rates~~its ofassets ~~interest~~in ~~charged~~relation to payments on ~~borrower~~Borrower ~~loans~~Loans inor ~~some~~Notes. ~~states~~If ~~and~~PFL ~~might~~repurchases ~~not~~any beNotes, ~~able~~PMI towill ~~originate~~concurrently ~~loans~~repurchase inthe ~~some~~related ~~states~~PMI ~~altogether~~Management Right for zero consideration. We ~~also~~PFL's ~~may~~repurchase ~~face~~obligations ~~increased~~under ~~costs~~the Amended and ~~compliance~~Restated ~~burdens~~Indenture, ifthe ~~our~~Notes, the investor agreement or any other agreement associated with ~~WebBank~~the isNote ~~terminated~~Channel, and PMI's concurrent repurchase of the related PMI Management Rights, do not affect investors' rights under federal or state securities laws.

~~Several~~Holders ~~lawsuits~~of ~~have~~the ~~sought~~PMI toManagement ~~recharacterize~~Rights, ~~certain~~collectively ~~loan~~through ~~marketers~~the ~~and~~indenture ~~other~~trustee, ~~originators~~have asa ~~lenders. If~~limited ~~litigation~~contractual orability ato ~~regulatory~~enforce ~~enforcement~~PMI's ~~action~~obligations onunder ~~similar~~the ~~theories~~Administration ~~were~~Agreement. ~~successful~~As ~~against~~a usresult, ~~borrower~~investors ~~loans~~will ~~originated~~have ~~through~~a ~~the~~limited ~~platform~~contractual ~~could~~ability ~~be subject~~ to ~~state~~require ~~consumer~~that ~~protection~~PMI ~~laws~~perform ~~and~~its ~~licensing~~obligations ~~requirements~~under inthe aAdministration ~~greater number of states~~Agreement.

~~Several~~Pursuant ~~lawsuits~~to ~~have~~the ~~brought~~Administration ~~under~~Agreement, ~~scrutiny~~PMI provides three kinds of services to PFL: (i) Loan Marketplace Administration Services (managing the ~~association~~operation ~~between~~of ~~high~~our marketplace), (ii) Corporate Administration Services (providing back-~~interest~~office ~~“payday~~services ~~loan”~~to ~~marketers~~PFL, such as maintaining books and ~~out-~~records, making periodic regulatory filings, performing limited cash management functions, etc.), and (iii) Loan and Note Servicing Services (servicing the Borrower Loans and Notes originated through our marketplace). Holders of~~-state~~ ~~banks~~PMI Management Rights do not have the contractual right, individually, to enforce PMI's obligations under the Administration Agreement. ~~These~~ ~~lawsuits~~Holders ~~assert~~representing ~~that~~at ~~payday~~least ~~loan~~25% ~~marketers~~of ~~use~~the ~~out~~outstanding Notes, collectively, have the contractual right to cause the indenture trustee to take action as a third-party beneficiary of the Administration Agreement to enforce PMI's marketplace administration and corporate administration obligations under the Administration Agreement. Holders representing at least 25% of the combined total of the outstanding Note, collectively, have the contractual right to cause the indenture trustee to take action as a third-~~state~~party ~~lenders~~beneficiary inof ~~order~~the Administration Agreement to ~~evade~~enforce PMI's loan servicing obligations under the ~~consumer~~Administration ~~protection~~Agreement. ~~laws~~All ~~imposed~~such bycollective contractual rights are subject to certain conditions set forth in the ~~states~~Amended ~~where~~and ~~they~~Restated doIndenture. ~~business~~Those conditions include, for example, that the holders indemnify the trustee for taking such action. ~~Such~~ ~~litigation~~If ~~has~~PMI ~~sought~~fails to ~~recharacterize~~adequately perform Loan and Note Servicing Services under the ~~loan~~Administration ~~marketer~~Agreement, and if PFL is unable to timely replace PMI as the ~~lender~~servicer ~~for~~of ~~purposes~~the Notes, investors' ability to receive principal and interest payments on Notes may be substantially impaired, even if their portfolio of ~~state~~Notes ~~consumer~~is ~~protection~~well ~~law~~diversified ~~restrictions~~and the Borrower Loans are paying on schedule. ~~Similar~~ ~~civil~~In ~~actions~~addition, ~~have~~although ~~been~~PFL ~~brought~~has a back- up provider in place for PMI as Loan and Note Servicer under the ~~context~~Administration ofAgreement, ~~gift~~PFL ~~cards. We~~does ~~believe~~not have a back-up provider for the Loan Marketplace Administration Services or the Corporate Administration Services that ~~our~~PMI ~~activities~~is ~~are~~obligated ~~distinguishable~~to provide. The failure of PMI to adequately perform those services could adversely affect investors' ability to benefit from those services. PMI's obligations to provide services under the ~~activities~~Administration ~~involved~~Agreement inmay ~~these~~be ~~cases~~terminated by PMI or by PFL under certain circumstances.

~~Nevertheless,~~Notwithstanding ifthe welimitations ~~were~~on ~~recharacterized as~~ the ~~lender~~ability of ~~borrower~~holders ~~loans, such~~of aPMI ~~recharacterization~~Management ~~could~~Rights ~~render~~to ~~those~~contractually ~~loans~~enforce ~~voidable~~PMI's orobligations ~~unenforceable. In~~under ~~addition,~~the weAdministration ~~could be subject to claims by borrowers~~Agreement, asholders ~~well as enforcement actions by regulators. Even if we were not required to cease doing business with residents~~ of ~~certain~~PMI ~~states~~Management orRights towill ~~change~~have ~~our~~rights ~~business~~under ~~practices~~the tofederal ~~comply~~securities ~~with applicable~~ laws ~~and regulations, we could be required to register or obtain licenses or regulatory approvals~~ that ~~could~~are ~~impose~~not ~~a substantial cost on us. To date~~limited, nocontractually ~~actions have been taken~~ or ~~threatened against us on the theory that we have engaged in unauthorized lending~~otherwise. ~~However, such actions could have a material adverse effect on our business.~~

As Internet commerce develops, federal and state governments may draft and propose new laws to regulate Internet commerce, which may negatively affect our business.

As Internet commerce continues to evolve, increasing regulation by federal and state governments becomes more likely. Our business could be negatively affected by the application of existing laws and regulations or the enactment of new laws applicable to peer-to-peer lending. The cost to comply with such laws or regulations could be significant and would increase our operating expenses, and we may be unable to pass along those costs to our members in the form of increased fees. In addition, federal and state governmental or regulatory agencies may decide to impose taxes on services provided over the Internet. These taxes could discourage the use of the Internet as a means of consumer lending, which would adversely affect the viability of the platform.

~~Table~~The Investor Registration Agreement contains provisions that limit certain legal rights of ~~Contents~~investors in relation to PFL and PMI.

IfInvestors ~~the~~enter ~~SEC~~into ~~deems~~the usInvestor toRegistration beAgreement anwith ~~asset-backed~~PFL ~~issuer~~and PMI, wewhich ~~could~~agreement begoverns ~~required~~all sales of Notes to ~~provide~~investors. ~~the~~The ~~disclosures~~Investor ~~and~~Registration ~~file~~Agreement ~~the~~contains ~~reports~~provisions ~~required~~that oflimit ~~asset-backed~~certain ~~issuers,~~legal ~~which~~rights ~~could~~of ~~adversely~~investors ~~impact~~in ~~our~~relation ~~business~~to ~~model~~PFL and ~~impose~~PMI, ~~additional costs.~~including:

~~Regulation~~• ABUpon ~~under~~a ~~the~~breach ~~Securities Act~~ of ~~1933,~~the asagreement ~~amended, defines an asset-backed security as “a security that is primarily serviced~~ by ~~the~~PFL ~~cash flows of a discrete pool of receivables~~ or ~~other financial assets~~PMl, ~~either~~PFL ~~fixed~~and orPMI ~~revolving,~~have ~~that~~the byoption ~~their terms convert into cash within a finite time period, plus any rights or other assets designed~~ to ~~assure~~determine ~~the~~which ~~servicing~~remedy ~~or timely distributions of proceeds~~ to ~~the security holders~~apply.” WeThe doavailable ~~not~~remedies ~~believe that a Note is an asset-backed security under this definition, in part because our Notes~~ are ~~not~~generally ~~backed~~to by(1) acure ~~“discrete pool” of assets since we will make payments on a Note from~~ the ~~cash~~breach, ~~flow~~(2) ~~generated~~repurchase by the ~~single loan underlying the~~ Note~~. We~~ ~~have not, however, sought a no-action letter~~ or ~~other~~(3) ~~informal~~indemnify ~~confirmation from the staff of the SEC,~~ and ithold ~~is possible that~~ the ~~SEC~~investor orharmless aagainst ~~court~~all ~~could~~losses ~~disagree~~resulting ~~with~~from ~~our conclusion. In~~ such circumstances, we would be required to seek an exemptive order or no-action relief, both of which impose significant costs and delays on our business, and if those are unsuccessful, prepare a registration statement and periodic reports that are substantially different from this registration statement and the periodic reports filed by PMI in connection with its outstanding Notesbreach. For example, an asset-backed issuer must file a distribution report on Form 10-D within 15 days after each required distribution date for the asset-backed security as specified in the transaction documents. We make hundreds of distributions a week, and as a result, we could be required to file numerous Forms 10-D in the absence of no-action relief from the SEC. These requirements could adversely impact our business model and impose additional costs that we did not anticipate in structuring this offering, which could ultimately undermine the purpose for which we were organized.

If• wePFL ormay ~~PMI~~in isits ~~required~~sole todiscretion, ~~register~~with ~~under~~or ~~the~~without ~~Investment~~cause ~~Company~~and ~~Act,~~with ~~our~~or ~~ability~~without tonotice, ~~conduct~~restrict ~~our~~an ~~business~~investor's ~~could~~access beto ~~materially~~our ~~adversely~~marketplace ~~affected~~or the website.

~~The~~• ~~Investment~~PFL ~~Company~~may ~~Act of 1940, or the “Investment Company Act,” contains substantive legal requirements that regulate the manner~~ in ~~which “investment companies” are permitted to conduct their business activities. We believe PMI has conducted~~ its ~~business,~~sole ~~and~~discretion weterminate ~~intend to conduct our business, in a manner that does not result in our being characterized as an investment company. If, however, we are deemed to be an investment company under~~ the ~~Investment Company Act~~agreement, wewith may be required to institute burdensome compliance requirements and our activities may be restricted, which would materially adversely affect our business, financial condition and results of operations. Any determination that PMI is an investment company under the Investment Company Act similarly could impair its ability to perform its obligations under the Servicing Agreement and thereby impair our ability to make payments on the Notes. If we or ~~PMI~~without ~~were deemed to be an investment company, we or PMI may also attempt to seek exemptive relief from the SEC, which could impose significant costs and delays on our business~~cause.

If• weInvestors oragree to indemnify PFL and PMI ~~are~~for ~~required~~all losses (i) resulting from an investor's material breach of the agreement, (ii) relating to ~~register~~the ~~under~~contents of the ~~Investment~~investor's ~~Advisers~~web ~~Act~~page, ~~our~~own ~~ability~~website or business, (iii) resulting from an investor's (and their employees, agents or representatives) acts, omissions and representations relating to ~~conduct~~PFL, ~~our~~PMI ~~business~~and ~~could~~their beaffiliates, ~~materially~~or ~~adversely~~(iv) ~~affected~~asserted by third parties against PFL, PMI and their affiliates alleging that the trademarks, trade names, logos or branding that an investor uses, displays, links to or advertises infringes upon the intellectual property rights of any such third party. These indemnification obligations survive termination of the agreement.

~~The~~• ~~Investment~~Investors ~~Advisers~~are ~~Act~~prohibited offrom ~~1940~~assigning, ortransferring, ~~the “Investment Advisers Act~~sublicensing,” contains substantive legal requirements that regulate the manner in which “investment advisers” are permitted to conduct their business activities. We believe that our business consists of providing a platform for peer-to-peer lending for which investment adviser registration and regulation do not apply under applicable federal or ~~state~~otherwise ~~law,~~delegating ~~and do not believe that we are required to register as an investment adviser with either the SEC or~~ any of ~~the~~their ~~various~~rights ~~states.~~under ~~The SEC or a state securities regulator could reach a different conclusion, however. Registration as an investment adviser could adversely affect our method of operation and revenues. For example,~~ the ~~Investment~~agreement ~~Advisers~~without ~~Act requires that an investment adviser act in a fiduciary capacity for its clients. Among other things, this fiduciary obligation requires that an investment adviser manage a client’~~PFL's ~~portfolio~~prior inwritten the best interests of the client, have a reasonable basis for its recommendations, fully disclose to its client any material conflicts of interest that may affect its conduct and seek best execution for transactions undertaken on behalf of its clientconsent. It could be difficult for us to comply with this obligation without meaningful changes to our business operations, and there is no guarantee that we could do so successfully. If we were ever deemed to be in non-compliance with applicable investment adviser regulations, we could be subject to various penalties, including administrative or judicial proceedings that might result in censure, fine, civil penalties (including treble damages in the case of insider trading violations), the issuance of cease-and-desist orders or other adverse consequences. Similarly, any determination by regulators that PMI must register as an

~~investment~~• ~~adviser~~Investors ~~could~~may ~~materially~~agree ~~adversely~~that ~~affect~~any claim (excluding claims against Prosper Funding or PMI, or their respective officers and ~~impair~~directors, ~~its~~under ~~ability~~the federal securities laws) relating to ~~continue~~the agreement will be resolved by binding arbitration administered by the American Arbitration Association or JAMS. An investor that agrees to ~~administer~~arbitration is required to pay up to $1,000 in fees and costs of the ~~platform~~arbitration, onwhich ~~our~~amount ~~behalf~~may be reimbursed if the investor wins the arbitration. An investor that agrees to arbitration must pay its own attorney’s fees. In addition, any claim of an investor must be brought as a single person, and not as a member of a class or purported class.

The Notes will not be listed on any securities exchange and can be held only by registered Prosper investors. Further, no trading platform for the transfer of Notes exists and there can be no assurance a trading platform for the transfer of Notes will develop in the future. Therefore, investors should be prepared to hold the Notes they purchase until maturity.

The Notes and PMI Management Rights will not be listed on any securities exchange and all Notes and PMI Management Rights must be held by registered Prosper investors. Further, in connection with Prosper’s termination of its relationship with FOLIOfn in October 2016, a trading platform for the transfer of Notes and PMI Management Rights no longer exists. While we may, in our sole discretion, permit the establishment of another platform on which a secondary market may be made with respect to the Notes, there can be no assurance a trading platform for the Notes and PMI Management Rights will develop in the future. Therefore, note purchasers must be prepared to hold their Notes and PMI Management Rights to maturity.

In connection with the termination of Prosper’s relationship with FOLIOfn, investors have no current means to transfer the Notes and PMI Management Rights, and the resulting lack of liquidity could render a potential investment in the Notes less attractive.

Prior to October 2016, Note investors could only trade their Notes through the online trading platform operated by FOLIOfn, an unaffiliated registered broker-dealer. However, in connection with Prosper’s termination of its relationship with FOLIOfn in October 2016, a trading platform for the resale of Notes no longer exists, and there can be no assurance that another trading platform will develop for the resale of Notes in the future. The resulting lack of liquidity for the Notes could reduce investor demand for the Notes, which would adversely affect our business.

~~Table~~Investors ofdo ~~Contents~~not earn interest on funds held in the FBO funding account.

WeAn ~~may~~investor's ~~face~~account ~~liability~~represents ~~under~~an ~~state~~interest ~~and federal securities law for statements~~ in ~~our~~a ~~prospectus~~FBO ~~and~~funding inaccount ~~other communications~~ that ~~could~~does benot ~~deemed~~earn tointerest. beSee an"About ~~offer to~~ the ~~extent~~Marketplace ~~that~~- ~~such~~Investors" ~~statements~~for ~~are~~more ~~deemed to be false or misleading~~information.

~~Loan~~The listings and other borrower information available on our website as well as in our sales and listing reports are statements made in connection with the purchase and sale of securities that are subject to the antifraud provisions of the Exchange Act and the Securities ActU. In general, these liability provisions provide a purchaser of Notes with a right to bring a claim against us for damages arising from any untrue statement of material fact or failure to state a material fact necessary to make any statements made not misleadingS. ~~Even~~ ~~though~~federal weincome ~~have~~tax ~~advised~~consequences ~~you~~ of ~~what we believe to be the material risks associated with~~ an investment in the Notes, ~~the~~are SEC or a court could determine that we have not advised you of all of the material facts regarding an investment in the Notes, which could give you the right to rescind your investment and obtain damages, and could subject us to civil fines or criminal penalties in addition to any such rescission rights or damagesuncertain.

~~Our~~There ~~activities~~are no statutory provisions, regulations, published rulings or judicial decisions that directly address the characterization of the Notes or instruments similar to the Notes for U.S. federal income tax purposes. However, although the matter is not free from doubt because payments on the Notes are dependent on payments on the corresponding Borrower Loan, PFL treats the Notes as debt instruments that have original issue discount ("OID") for U.S. federal income tax purposes. Where required, PFL intends to file information returns with the U.S. Internal Revenue Service ("IRS") in ~~connection~~accordance with such treatment unless there is a change or clarification in the ~~offer~~law, ~~and~~by ~~sale~~regulation or otherwise, that would require a different characterization of ~~securities~~the onNotes. Investors should be aware, however, that the ~~platform~~IRS is not bound by PFL's characterization of the Notes and the IRS or a court may take a different position with respect to the Notes' proper characterization. For example, the IRS could ~~result~~determine that, in ~~potential~~substance, ~~violations~~each ofinvestor owns a proportionate interest in the corresponding Borrower Loan for U.S. federal ~~securities~~income ~~law~~tax purposes or, for example, the IRS could instead treat the Notes as a different financial instrument (including an equity interest or a derivative financial instrument). Any different characterization could significantly affect the amount, timing, and ~~result~~character of income, gain or loss recognized in ~~material~~respect ~~liability~~of a Note. For example, if the Notes are treated as PFL's equity, (i) PFL would be subject to usU.S. federal income tax on income, including interest, accrued on the corresponding Borrower Loans but would not be entitled to deduct interest or OID on the Notes, and (ii) payments on the Notes would be treated by the Note holder for U.S. federal income tax purposes as dividends (that may be ineligible for reduced rates of U.S. federal income taxation or the dividends-received deduction) to the extent of PFL's earnings and profits as computed for U.S. federal income tax purposes. A different characterization may significantly reduce the amount available to pay interest on the Notes. Investors are strongly advised to consult their own tax advisor regarding the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership, and disposition of the Notes (including any possible differing treatments of the Notes).

~~Our~~PFL's ~~business~~ability ~~is subject~~ to ~~federal~~pay ~~and~~principal ~~state securities laws that may limit the kinds of activities in which we may engage~~ and ~~the~~interest ~~manner in which we engage in such activities. For example, changes to the manner in which we offer and sell Notes or other securities~~ on ~~the~~a ~~platform~~Note ~~could~~may be ~~viewed~~affected by ~~the~~its ~~SEC~~ability orto amatch ~~state securities regulator as involving~~ the ~~creation~~timing ~~or sale~~ of ~~new,~~its ~~unregistered~~income ~~securities. In such circumstances, the failure to register such securities could subject us to liability~~ and ~~the~~deductions ~~amount~~for ofU.S. ~~such~~federal ~~liability~~income ~~could~~tax ~~be meaningful~~purposes.

Investors should be aware that PFL's ability to pay principal and interest on a Note may be affected by its ability, for U.S. federal income tax purposes, to match the timing of income it receives from a corresponding Borrower Loan that it holds and the timing of deductions that it may be entitled to in respect of payments made on the Notes that it issues. For example, if the Notes are treated as contingent payment debt instruments for U.S. federal income tax purposes but the corresponding Borrower Loans are not, there could be a potential mismatch in the timing of PFL's income and deductions for U.S. federal income tax purposes, and PFL's resulting tax liabilities could affect its ability to make payments on the Notes.

Our participation in the funding of Borrower Loans could be viewed as creating a conflict of interest.

As is the practice with other marketplace lending companies, from time to time, we may fund portions of qualified loan requests in our marketplace and hold any Notes purchased as a result of such funding for our own individual accounts. Even though we will participate in funding Borrower Loans listed in our marketplace under the same terms and conditions and through the use of the same information that is made available to other potential investors in our marketplace, such participation may be perceived as involving a conflict of interest. For example, our funding of a Borrower Loan may cause the loan to fund, and in some cases, fund faster, than it would fund in the absence of our participation, which could benefit us to the extent that it ensures that one or the other of us generates the revenue associated with the loan.

During the three months ended March 31, 2018, we purchased $71,000 in Notes for investment.

RISKS RELATED TO PFL AND PMI, OUR MARKETPLACE AND OUR ABILITY TO SERVICE THE NOTES

We have experienced errors on our platform that have resulted in incorrect reporting of performance returns to Note investors. If we are unable to prevent the reoccurrence of similar errors, investors could be adversely impacted.

~~Table~~In April 2017, we became aware of ~~Contents~~an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. On average, the error resulted in note investors being shown annualized net return information that was approximately 260 basis points higher than the actual performance of notes in their accounts. The error did not affect any other part of note investors’ accounts, nor did it affect any other aspects of the platform, including the receipt and distribution of loan payments, deposits, monthly statements or tax documentation, or the note and loan level information provided to investors.

~~USE~~The OFerror ~~PROCEEDS~~was the result of errors in the code forming part of our calculation framework and reveals a risk associated with the complex programs, algorithms and inputs that support our platform. We depend on these programs, algorithms and inputs to store, retrieve, process and manage data, as well as to provide marketplace features such as our credit assessments and underwriting, the Prosper Rating, estimated loss rates, estimated returns, and individual note, note portfolio and platform wide performance data. Errors or other design defects within these programs, algorithms and inputs may result in a negative experience for borrowers and investors, delay introductions of new features or enhancements, or impact the information displayed on our website. They could also result in negative publicity and unfavorable media coverage, harm to our reputation, litigation, regulatory inquiries or proceedings, loss of or damage to our relationships with borrowers or investors or loss of revenue or liability for damages, any of which could adversely affect our business and financial results.

WeArrangements ~~will~~for ~~use~~back-up ~~the~~servicing ~~proceeds~~are oflimited. ~~each~~If ~~series~~PMI offails ~~Notes~~ to ~~facilitate~~maintain ~~the~~operations ~~funding~~or ofthe aAdministration ~~borrower~~Agreement ~~loan~~is ~~through~~rejected ~~the~~or ~~platform~~terminated ~~designated~~(in bybankruptcy ~~the~~or ~~lender~~otherwise), ~~members~~investors ~~purchasing~~may ~~such~~experience ~~series~~a ofdelay ~~Notes. We~~and ~~will~~increased ~~use~~cost ~~the~~in ~~proceeds~~respect of ~~each~~their ~~series~~expected ofprincipal ~~Notes~~and tointerest ~~purchase~~payments ~~the~~on ~~corresponding~~Notes, ~~borrower~~and ~~loan~~PFL ~~from~~may ~~WebBank. See~~be ~~“About~~unable ~~the~~to ~~Platform”~~collect ~~for~~and ~~more~~process ~~information~~repayments from borrowers.

~~PLAN~~If OFPMI ~~DISTRIBUTION~~were to become subject to a bankruptcy proceeding, PMI may have the right to assume or reject the Administration Agreement between PFL and PMI (or the loan servicing provisions thereof) because a bankruptcy court may disallow termination of the Administration Agreement (or the loan servicing provisions thereof). If PMI elected to continue to perform under the Administration Agreement (or the loan servicing provisions thereof) without expressly assuming it or elected to assume the Administration Agreement (or the loan servicing provisions thereof), PMI would continue to perform its servicing obligations with respect to the Borrower Loans and the Notes. If PMI were to continue as servicer during the pendency of its bankruptcy proceeding, depending on the facts and circumstances at the time, PFL would determine whether the creation of new Borrower Loans would continue to be facilitated and new Notes issued through our marketplace. If PMI elected to reject the Administration Agreement (or the loan servicing provisions thereof), or if PMI was in default in performing its obligations thereunder, and PMI was unable to cure such default, the loan servicing provisions of the Administration Agreement (and likely also the other provisions thereof) would be terminated. If the loan servicing provisions of the Administration Agreement are terminated for any reason, PFL would attempt to transfer the loan servicing obligations on the Borrower Loans and Notes to a third party pursuant to its contractual agreements with investors.

WePFL has entered into a back-up servicing agreement with a loan servicing company that is willing and able to transition servicing responsibilities from PMI. There can be no assurance, however, that this back-up servicer will ~~offer~~be able to adequately perform the servicing of the outstanding Borrower Loans and Notes. toIf ~~lender~~this ~~members~~back-up atservicer ~~100%~~assumes the servicing of ~~their~~the ~~principal~~Borrower ~~amount. The~~Loans and Notes, ~~will~~the beback-up ~~offered~~servicer ~~only~~may byimpose usadditional ~~through~~servicing ~~www~~fees, reducing the amounts available for payments on the Notes.~~prosper.com~~ Additionally, transferring these servicing obligations to the back-up servicer, particularly if such transfer is made when PMI is in bankruptcy and ~~there~~already ~~will~~defaulting bein noperformance ~~underwriters~~of its obligations under the Administration Agreement, may result in delays in the processing of collections on Borrower Loans and information with respect to amounts owed on Borrower Loans or, ~~underwriting~~if ~~discounts~~our marketplace becomes inoperable, may prevent the back-up servicer from servicing the Borrower Loans and making principal and interest payments on the Notes. ~~See~~ ~~“About~~If the ~~Platform”~~back-up servicer is not able to service the Borrower Loans and ~~“About~~Notes effectively, investors' ability to receive principal and interest payments on your Notes may be substantially impaired, even if their portfolio of Notes is well diversified and the ~~Issuer”~~corresponding ~~for~~Borrower ~~more~~Loans ~~information~~are paying on schedule.

~~FINANCIAL~~In ~~SUITABILITY~~addition, ~~REQUIREMENTS~~it is unlikely that the back-up servicer would be able to perform functions other than servicing the outstanding Borrower Loans and Notes. For instance, the back-up servicer likely would not be able to facilitate the creation of new Borrower Loans through our marketplace or manage PFL's marketing efforts. PFL believes that it could find one or more other parties who could perform these and any other functions necessary to fully operate our marketplace in the absence of PMI. However, it could take some time to find another such party or parties who could perform the necessary functions and it could take such party or parties additional time to become comfortable with the operation of our marketplace.

The Notes are highly risky and speculative. Investing in the Notes should be considered only by persons who can afford the loss of their entire investment. Our platform currently allows lender members to bid as little as $25 and as much as the full amount of any particular listing, up to an aggregate amount of $5,000,000 for individuals and $50,000,000 for institutions.

To purchase Notes, lender members located in Idaho or Missouri must meet one or more of the following suitability requirements:

a. (i) You must have an annual gross income of at least $70,000; (ii) your net worth must be at least $70,000; and (iii) the total amount of Notes you purchase cannot exceed 10% of your net worth; or

b. (i) Your net worth must be at least $250,000; and (ii) the total amount of Notes you purchase cannot exceed 10% or your net worth.

For purposes of the suitability requirements described above, you and your spouse are considered to be a single person. In addition, the following definitions apply:

"annual gross income" means the total amount of money you earn each year, before deducting any amounts for taxes, insurance, retirement contributions or any other payments or expenses;

"net worth" means the total value of all your assets, minus the total value of all your liabilities. The value of an asset is equal to the price at which you could reasonably expect to sell it. In calculating your net worth, you should only include assets that are liquid, meaning assets that consist of cash or something that could be quickly and easily converted into cash, such as a publicly-traded stock. You shouldn't include any illiquid assets, such as homes, home furnishings or cars;

"net investment" means the principal amount of Notes purchased, minus principal payments received on the Notes.

We are seeking to register the offer and sale of our Notes in all 50 states as well as the District of Columbia. As part of this process, we expect that states in addition to those referenced above will impose minimum financial suitability standards and maximum investment limits for lender members who reside in such states. Should this occur we will set forth these requirements in a supplement to this prospectus. Under the lender registration agreement, lender members are required to represent and warrant that they satisfy the applicable minimum financial suitability standards and maximum investment limits of the state in which they reside. Lender members who fail to satisfy any such requirements will not be permitted to purchase Notes.

~~Table~~Moreover, PMI owns and has not transferred to PFL ownership of ~~Contents~~the computer hardware that it uses to host and maintain the website or agreements with third parties relating to the hosting and maintenance of the website. Although PMI's retention of such hardware and agreements should not bear on a bankruptcy court's analysis of the legal separateness of PMI and PFL (or their respective assets and liabilities), the cessation of or substantial reduction of the day-to-day operations of PMI (because of or during its bankruptcy or otherwise) would materially impair and delay the ability of PFL or a back-up service provider to retrieve data and information in the possession of PMI and to operate our marketplace or elements thereof relevant to Borrower Loan and Note servicing.

~~ABOUT~~Any ~~THE~~such ~~PLATFORM~~delay or impairment that did not affect existing Note holders, because PFL or its back-up servicer proves able to continue servicing outstanding Borrower Loans and Notes, could nonetheless delay PFL's ability to facilitate the origination of new Borrower Loans and issue new Notes through our marketplace, which could adversely affect PFL's finances and customer relationships

~~Overview~~A decline in economic conditions may adversely affect our customers, which may negatively impact our business and results of operations.

~~Prosper~~As ~~Funding LLC operates~~ a ~~peer-to-peer~~lending ~~online credit platform~~marketplace, ~~which~~ we ~~refer~~believe toour ascustomers ~~the~~are ~~“platform”,~~highly ~~that~~susceptible ~~enables its borrower members~~ to ~~borrow~~uncertainties ~~money~~ and ~~its~~negative ~~lender members to purchase Borrower Payment Dependent Notes~~trends, real or ~~Notes~~perceived, ~~issued~~in bythe ~~Prosper~~markets ~~Funding~~driven ~~LLC~~by, ~~the~~among ~~proceeds~~other offactors, ~~which~~general ~~facilitate~~economic ~~the~~conditions ~~funding~~in of the ~~loans~~United ~~made~~States toand ~~borrower members~~abroad. ~~Prosper~~These ~~Funding~~external ~~LLC~~economic isconditions aand ~~wholly-owned~~resulting ~~subsidiary~~trends ofor ~~Prosper~~uncertainties ~~Marketplace,~~could ~~Inc.~~adversely Weimpact ~~use~~our ~~the~~customers' ~~terms~~ability ~~“we”,~~or ~~“us”~~desire ~~and~~to ~~“our”~~participate toon ~~refer~~our tomarketplace ~~Prosper~~as ~~Funding~~borrowers ~~LLC~~or investors, and weconsequently ~~use~~could ~~the~~negatively ~~term~~affect ~~“PMI”~~our tobusiness ~~refer~~and toresults ~~Prosper~~of ~~Marketplace, Inc~~operations.

~~PMI~~A ~~developed~~relatively ~~the~~small ~~platform~~number ~~and owns the proprietary technology that makes operation~~ of ~~the~~investors ~~platform possible. We have entered into a Servicing Agreement with PMI pursuant to which PMI has licensed to us the right to operate the platform, and we have appointed PMI to~~ provide ~~certain administrative services relating to~~ the ~~platform~~funding ~~(the~~commitments ~~“Servicing~~for ~~Agreement”). Prior~~a tolarge ~~the~~percentage ~~commencement~~ of ~~this~~all ~~offering,~~Borrower ~~PMI~~Loans ~~operated the platform directly, facilitated the origination of loans by WebBank through the platform and issued and sold notes corresponding to those loans. We refer to borrower loans~~ originated ~~and notes issued and sold~~ through ~~the~~our ~~platform prior to the commencement of this offering as “PMI Borrower Loans” and “PMI Notes”, respectively~~marketplace.

~~The~~A ~~platform~~relatively ~~was~~small ~~designed~~number toof ~~allow~~investors ~~people~~provide tothe ~~lend~~funding ~~money~~commitments tofor ~~other~~a ~~people~~large inpercentage anof ~~open~~all ~~transparent~~Borrower ~~marketplace.~~Loans ~~Prosper~~originated ~~believes~~through ~~peer-to-peer~~our ~~lending~~marketplace. If ~~represents~~these ainvestors ~~new~~cease ~~model~~or ofsignificantly ~~consumer~~decrease ~~lending,~~their ~~where~~investment ~~individuals~~in ~~can~~Borrower ~~earn~~Loans ~~the~~through ~~interest~~our ~~spread~~marketplace ofand aPFL ~~traditional~~is ~~consumer~~unable ~~lender~~to ~~but~~attract ~~must~~sufficient ~~also~~investor ~~assume~~purchase ~~the~~commitments ~~credit~~from ~~risk~~new ofand aexisting ~~traditional~~investors, ~~lender. It~~then isour ~~people~~business ~~that~~and ~~are~~results ~~the drivers~~ of ~~credit~~operations ~~formation~~may inbe ~~peer-to-peer~~adversely ~~lending, not institutions~~affected.

WeOur ~~believe~~business ~~peer-to-peer~~could ~~lending~~be ~~presents~~adversely anaffected ~~enormous~~by ~~opportunity~~a toweakening ~~create~~market afor ~~more~~securities ~~transparent~~backed ~~form~~by of consumer ~~lending~~assets. ~~Key drivers of peer-to-peer lending include:~~

·PFL ~~The~~is ~~possibility~~involved in the securitization market through its business of ~~lower~~selling ~~rates~~loans ~~and~~to ~~better~~investors ~~terms~~who, in turn, sell asset backed securities based on accumulated loan portfolios. If the market for ~~borrowers~~asset ~~compared~~backed tosecurities ~~traditional~~based ~~sources~~on consumer assets weakens, investors may cease or significantly decrease their funding of ~~consumer~~Borrower ~~credit~~Loans through our marketplace and if PFL has been unable to attract sufficient investor purchase commitments from new and existing investors, ~~such~~then asour ~~credit~~business ~~cards;~~and results of operations may be adversely affected.

·Although APFL ~~new~~has ~~asset~~been ~~class~~organized ~~for~~in ~~investors~~a ~~with~~manner ~~the~~that ~~possibility~~is ofintended ~~attractive~~to ~~risk-adjusted~~minimize ~~returns~~the likelihood that ~~are~~it ~~not~~will ~~directly~~become ~~correlated~~subject to a bankruptcy proceeding, if this were to occur, the ~~performance~~rights of the ~~stock~~holders ~~market;~~of the Notes could be uncertain, and payments on the Notes may be limited, suspended or stopped. The recovery, if any, of a holder on a Note may therefore be substantially delayed and substantially less than the principal and interest due and to become due on the Note.

·Although AnPFL ~~opportunity~~has been organized and is operated in a manner that is intended to ~~combine~~minimize ~~social~~the ~~networking~~likelihood ~~with~~that ~~financial~~it ~~services~~will become subject to a bankruptcy or similar proceeding, if this were to occur, the recovery, if any, of a holder of a Note may be substantially delayed in time (for example, due to the imposition of a stay on payments by the bankruptcy court) and may be substantially less in amount than the principal and interest due and to become due on the Note even if a Note holder's portfolio of Notes is well diversified and the Borrower Loans are paying on schedule. For example, PFL has structured its limited liability company agreement, and agreed to covenants in the Amended and Restated Indenture, that limit its activities in a manner that ~~allows~~is ~~users~~intended to limit the possibility that ~~help~~it ~~fund~~would ~~loans~~voluntarily file for or could be required to ~~feel~~file ~~they~~for ~~are~~bankruptcy. ~~directly~~Among ~~helping~~other things, PFL must receive the affirmative vote of its independent board members to file for bankruptcy. There is no guarantee, however, that its fee income from license fees and loan servicing fees will be sufficient to fund its contingent and other ~~people~~liabilities ~~while~~or ~~also~~that ~~potentially~~it ~~earning~~will ~~attractive~~not ~~returns;~~enter into transactions that cause it to face solvency issues that ultimately could cause it to file for bankruptcy. Further, although PFL has granted the indenture trustee, for the benefit of the Note holders, a security interest in all of the Borrower Loans,

· Growing acceptance of the Internet as an efficient and convenient forum for consumer transactions.

How the Platform Works

The platform is an online marketplace that matches individuals who wish to obtain consumer loans, whom we refer to as “borrower members”, with persons who are willing to help fund those loans, whom we refer to as “lender members”. A borrower member who wishes to obtain a loan through the platform must post a loan listing, or listing, on the platform. Lender members can review all the loan listings on the platform and make a commitment towards any listing they wish to help fund. A commitment is a commitment to purchase a promissory note, or “Note”, from us, the payments on which will be dependent on the payments we receive on the loan requested in the listing. If a listing receives enough lender member commitments to be funded, our partner WebBank, an FDIC-insured, Utah industrial bank, will originate the loan requested and then sell it to us and, at the same time, we will sell a Note to each lender member that made a commitment towards the loan in the principal amount of that commitment. We refer to a borrower member who posts a loan listing as an “applicant” and an applicant who obtains a loan through the platform as a “borrower”.

~~Table~~all payments and proceeds it receives on the corresponding Borrower Loans and in the bank account in which the Borrower Loan payments are deposited, the holders of ~~Contents~~the Notes would still be subject to risks associated with PFL's insolvency, bankruptcy or a similar proceeding.

InIf ~~order~~PFL tobecomes ~~post~~subject ~~a listing, an applicant must first complete a loan application. We then obtain a credit report for the applicant and use data from that report as well as data supplied by the applicant~~ to ~~assign~~ a ~~risk~~bankruptcy ~~grade~~or tosimilar ~~the listing~~proceeding, ~~which~~borrowers ismay ~~called~~delay apayments ~~“Prosper~~or ~~Rating”.~~cease ~~The~~making ~~listing~~payments isat ~~then posted on the platform~~all. The format for listings is shown below. The actual images are from hypothetical listings we created rather than actual listings. Each listing includes the Prosper Rating, selected items from the applicant’s credit report, intended use of the potential loan, plus information regarding any previous loans obtained by the applicant through the platform.

Borrowers may delay or suspend making payments to PFL because of the uncertainties occasioned by its becoming subject to a bankruptcy or similar proceeding, even if the borrowers have no legal right to do so, and such delay would reduce, at least for a time, the funds that might otherwise be available to pay the Notes corresponding to those Borrower Loans. In addition, the commencement of the bankruptcy or similar proceeding may, as a matter of law, prevent PFL from making regular payments on the Notes, even if the funds to make such payments are available. Because the indenture trustee would be required to enforce its security interest in the Borrower Loans in a bankruptcy or similar proceeding, the indenture trustee's ability to make payments under the Notes would be delayed, which may effectively reduce the value of any recovery that a holder of a Note may receive (and no such recovery can be assured) by the time any recovery is available.

If PFL becomes subject to a bankruptcy or similar proceeding, interest accruing upon and following such bankruptcy or similar proceeding may not be paid.

In a bankruptcy or similar proceeding for PFL, interest accruing on the Notes during the proceedings may not be part of the allowed claim of a holder of a Note. If the holder of a Note receives a recovery on the Note (and no such recovery can be assured), any such recovery may be based on, and limited to, the claim of the holder of the Note for principal and for interest accrued up to the date of the bankruptcy or similar proceeding, but not thereafter. Because a bankruptcy or similar proceeding may take months or years to complete, a claim based on principal and on interest only up to the start of the bankruptcy or similar proceeding may be substantially less than a claim based on principal and on interest through the end of the bankruptcy or similar proceeding.

If PFL becomes subject to a bankruptcy or similar proceeding a holder of a Note may not have any priority right to payment from the corresponding Borrower Loan, may not have any right to payment from funds in the deposit account, and may not have any ability to access funds in an FBO funding account.

If PFL failed to perfect the security interest properly, investors may be required to share the proceeds of the Borrower Loans upon which their Notes are dependent for payment with PFL's other creditors, including holders of other Notes or Borrower Loans. To the extent that proceeds of the Borrower Loans would be shared with PFL's other creditors, any secured or priority rights of such other creditors may cause the proceeds to be distributed to such other creditors before any distribution is made to investors on the corresponding Notes.

If a payment is made on a Borrower Loan corresponding to a Note before PFL's bankruptcy or similar proceeding is commenced, and those funds are held in the deposit account PFL maintains with Wells Fargo to collect borrower payments and have not been used by PFL to make payments on the Note as of the date the bankruptcy or similar proceeding is commenced, there can be no assurance that PFL will or will be able to use such funds to make payments on the Note. Other creditors of PFL (including holders of other Note or Borrower Loans) may be deemed to have rights to such funds or interests in the deposit account and monies credited thereto that are equal to or greater than the rights of the holder of the Note. See "About the Marketplace-Loan Servicing and Collection" for more information.

Although PFL believes that amounts funded by investors into the FBO funding accounts should not be subject to claims of its creditors other than the investors for whose benefit the funds are held, the legal title to the FBO funding accounts, and the attendant right to administer the FBO funding accounts would be property of PFL's bankruptcy estate. As a result, if PFL were to file for bankruptcy protection, the legal right to administer the funds in the FBO funding accounts would vest with the bankruptcy trustee or debtor in possession. In that case, while neither PFL nor its creditors should be able to reach those funds, the indenture trustee or the investors may have to seek a bankruptcy court order lifting the automatic stay and permitting them to withdraw their funds. Investors may suffer delays in accessing their funds in the FBO funding accounts as a result. Moreover, United States Bankruptcy Courts have broad powers at law and in equity and, if PFL has failed to properly segregate or handle investors' funds, a bankruptcy court could determine that some or all of such funds were beneficially owned by PFL and therefore that they became available to PFL's creditors generally. See "About the Marketplace-Loan Servicing and Collection"" for more information.

~~Table~~In a bankruptcy or similar proceeding for PFL, the holder of ~~Contents~~a Note may be delayed or prevented from enforcing PFL's repurchase obligations.

~~Lender~~In ~~members~~a ~~can~~bankruptcy ~~bid~~or onsimilar ~~listings~~proceeding infor ~~amounts~~PFL, ~~ranging~~any ~~from~~right ~~the~~of ~~entire~~a ~~loan~~holder ~~amount~~of ~~requested~~a Note to asrequire ~~little~~PFL asto ~~$25.~~repurchase ~~Thus~~the Note or indemnify the holder of the Note under the circumstances set forth in the investor agreement or Note might not be enforceable, itand issuch ~~typical~~holder's toclaim ~~have~~for ~~multiple~~such ~~lender~~repurchase ~~members~~may ~~bid~~be ontreated less favorably than a ~~single~~general ~~listing~~unsecured obligation of PFL. As For a discussion of the ~~listing~~restrictions isPFL ~~funded,~~has imposed upon itself and the ~~listing~~formalities ~~will~~it ~~show~~has adopted under its organizational documents to minimize the ~~amount~~likelihood of ~~commitments~~its ~~made~~becoming ~~towards~~subject ~~that~~to ~~potential~~a ~~loan~~bankruptcy byor ~~lender~~similar ~~members~~proceeding, see "-Information about Prosper Funding LLC" and "Information About Prosper Marketplace, Inc."

~~One~~Although ~~unique~~PFL ~~aspect~~has ofbeen ~~peer-to-peer~~organized ~~lending~~in isa manner that itis ~~allows~~intended ~~lender~~to ~~members~~prevent ~~who~~it ~~are~~from ~~friends~~being ~~and~~substantively ~~family~~consolidated ofwith anPMI ~~applicant~~in tothe ~~bid~~event onof ~~that applicant’~~PMI's ~~listing.~~bankruptcy, ~~Friends~~if ~~and~~PFL ~~family~~were ~~bids~~substantively ~~can~~consolidated ~~signal~~in ~~that~~this amanner, ~~stronger~~the ~~social~~rights ~~bond~~of ~~exists~~the ~~that~~holders ~~could~~of ~~influence~~the ~~repayment~~Notes ~~rates.~~could ~~Friends~~be uncertain, and ~~family~~payments ~~can~~on ~~also~~the ~~vouch~~Notes ~~for~~may ~~the~~be ~~applicant’s~~limited, ~~character~~suspended or stopped. ~~These~~The ~~bids~~recovery, ~~are~~if ~~also~~any, ~~shown~~of a holder on ~~the~~a ~~listing~~Note ~~page~~may ~~for~~therefore ~~all~~be ~~lender~~substantially ~~members~~delayed and substantially less than the principal and interest due and to ~~review,~~become asdue ~~shown~~on ~~below~~the Note.

Although PFL has been organized and is operated in a manner that is intended to prevent it from being substantively consolidated with PMI in the event of PMI's bankruptcy, if PMI became subject to a bankruptcy or similar proceeding and PFL were substantively consolidated with PMI, the risks described in the immediately preceding risk factors regarding (i) payment delays, (ii) uncollectability of interest accrued during the bankruptcy proceeding, (iii) being subordinated to the interests of PFL's other creditors, and (iv) the indenture trustee's inability to access funds in the deposit account or the FBO funding accounts would all be present and, in addition, the same considerations would apply in relation to the claims of creditors of PMI, including that such creditors of PMI may be determined to have perfected security interests or unsecured claims that take precedence over or are at least equal in priority to those of creditors of PFL (including holders of Notes).

In addition, in a bankruptcy or similar proceeding of PMI, (i) the implementation of back-up servicing arrangements may be delayed or prevented, and (ii) PMI's ability to transfer its servicing obligations to a back-up servicer or its other corporate and marketplace administration services and marketing services to third parties may be limited and subject to the approval of the bankruptcy court or other presiding authority. The bankruptcy process may delay or prevent the implementation of back-up servicing, which may impair the collection of Borrower Loans to the detriment of holders of the Notes.

For a discussion of the restrictions PFL has imposed upon itself and the formalities it has adopted under its organizational documents and agreed to in the Amended and Restated Indenture to prevent its being substantively consolidated with PMI in the event of PMI's bankruptcy, see "Information About Prosper Funding LLC" and "Information About Prosper Marketplace, Inc."

PMI owns and did not transfer to PFL ownership of the computer hardware that it uses to host and maintain the website or agreements with third parties relating to the hosting and maintenance of the website. Although PMI's retention of such hardware and agreements should not bear on a bankruptcy court's analysis of the legal separateness of PMI and PFL (or their respective assets and liabilities), the cessation of or substantial reduction of the day-to-day operations of PMI (because of or during its bankruptcy or otherwise) would materially impair and delay the ability of PFL or a back-up service provider to retrieve data and information in the possession of PMI and to operate our marketplace or elements thereof relevant to Borrower Loan and Note servicing.

PMI, in its capacity as servicer, has the authority to waive or modify the terms of a Borrower Loan without the consent of the Note holders.

Pursuant to the Administration Agreement, PMI is obligated to use commercially reasonable efforts to service and collect the Borrower Loans in accordance with industry standards. Subject to that obligation, the Administration Agreement grants PMI the authority to waive or modify any non-material term of a Borrower Loan or consent to the postponement of strict compliance with any such term or in any manner grant a non-material indulgence to any borrower. In addition, if a Borrower Loan is in default, or PMI determines default is reasonably foreseeable, or PMI determines such action is consistent with its servicing obligation, the Administration Agreement grants PMI the authority to waive or modify a material term of a Borrower Loan, to accept payment of an amount less than the principal balance in final satisfaction of a Borrower Loan and to grant any indulgence to a borrower,

~~Table~~provided that PMI has reasonably and prudently determined that such action will not be materially adverse to the interests of ~~Contents~~the relevant Note holders. If PMI approves a modification to the terms of any Borrower Loan it must promptly notify the corresponding Note holders in the Note holder's account.

~~Our~~There ~~registration,~~can ~~processing~~be ~~and payment systems are automated and electronic. We have~~ no ~~physical~~assurance ~~branches,~~that ~~no deposit-taking and interest payment activities and limited loan underwriting activities. Our website provides detailed information about the platform~~PMI, ~~including~~in ~~detailed~~its ~~fee~~capacity ~~information,~~as ~~the full text of our member legal agreements~~servicer, ~~help~~will ~~pages and~~be ~~white~~able ~~papers. In addition~~ to collect the ~~customer~~principal ~~support~~amount ~~materials~~or ~~available~~interest onrate ~~our~~agreed ~~website, we make additional customer support available~~ to ~~members~~and/or bysell ~~email~~charged ~~and~~off ~~phone. Our~~Borrower ~~customer~~Loans ~~support~~in ~~team~~the isfuture ~~currently~~as ~~located~~a atresult ~~our~~of ~~headquarters~~business, inregulatory ~~San~~or ~~Francisco,~~other ~~California~~considerations.

WeProsper ~~will~~has ~~attract~~incurred ~~lender~~annual ~~members~~operating ~~and~~losses ~~borrowers~~since toinception ~~www.prosper.com through a variety of sources, including referrals from other parties (such as online communities, social networks~~ and ~~marketers),~~may ~~search~~continue ~~engine~~to ~~results~~incur ~~and~~net ~~online~~losses ~~and~~in ~~offline advertising. We are not dependent on any one source of traffic to our website. Through~~ the ~~first nine months of 2011, our website was receiving an average of approximately 167,716 unique visitors per month~~future.

WeProsper ~~generate~~has ~~revenue~~incurred byannual ~~charging~~operating ~~lender~~losses ~~members~~since ~~ongoing~~its ~~servicing~~inception ~~fees~~and onit may continue to incur net losses in the ~~Notes~~future. ~~they~~For ~~have~~the ~~purchased~~years ended December 31, 2017 and 2016 Prosper had cash inflows from ~~transaction~~operations ~~fees~~of ~~paid~~$1.1 bymillion ~~borrowers~~and outflows from operations of $62. 7 million, respectively. Additionally, from its inception through March 31, 2018, Prosper had an accumulated deficit of $392.2 million.

~~Platform~~Prosper ~~Participants~~has financed its operations to date primarily with proceeds from the sale of equity securities. At March 31, ~~Registration~~2018, ~~Requirements~~Prosper had approximately $39.3 million unrestricted cash and ~~Minimum~~cash ~~Credit~~equivalents ~~Criteria~~and $47.7 million available for sale investments at fair value. Prosper is dependent upon raising additional capital or debt financing to fund its current operating plan. Prosper's failure to obtain sufficient debt and equity financing and, ultimately, to achieve profitable operations and positive cash flow from operations could adversely affect its ability to perform its obligations under the Administration Agreement and, in such event, PFL's ability to continue to make payments on the Notes could be materially impaired.

~~All~~Although ~~platform~~our ~~participants~~business ~~must~~has ~~register~~grown, ~~with~~we usmay ~~and~~be ~~agree~~unable to ~~the~~manage ~~platform’s~~our ~~rules and~~growth ~~terms~~effectively ofand ~~use,~~meet ~~including consent to receipt of disclosures electronically. At~~ the ~~time~~demands ofthat ~~registration,~~such ~~individuals~~growth orplaces ~~authorized~~on ~~institutional~~our ~~agents must provide their name~~facilities, ~~address~~employees and ~~an email address~~infrastructure. ~~After responding to an email verification, registrants must agree to the terms and conditions (including the applicable registration agreement) for the specific role for which they are registering.~~

As the number of borrowers, investors and Borrower ~~Members~~Loans originated through our marketplace increases, PMI will need to increase its facilities, personnel and infrastructure in order to continue performing effectively its obligations under the Administration Agreement and to accommodate the effects that such growth will have on our servicing and marketplace needs. PMI must constantly add new hardware and update its software and our marketplace, expand customer support services, and add new employees to maintain the operations of our marketplace as well as to satisfy its servicing obligations on the Borrower Loans and the Notes and its other obligations under the Administration Agreement. If PMI is unable to increase the capacity of our marketplace and maintain the necessary infrastructure to perform its duties under the Administration Agreement, PFL, or one or more other third-party service providers engaged by PFL, will have to perform the duties otherwise performed by PMI, and investors may experience delays in receipt of payments on their Notes and periodic downtime of our marketplace.

APFL ~~borrower~~has ~~member may be any natural person at least 18 years of age who is~~ a ~~U.S.~~limited ~~resident~~operating ~~in a state where loans through the platform are available, with a bank account and a social security number~~history. After passing Prosper’s anti-fraud and identity verification process, borrower members can request unsecured borrower loans at interest rates we set. We set minimum credit and other credit guidelines for borrowers, as discussed in the risk grading section.

~~When~~PFL anis ~~applicant requests~~ a ~~loan,~~recently weformed ~~first~~limited ~~evaluate~~purpose ~~whether~~vehicle ~~the~~with ~~applicant~~a ~~meets~~limited ~~the~~operating ~~underwriting~~history. ~~criteria~~Under wethe ~~have~~Administration ~~established~~Agreement, ~~with~~PFL ~~our~~receives ~~origination~~a ~~partner,~~license ~~WebBank. WebBank~~fee ~~makes~~from ~~loans~~PMI tofor ~~borrowers~~granting ~~and~~PMI ~~then~~a ~~sells~~non-exclusive, ~~and~~worldwide ~~assigns~~license ~~the~~to ~~promissory~~access ~~notes~~and ~~evidencing~~use ~~those~~our ~~loans to us~~marketplace. ~~The~~ ~~underwriting~~In ~~criteria~~addition, ~~apply~~PFL ~~for~~earns ~~all~~servicing ~~borrower~~fees ~~loans~~in ~~originated~~relation ~~through~~to the ~~platform~~servicing ~~and~~of ~~may~~the ~~not~~Borrower beLoans ~~changed~~and ~~without~~Notes ~~WebBank’s consent. The underwriting criteria require~~ that ~~borrowers~~it ~~have~~retains afrom ~~minimum~~collections ~~credit~~on ~~score~~the ofBorrower aLoans. ~~specified~~PFL ~~threshold~~believes ~~amount~~this ~~(currently~~fee ~~640,~~income ~~except~~is ~~that~~sufficient ~~the~~to ~~minimum~~cover isits ~~600~~reasonably ~~for~~anticipated ~~borrower~~obligations. ~~members~~While ~~who~~PFL ~~(1) previously~~believes ~~obtained~~that ait ~~borrower~~is ~~loan~~adequately ~~and~~capitalized ~~paid~~to ~~off~~meet ~~the~~its ~~loan~~foreseeable ~~in full~~obligations, orand ~~(2) are~~that ~~seeking~~its afee ~~second~~income ~~loan~~is ~~and~~sufficient ~~are~~to ~~otherwise~~meet ~~eligible~~its ~~for~~ongoing aoperating ~~second loan)~~costs, ~~and~~its ~~have~~financial noresources ~~prior~~are ~~charge-offs~~limited onand ~~loans~~could ~~originated~~prove ~~through~~to ~~the~~be ~~platform~~insufficient. In ~~connection~~addition, ~~with~~PFL ~~our~~has ~~identity~~no employees and ~~anti-fraud~~relies ~~verification~~on ~~process~~PMI, ~~for~~as ~~applicants~~servicer, weor ~~verify~~other ~~the~~third-party ~~deposit~~service ~~account~~providers, ~~into~~to ~~which~~perform ~~the~~most ~~loan~~of ~~proceeds~~its ~~will be deposited,~~ day-to-day ~~determine~~operations. ~~that~~The ~~the~~lack ~~applicant~~of isPFL's aown ~~holder~~employees, ofits ~~record~~limited ofoperating ~~the~~history, ~~account. Even~~and ifcapitalization athat ~~listing~~is ~~receives~~less ~~bids~~than that ~~equal~~of orPMI ~~exceed~~could ~~the~~make ~~minimum~~it ~~amount~~difficult ~~required~~for PFL to ~~fund,~~operate weat ~~will~~a ~~cancel~~level ~~the~~that ~~listing~~will ifbe wesustainable. ~~are~~Absent ~~unable~~the services to ~~verify~~be ~~the~~provided ~~applicant’s~~to ~~account. While~~PFL weby ~~attempt~~PMI pursuant to ~~authenticate~~the ~~each~~Administration ~~platform~~Agreement, ~~participant’~~PFL's ~~identity,~~risk ~~our~~management ~~fraud~~process, ~~checks~~ability ~~could~~to ~~fail~~predict toloss ~~detect~~rates ~~identity~~and ~~theft,~~the ~~fraud~~general ~~and~~operation ~~inaccuracies. See~~of ~~“Risk~~our ~~Factors—Risks~~marketplace ~~Related~~would tohave ~~Borrower~~a ~~Default”~~thinner margin for ~~more~~error ~~information~~than does PMI.

~~Lender~~The ~~Members~~market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.

~~Our~~The ~~lender~~consumer ~~members~~lending ~~are~~market ~~individuals~~is competitive and ~~institutions~~rapidly ~~that have the opportunity to buy our Notes~~changing. ~~Lender~~ ~~members~~With ~~must register on~~ the ~~platform. During~~introduction ~~lender~~of ~~registration,~~new ~~potential~~technologies ~~lender members must authorize us to obtain their credit report for identification purposes, they must also consent to any applicable tax withholding statement~~ and ~~must agree to~~ the ~~terms~~influx ~~and conditions~~ of ~~our~~new ~~website. Lender members must also enter into a lender registration agreement with us~~entrants, ~~which~~we ~~agreement~~expect ~~governs~~competition ~~all sales of our Notes~~ to ~~lender~~persist ~~members. Lender members are not required to give credit information to the same extent as borrower members. An individual lender member must be a natural person at least 18 years of age~~ and aintensify U.S. resident, must provide his or her social security number and may be required to provide his or her state driver’s license or state identification card number. Institutions must provide their taxpayer identification number. At the time a lender member registers with Prosper, the lender member must satisfy any minimum financial suitability standards and maximum investment limits established for the platform or the Note Trader platform by the state in ~~which~~ the ~~lender member resides. Prior to bidding on a listing~~future, ~~lender members must transfer funds to an account maintained on the platform,~~ which wecould ~~refer~~harm toour asability ~~a “funding account.” The funding account holds all funds supporting a lender member’s bids and all Note payments payable~~ to ~~the~~increase ~~lender~~volume ~~member are deposited~~ in ~~the~~our ~~funding account~~marketplace.

~~Table~~Our principal competitors include major banking institutions, credit unions, credit card issuers and other consumer finance companies, as well as other marketplace lending platforms, including LendingClub. Competition could result in reduced volumes, reduced fees or the failure of ~~Contents~~our marketplace to achieve or maintain more widespread market acceptance, any of which could harm our business. In addition, in the future we may experience new competition including companies possessing large, existing customer bases, substantial financial resources and established distribution channels. If any of these companies or any major financial institution decided to enter our marketplace lending business, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and its operating results could be harmed.

Most of our current or potential competitors have significantly more financial, technical, marketing and other resources than either of us does and may be able to devote greater resources to the development, promotion, sale and support of their marketplaces and distribution channels. Our ~~Relationship~~potential competitors may also have longer operating histories, more extensive customer bases, greater brand recognition and broader customer relationships than we have. These competitors may be better able to develop new products, to respond quickly to new technologies and to undertake more extensive marketing campaigns. Our industry is driven by constant innovation. If we are unable to compete with ~~WebBank~~such companies and meet the need for innovation, the use of our marketplace could stagnate or substantially decline.

~~WebBank~~If isPFL afails ~~FDIC-insured,~~to ~~Utah-chartered~~promote ~~industrial bank~~ and ~~direct~~maintain ~~lender~~its ~~that~~brand ~~makes~~in ~~loans~~a tocost-effective ~~borrowers~~manner, ~~and~~it ~~sells~~may ~~and~~lose ~~assigns~~market ~~the~~share ~~promissory~~and ~~notes~~its ~~evidencing~~revenue ~~borrower~~may ~~loans to us~~decrease.

~~Risk~~To ~~Management~~succeed, PFL must increase transaction volumes in our marketplace by attracting a large number of borrowers and investors in a cost-effective manner, many of whom have not previously participated in marketplace lending. If PFL is not able to attract qualified borrowers and sufficient investor purchase commitments, it will not be able to increase its transaction volumes. PFL believes that developing and maintaining awareness of its brand in a cost-effective manner is critical to achieving widespread acceptance of our marketplace and attracting new borrower and investors. Furthermore, it believes that the importance of brand recognition will increase as competition in the marketplace lending industry increases. Successful promotion of its brand will depend largely on the effectiveness of marketing efforts and the user experience on our marketplace. These brand promotion activities may not yield increased revenues. If PFL fails to successfully promote and maintain its brand, it may lose its existing users to competitors or be unable to attract new users, which would cause its revenue to decrease and may impair its ability to maintain our marketplace.

~~The~~We ~~Prosper~~are ~~Rating~~subject ~~System~~to extensive federal, state and local regulation that could adversely impact our ability to service the Notes.

~~Each~~We ~~listing~~are issubject ~~assigned~~to aextensive ~~Prosper~~federal, ~~Rating~~state ~~based~~and onlocal ~~the~~regulation, ~~estimated~~non-compliance ~~loss~~with ~~rate~~which ~~for~~could ~~that~~have ~~listing. The Prosper Rating is~~ a ~~letter~~negative ~~that~~impact ~~indicates~~on ~~the~~our ~~level~~ability ~~of risk associated with a listing and corresponds~~ to anservice ~~estimated~~the ~~average~~Notes, ~~annualized~~provide ~~loss rate range. This rating system allows us to maintain consistency when assigning~~ a ~~rating~~trading tomarket afor ~~listing. There are currently seven Prosper Ratings, but this, as well as~~ the ~~loss ranges associated with each~~Notes, ~~may~~or ~~change~~maintain ~~over~~our ~~time as the~~ marketplace ~~dictates~~.

~~The~~Additionally, ~~current~~we ~~Prosper~~hold ~~Ratings~~lending licenses, collections licenses or similar authorizations in a number of states, each of which has the authority to supervise and examine our activities. Because PFL currently relies on PMI, pursuant to the ~~estimated~~Administration ~~loss~~Agreement, ~~ranges~~to ~~associated~~oversee the operation of our marketplace on its behalf, if PMI does not comply with ~~them~~applicable ~~are~~laws, asPMI ~~follows:~~could lose one or more of its licenses or authorizations, which may have an adverse effect on PFL's ability to continue to perform its servicing obligations or maintain our marketplace.

Prosper Rating		Est. Avg. Annual Loss Rate
AA		0.00% - 1.99 %
A		2.00% - 3.99%
B		4.00% - 5.99%
C		6.00% - 8.99%
D		9.00% - 11.99%
E		12.00% - 14.99%
HR		>=15.00%

The Federal Fair Debt Collection Practices Act and similar state debt collection laws regulate debt collection practices by "debt collectors" and prohibit debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans. Some states also impose similar obligations on companies that service accounts, as well as original creditors. While we employ procedures to ensure compliance with these requirements, and obligate the third party collection agencies and other service providers that we use to comply with applicable law in collecting Borrower Loans (and we have sought and will seek to comply with such law when we undertake direct collection activity in relation to Borrower Loans), it is possible that improper collection practices may occur that could adversely affect the collectability of particular Borrower Loans originated through our marketplace or could result in financial penalties or operating restrictions being imposed on us that adversely affect our ability to operate or perform our respective payment and other obligations.

The estimated loss rate for each listing is based on the historical performance of PMI Borrower Loans with similar characteristics and is primarily determined by two scores: (1) a custom Prosper Score, and (2) a credit score obtained from a credit reporting agency.

Prosper Score

The Prosper Score predicts the probability of a borrower loan going “bad,” where “bad” is the probability of going more than 60 days past due. To create the Prosper Score, PMI developed a custom risk model using its historical data. PMI built the model on the platform’s borrower population so that the model would incorporate behavior that is unique and inherent to that population. In contrast, a credit score obtained from a credit reporting agency is based on a much broader population, of which platform borrowers are just a small subset. We use both the Prosper Score and a credit score to assess the level of risk associated with a listing.

To build and validate its custom risk model, PMI used loans originated through the platform from April 2007 through October 2008 and measured their performance for the fifteen months following origination. PMI analyzed variables available at the time of listing for potential inclusion in the final model, including those from the credit report and provided by the borrower. PMI dropped or kept variables in the final model based on their contribution and stability over time, and went through a number of iterations before finalizing the model in its current form. Some of the variables included in the final model are:

- Total Inquiries

- Inquiries last 6 months

- Total Trades

- Trades opened <= 6 months

- Trades Never Delinquent or Derogatory

- Trades with Delinquent Balance

- Available Credit on Open Bankcards

- Debt-to-Income Ratio

- Bankcard Utilization

~~Table~~The proprietary technology that makes operation of ~~Contents~~our marketplace possible is not protected by any patents. It may be difficult and costly for PFL to protect its intellectual property rights in relation thereto, or to continue to develop or obtain new technologies, which could adversely affect its ability to operate competitively.

~~The~~On ~~model~~February ~~assigns~~1, ~~weights~~2013, toPMI ~~all~~transferred ownership of ~~its~~the ~~variables~~marketplace, ~~based~~including onthe ~~their~~proprietary ~~value~~technology inand ~~predicting~~all of the ~~likelihood~~rights related to the operation of athe ~~loan~~marketplace, ~~going~~to ~~bad~~PFL. ~~For~~ aPFL's ~~given~~ability ~~listing~~to maintain our marketplace depends, ~~the~~in ~~model~~part, ~~estimates~~upon ~~the~~this ~~probability~~proprietary oftechnology. ~~the~~We ~~related~~intend ~~loan~~to ~~becoming~~vigorously ~~bad~~protect proprietary interests in such technology. Despite our best efforts, ~~which~~however, we ~~call~~may not protect the ~~listing’~~proprietary technology effectively, which would allow competitors to duplicate our products and adversely affect our ability to compete. A third party may attempt to reverse engineer or otherwise obtain and use the proprietary technology without PFL's ~~“probability~~consent. In addition, our marketplace may infringe upon claims of ~~bad”~~third-party patents and PFL or PMI may face intellectual property challenges from such other parties. ~~The~~ ~~probability~~PFL ofor ~~bad~~PMI ~~for~~may anot ~~listing~~be issuccessful ~~then~~in ~~mapped~~defending against any such challenges or in obtaining licenses to aavoid ~~Prosper~~or ~~Score~~resolve any intellectual property disputes. Furthermore, ~~which~~the istechnology ~~displayed~~may asbecome ~~part~~obsolete, ofand ~~that~~there ~~listing. Prosper~~is ~~Scores~~no ~~range~~guarantee ~~from~~that 1PFL will be able to 10successfully develop, obtain or use new technologies to adapt our marketplace to compete with 10other ~~being~~marketplace lending companies. If PFL cannot protect the ~~best~~proprietary technology embodied in and used by our marketplace from intellectual property challenges, or ~~lowest~~if ~~risk~~our ~~value. The~~marketplace ~~probability~~becomes ofobsolete, ~~bad~~its ~~ranges~~ability to maintain our marketplace and ~~the~~perform ~~corresponding~~its ~~Prosper~~servicing ~~Scores~~obligations ~~are~~could asbe ~~follows~~adversely affected and, in such event, its ability to continue to make payments on the Notes could be materially impaired.

Probability Bad		Prosper Score
> 24.84%		1
20.33 < x <=24.84%		2
17.05 < x <= 20.33%		3
14.42 < x <= 17.05%		4
12.00 < x <= 14.42%		5
10.00 < x <= 12.00%		6
8.17 < x <= 10.00%		7
5.98 < x <= 8.17%		8
4.50 < x <= 5.98%		9
0.00 < x <= 4.50%		10

PFL relies on a third-party commercial bank to process transactions. If PFL is unable to continue utilizing these services, its business and ability to service the Notes may be adversely affected.

~~For~~Because ~~example,~~PFL ais ~~probability~~not ofa ~~bad~~bank, ofit ~~3.29%~~cannot ~~equates~~belong to aor ~~Prosper~~directly ~~Score~~access ofthe ~~10,~~Automated Clearing House (ACH) payment network. As a ~~probability~~result, ofit ~~bad~~currently ofrelies 12on an FDIC-insured depository institution to process its transactions.~~00%~~ ~~equates~~If PFL cannot continue to aobtain ~~Prosper~~such ~~Score~~services offrom 6,this ~~and~~institution aor ~~probability~~elsewhere, ofor ~~bad~~if ofit ~~37.54%~~cannot ~~equates~~transition to aanother ~~Prosper~~processor ~~Score~~quickly, ofits 1.ability ~~The~~to ~~probability~~process ofpayments ~~bad~~will ~~ranges~~suffer isand ~~likely~~investors' ability to ~~change~~receive ~~over~~principal ~~time~~and asinterest wepayments ~~acquire~~on ~~additional~~the ~~performance~~Notes ~~data~~will be delayed or impaired.

~~Credit~~If ~~Score~~the security of PFL's investors' and borrowers' confidential information stored in our systems is breached or otherwise subjected to unauthorized access, users' secure information may be stolen, our reputations may be harmed, and we may be exposed to liability.

InAs ~~addition~~with toany ~~Prosper~~entity ~~Score~~with a significant Internet presence, we and the third party that Prosper uses for website hosting occasionally have experienced cyber-attacks, attempts to breach their systems and other ~~element~~similar weincidents, ~~use~~none of which have been successful. Our marketplace stores PFL's investors' and borrowers' bank information and other personally-identifiable sensitive data. Any accidental or willful security breaches or other unauthorized access could cause users' secure information to ~~determine~~be ~~the~~stolen ~~Prosper~~and ~~Rating~~used for acriminal ~~listing~~purposes. isSecurity abreaches ~~credit~~or ~~score~~unauthorized ~~from~~access ato ~~consumer~~secure ~~reporting~~information ~~agency.~~could ~~The~~also ~~credit~~expose ~~score~~us weto ~~use~~liability ~~currently~~related isto ~~Experian’s~~the ~~Scorex~~loss ~~PLUS~~of ~~score~~the information, ~~although~~time-consuming weand ~~may~~expensive ~~use~~litigation ~~one~~and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or ~~more~~otherwise, ~~different~~or ~~scores~~if design flaws in the ~~future. The~~relevant ~~minimum~~software ~~credit~~are ~~score~~exposed ~~required~~and ~~for~~exploited, anand, ~~applicant~~as toa ~~post~~result, a ~~listing~~third isparty ~~640~~or disaffected employee obtains unauthorized access to any investors' or borrowers' data, ~~except~~PFL's ~~for~~relationships ~~applicants~~with ~~who~~its users will be severely damaged, and it (ior PMI) ~~previously~~could ~~obtained~~incur asignificant ~~borrower~~liability. ~~loan~~Because techniques used to obtain unauthorized access or ato ~~PMI~~sabotage ~~Borrower~~systems ~~Loan~~change frequently and ~~paid~~generally ~~off~~are ~~the~~not ~~loan~~recognized inuntil ~~full~~they are launched against a target, we and PMI's third-party hosting facilities may be unable to anticipate these techniques or ~~(ii)~~to ~~are~~implement ~~seeking~~adequate apreventative ~~second~~measures. ~~loan~~In ~~while~~addition, many states have enacted laws requiring companies to notify individuals of data security breaches involving their ~~first~~personal ~~loan~~data. isThese ~~still~~mandatory ~~outstanding~~disclosures ~~and~~regarding a security breach are ~~otherwise~~costly ~~eligible~~to ~~for~~implement ~~such~~and ~~second~~often ~~loan~~lead to widespread negative publicity, ~~for~~which ~~whom~~may cause our users to lose confidence in the ~~minimum~~effectiveness ~~score~~of ~~required~~its isand ~~600~~PMI's data security measures. Any security breach, whether actual or perceived, would harm our reputations, and we could lose users.

WeAny ~~obtain~~significant andisruption ~~applicant’s~~in ~~credit~~service score at the time his listing is created, unless we already have a credit score on file that is not more than thirty days old. This credit score is used to determine the Prosper Rating for the listing, and the range that credit score falls within is also included in ~~the~~our ~~listing. If~~marketplace ~~available,~~or ~~we obtain updated credit scores on a monthly basis for borrowers with outstanding loans, and we include the applicable score ranges by month~~ in ~~listings~~PMI's oncomputer ~~the~~systems ~~Note~~could ~~Trader~~adversely ~~platform. We~~affect ~~do not disclose applicant’~~PMI's ~~exact~~ability ~~credit score~~ to ~~any~~perform ofits ~~our~~obligations ~~customers,~~under ~~except for~~ the ~~applicant~~Administration ~~himself~~Agreement.

~~Assigning~~PMI's ~~Estimated~~ability ~~Loss~~to ~~Rates~~perform its obligations under the Administration Agreement could be materially and adversely affected by events outside of its control. The satisfactory performance, reliability and availability of PMI's technology and its underlying network infrastructure are important to our respective operations, level of customer service, reputation and ability to attract new users and retain existing users. PMI's system hardware is hosted in hosting facilities located in Las Vegas, Nevada and Scottsdale, Arizona, owned and operated by Digital Realty Trust. Digital Realty Trust does not guarantee that access to our marketplace or

We assign estimated loss rates for listings based on the historical performance of borrower loans and PMI Borrower Loans with similar characteristics. The starting point for this determination is our base loss rate table, shown below, which PMI created by dividing the range of Prosper Scores and credit scores into multiple segments and combining them into a single grid. We estimate a base loss rate for each cell in the table, based on the historical performance of loans originated on the platform that occupied the same cell (i.e., that had the same point of intersection for their Prosper Score and credit score). Cells are grouped together due to small volume, similar behavior or both. We review our loan performance on a monthly basis to see how our loss estimates compare to the actual performance of loans originated on the platform, and we make any adjustments to those estimates we deem necessary based on such reviews. Please refer to our website for the estimated base loss rate currently in use. Estimated base loss rates for the cells in the table below are based on performance of historical PMI Borrower Loans as of November 30, 2011.

~~Table~~to PMI's own systems will be uninterrupted, error-free or secure. The operation of ~~Contents~~our marketplace and PMI's operation of its own systems depend on Digital Realty Trust's ability to protect the relevant systems in Digital Realty Trust's facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity or other environmental concerns, computer viruses or other attempts to harm them, criminal acts and similar events. If PMI's arrangement with Digital Realty Trust is terminated, or there is a lapse of service or damage to Digital Realty Trust's facilities, PMI could experience interruptions in providing its services under the Administration Agreement, PFL could experience interruptions in the operations of our marketplace, and both could experience delays and additional expense in arranging new facilities. Any interruptions or delays in PMI's performance of its services or in the functioning of and accessibility of our marketplace, whether as a result of Digital Realty Trust or other third-party error, PMI's error, natural disasters or security breaches, whether accidental or willful, could harm PFL's relationships with users and its reputation. Additionally, in the event of damage or interruption, PMI's insurance policies may not be sufficient for PMI to adequately compensate PFL for any losses that it may incur. PMI's disaster recovery plan has not been tested under actual disaster conditions, and PMI may not have sufficient capacity to recover all data and services in the event of an outage at the Digital Realty Trust facility. These factors could prevent PMI from processing or posting payments on the Borrower Loans or the Notes, damage PFL's brand and reputation, divert the attention of PMI's employees, reduce PFL's revenue, subject PMI or PFL to liability and cause users to abandon our marketplace, any of which could adversely affect our respective businesses, financial condition and results of operations.

	Experian Scorex Plus Score
Prosper Score	600-619	620-639	640-649	650-664	665-689	690-701	702-723	724-747	748-777	778+
1	24.90%	24.90%	24.90%	24.90%	24.90%	24.90%	24.90%	24.90%	16.50%	16.50%
2	24.90%	24.90%	24.90%	19.90%	19.90%	16.50%	16.50%	16.50%	16.50%	16.50%
3	24.90%	24.90%	24.90%	19.90%	19.90%	16.50%	16.50%	16.50%	16.50%	16.50%
4	19.90%	19.90%	19.90%	19.90%	16.50%	16.50%	16.50%	16.50%	16.50%	16.50%
5	19.90%	19.90%	19.90%	19.90%	16.50%	16.50%	16.50%	11.90%	11.90%	11.90%
6	19.90%	19.90%	19.90%	14.70%	14.70%	11.90%	11.90%	8.90%	8.90%	8.90%
7	19.90%	19.90%	19.90%	8.90%	8.90%	8.90%	8.90%	8.90%	8.90%	8.90%
8	14.70%	14.70%	14.70%	5.65%	5.65%	5.65%	5.65%	5.65%	5.65%	3.30%
9	14.70%	14.70%	14.70%	5.65%	5.65%	5.65%	5.65%	3.30%	3.30%	3.30%
10	14.70%	14.70%	14.70%	5.65%	5.65%	5.65%	5.65%	3.30%	3.30%	1.00%

Our marketplace may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions.

WeOur ~~can~~marketplace ~~make~~may ~~adjustments~~be vulnerable to ~~the~~computer ~~base~~viruses, ~~loss~~physical ~~rate~~or toelectronic ~~determine~~break-ins ~~the~~and ~~final~~similar ~~loss rate~~disruptions. ~~The~~ ~~final~~If ~~loss~~a ~~rate~~"hacker" ~~determines~~were ~~the~~able ~~Prosper~~to ~~Rating. We~~infiltrate ~~currently~~our ~~make~~marketplace, ~~adjustments~~users ifwould be subject to the ~~applicant~~increased ~~has~~risk ~~already~~of ~~been~~fraud aor borrower identity theft and may experience losses on, or delays in the ~~platform~~recoupment ~~and~~of ~~based~~amounts owed on, ~~loan~~a ~~term. The~~fraudulently ~~value~~induced purchase of ~~the~~a ~~adjustments~~Note. ~~are~~Additionally, ~~based~~if ona ~~historical~~hacker ~~PMI~~were ~~data,~~able ~~where~~to ~~available~~access our secure files, ashe ~~well~~or asshe ~~observed~~might ~~industry~~be ~~performance~~able to gain access to users' personal information. ~~Current~~ ~~adjustment~~While ~~variables~~we ~~and~~have ~~their~~taken ~~values~~steps to prevent such activity from affecting our marketplace, if we are: unable to prevent such activity, the value of investors' investment in the Notes could be adversely affected.

	Previous Prosper Loan		Loan Term
Base Loss Rate	Yes	No	1 year	3 year	5 year
0.00 – 1.99%	-0.25%	-	-0.15%	-	-
2.00 – 3.99%	-1.30%	-	0.00%	-	-
4.00 – 5.99%	-3.65%	-	0.00%	-	-
6.00 – 8.99%	-4.70%	-	-0.10%	-	-
9.00 – 11.99%	-4.70%	-	-0.10%	-	-
12.00 – 14.99%	-10.50%	-	-0.10%	-	-
15.00+%	-10.00%	-	-0.45%	-	-

Competition for Prosper's employees is intense, and Prosper may not be able to attract and retain the highly skilled employees it needs to perform under the Administration Agreement.

~~Here~~Competition for highly skilled technical and financial personnel is anextremely ~~example~~intense. ofProsper ~~how~~may ~~the~~not ~~final~~be ~~loss~~able ~~rate~~to hire and retain these personnel at compensation levels consistent with its existing compensation and salary structure. Many of the companies with which Prosper ~~Rating~~competes for aexperienced ~~loan~~employees ~~listing~~have ~~would~~greater resources than Prosper has and may be ~~calculated:~~able to offer more attractive terms of employment.

-In ~~Applicant~~addition, ~~credit~~Prosper ~~bureau~~invests ~~score~~significant =time ~~715~~and expense in training its employees, which increases their value to competitors who may seek to recruit them. If Prosper fails to retain its employees, it could incur significant expenses in hiring and training their replacements and the quality of its services and its ability to serve borrower and investors could diminish, resulting in a material adverse effect on its ability to perform its obligations under the Administration Agreement and, in such event, Prosper's ~~score~~ability =to 9continue to make payments on the Notes could be materially impaired.

-Purchasers ~~Applicant~~of ~~has~~Notes ~~borrowed~~will ~~through~~have ~~the~~no ~~platform~~control ~~before~~over us and will not be able to influence our corporate matters.

Base Loss Rate:		5.65%
Adjustments:
	-Previous Loan:	-3.65%
Final Loss Rate:		2.00%
Prosper Rating:		A

PFL is not offering and will not offer equity interests in its company. Investors who purchase Notes offered through our marketplace will have no equity interest in either of us and no ability to vote on or influence our decisions. As a result, PMI, which owns all of PFL's outstanding equity interests, will continue to have sole control over PFL's governance matters, subject to the presence of PFL's independent directors, whose consent will be required before PFL can take certain extraordinary actions, and subject to the limitations specified in PFL's organizational documents and the Amended and Restated Indenture. See "Information About Prosper Funding LLC" and "Information About Prosper Marketplace, Inc." for more information.

~~Table~~Events ofbeyond ~~Contents~~our control may damage our ability to maintain adequate records, maintain our marketplace or perform the servicing obligations. If such events result in a system failure, investors' ability to receive principal and interest payments on the Notes would be substantially harmed.

~~Calculating~~If ~~Loss~~a ~~Estimates~~catastrophic event resulted in a marketplace outage and physical data loss, PFL's ability (and PMI's ability as servicer under the Administration Agreement) to perform its servicing obligations would be materially and adversely affected. Such events include, but are not limited to, fires, earthquakes, terrorist attacks, natural disasters, computer viruses and telecommunications failures. In addition, PMI is responsible for storing back-up records related to the operation of our marketplace in offsite facilities located in San Francisco, California and Las Vegas, Nevada. If PMI's electronic data storage and back-up data storage system are affected by such events, PFL's ability (and PMI's ability as servicer under the Administration Agreement) to perform its servicing obligations could be materially and adversely affected. In the event of any marketplace outage or physical data loss described in this paragraph, PFL cannot guarantee that investors would be able to recoup their investment in the Notes.

ToPMI ~~calculate~~completed ~~the~~its ~~estimated~~first ~~loss~~two ~~rates~~acquisitions ~~contained~~ in ~~the~~2015, ~~base loss rate table~~ and ~~adjustment~~in ~~values,~~the future PMI ~~developed~~may acontinue ~~loan~~to ~~model~~enter tointo ~~simulate~~acquisitions ~~the~~that ~~future~~may ~~performance~~be ofdifficult ~~loans~~to ~~based~~integrate, onfail ~~past~~to ~~performance~~achieve ~~data. The~~their ~~principal~~strategic ~~elements~~objectives, ofdisrupt ~~the~~our ~~model~~business ~~are~~or asdivert ~~follows:~~management attention.

~~Average~~PMI ~~Balance.~~completed Toits ~~calculate~~first ~~the~~two ~~average~~acquisitions ~~balance~~in ~~for~~2015, ~~each~~and ~~period,~~in the future PMI ~~used~~may ~~the~~continue ~~amount~~to enter into acquisitions of ~~loan~~businesses, ~~principal~~technologies onand ~~loans~~products that ~~are~~it ~~still~~intends ~~open~~to complement its existing business, solutions, services and ~~have~~technologies. ~~not~~PMI ~~been~~cannot ~~charged-off~~provide assurance that the acquisitions it has made or ~~paid~~will ~~off.~~make Asin ~~loan~~the ~~payments~~future will provide it with the benefits or achieve the results anticipated in entering into the transaction. Acquisitions are ~~made~~typically accompanied by a number of risks, including: difficulties assimilating and retaining the ~~principal~~management ~~balance~~and other personnel, culture and operations of ~~each~~the ~~loan~~acquired ~~declines~~businesses; ~~over~~potential ~~time.~~disruption Itof isongoing ~~assumed~~business ~~that~~and ~~borrowers~~distraction ~~that~~of ~~are~~management; ~~making~~difficulties ~~scheduled~~in ~~payments~~maintaining onacceptable ~~these~~standards, ~~loans~~controls, doprocedures soand ~~according~~policies, including integrating financial reporting and operating systems, particularly with respect to ~~their~~foreign ~~amortization~~and/or ~~schedule~~public subsidiaries; potential loss of existing or acquired strategic operating partners, users and customers following an acquisition; difficulties in integrating acquired technologies and products into our solutions and services; and unexpected costs and expenses resulting from the acquisition, and potential unknown liabilities associated with acquired businesses.

~~When~~In ~~the loan is paid off early~~addition, itacquisitions ismay noresult ~~longer included~~ in the ~~outstanding~~incurrence ~~balance~~of ~~for~~debt, ~~subsequent~~acquisition-related ~~periods.~~costs ~~Historical~~and ~~payoff~~expenses, ~~rates~~restructuring ~~were~~charges ~~used to project the monthly payoffs~~ and ~~these~~write-offs. ~~rates~~Acquisitions ~~were~~may ~~assumed~~also toresult ~~remain~~in ~~constant~~goodwill ~~throughout~~and ~~the~~other ~~life~~intangible ofassets ~~the~~that ~~loans.~~are ~~Similarly,~~subject ~~once~~to aimpairment ~~loan has been charged-off~~tests, ~~the~~which ~~principal~~could ~~associated~~result ~~with this loan is considered a credit loss and is no longer included~~ in ~~the~~future ~~outstanding~~impairment ~~periodic balance~~charges.

~~Delinquent~~PMI ~~and~~may ~~Charged-Off~~enter ~~Loans. To~~into ~~estimate~~negotiations ~~the~~for ~~number~~acquisitions ofthat ~~current~~are ~~and~~not ~~delinquent~~ultimately ~~accounts on a monthly basis, PMI applied roll rates to each group of given loans~~consummated. ~~PMI~~Those ~~first~~negotiations ~~calculated~~could ~~the~~result ~~historical~~in ~~roll~~diversion ~~rates~~ of ~~accounts~~management intime ~~particular cells~~ and ~~then~~significant ~~applied~~out-of-pocket ~~the historical rate to the given loans~~costs. AIf ~~roll~~PMI ~~rate~~fails ~~measures the percent of loans within a particular payment status that “roll”~~ to ~~the~~evaluate ~~next~~and ~~late~~execute ~~payment~~acquisitions ~~status if the loan is not paid. For example~~successfully, aPMI ~~current~~may ~~account that is~~ not ~~paid~~be ~~“rolls”~~able to aachieve ~~new~~its ~~payment~~anticipated ~~status~~level ~~defined~~of asgrowth 1and toits 30business ~~days past due. Similarly, an account that is already 1 to 30 days past due~~ and ~~does~~operating ~~not~~results ~~make~~could ~~the next payment then “rolls” to a status of 31 to 60 days past due. An account is considered to~~ be aadversely ~~loss, or charged-off, when it reaches 121+ days past due~~affected. ~~The average historical roll rates were assumed to be constant for the life of the loan term.~~

Loss Rates. The estimated monthly dollar charge-offs are calculated by multiplying the estimated number of accounts that reach 121+ days past due in that month by the average balance of loans in that month.

Collection expenses and recovery payments are applied to gross losses to calculate net losses. When an account becomes more than 30 days past due, it is referred to a collection agency. Collection agencies are compensated by keeping a portion of the payments they collect based on a predetermined schedule. Payments collected by the collection agency reduce the amount of principal that is repaid to lenders. This expense is added to losses in the month the payment is made.

In addition, once an account has been charged-off, any subsequent payments received or proceeds from the sale of the loan in a debt sale are considered recoveries and reduce the amount of principal lost. Recovery assumptions are based on historical recoveries through November 2009 on accounts that were 121+ days past due in 2008. The recovery rate assumptions were:

· Prosper Rating AA-D = 6.0% annual recovery rate

· Prosper Rating E-HR = 2.0% annual recovery rate

To calculate the estimated average annualized net loss rate:

	1.	Calculate monthly net loss rate = (Net principal charge-offs in month X) / (Outstanding principal balance in month X)
	2.	Calculate average annualized net loss rate:

· monthly net loss rate x 12

· balance-weighted average of the monthly rates over the life of the loan

For each group of loans, the average loan amount for charged-off accounts was compared to that for total loans; if there was a significant difference, the ratio of average charged-off loan amount to average total loan amount was applied to the expected loss rate to account for this differential. Estimated loss rates determine the Prosper Rating.

~~Table~~RISKS ofRELATING ~~Contents~~TO COMPLIANCE AND REGULATION

~~Comparing~~Our ~~Estimated~~marketplace ~~Loss~~represents ~~Rates~~a novel approach to ~~Actual~~borrowing ~~Losses~~and investing that may fail to comply with federal and state securities laws, borrower protection laws, such as state lending laws, federal consumer protection laws and the state counterparts to such consumer protection laws. Borrowers may dispute the enforceability of their obligations under borrower or consumer protection laws after collection actions have commenced, or otherwise seek damages under these laws. Investors may attempt to rescind their Note purchases under securities laws. Regulatory agencies and their state counterparts may investigate our compliance, or the compliance of our business partners, with these regulatory obligations, and may take enforcement action with respect to alleged law violations. Compliance with such regulatory regimes is also costly and burdensome.

WeOur ~~review~~marketplace ~~our~~represents ~~loan performance on~~ a ~~monthly~~novel ~~basis~~program tothat ~~see~~must ~~how~~comply ~~our~~with ~~loss~~regulatory ~~estimates~~regimes ~~compare~~applicable to ~~the~~consumer ~~actual~~credit ~~performance~~transactions ofas ~~our~~well ~~loans,~~as ~~and~~with weregulatory ~~make~~regimes ~~any~~applicable ~~adjustments~~ to ~~those~~securities ~~estimates we deem necessary based on such reviews~~transactions. The ~~graphs~~novelty ~~below~~of ~~show~~our ~~the~~marketplace ~~expected~~means ~~versus~~compliance ~~actual~~with ~~cumulative~~various ~~dollar~~aspects ~~loss rates by Prosper Rating for PMI Borrower Loans booked from July 13, 2009 through September 30, 2010. Performance is as~~ of ~~September~~such ~~30,~~laws ~~2011. The loss performance~~ is ~~tracked by quarterly vintage, meaning each line represents all the loans originated in a given quarter~~untested. We ~~have~~Certain ~~only~~state ~~included~~laws ~~quarterly~~generally ~~vintages~~regulate ~~where~~interest ~~all~~rates ~~PMI~~and ~~Borrower~~other ~~Loans~~charges ~~originated~~and ~~during~~require ~~that~~certain ~~quarter have been outstanding at least 10 months~~disclosures, toand ~~ensure~~also ~~that~~require ~~all~~licensing offor ~~the~~certain ~~loans included are adequately seasoned~~activities. In addition, weother ~~only~~state ~~include~~laws, ~~data~~public ~~for~~policy aand ~~point~~general ~~along~~principles ~~the~~of xequity ~~axis~~relating ifto ~~at least 70% of~~ the ~~amount~~protection ~~originated in that vintage has been outstanding for at least that number~~ of ~~cycles. For example~~consumers, inunfair ~~our~~and ~~graph~~deceptive ~~for~~practices AAand ~~PMI~~debt ~~Borrower~~collection ~~Loans~~practices ~~funded~~may ~~during~~apply Q3to ~~2009, 70% or more of~~ the ~~original amount borrowed in that vintage has been outstanding for 24 cycles~~origination, ~~but~~servicing ~~less~~and ~~than~~collection ~~70%~~ of ~~the~~Borrower ~~original~~Loans ~~amount~~in ~~borrowed~~our ~~has~~marketplace. ~~been~~Our ~~outstanding~~marketplace ~~for~~is 25also orsubject ~~more~~to ~~cycles.~~other Solaws, ~~that~~such ~~graph includes a data point for cycle 24 but not for cycle 25.~~as:

~~Quarterly~~• ~~vintages generally contain enough volume for their performance curves to be meaningful, but there are exceptions. For example,~~ the ~~volume~~federal ~~of PMI Borrower Loans originated~~ Truth-in-Lending ~~the~~Act ~~3rd quarter of 2009 was relatively low because the platform was closed during the first few weeks of the quarter,~~ and ~~also~~Regulation ~~because~~Z ~~the platform~~promulgated reopened during the quarter after having been shut down for almost nine months. And during the 4th quarter of 2010 only 31 PMI Borrower Loans were originated on the platform with a C Prosper Rating. For such vintagesthereunder, awhich ~~few~~require ~~loans~~certain ~~charging-off,~~disclosures ~~or even a single charge-off, can result in actual losses for that vintage being well above estimates. Therefore, we look at quarterly vintages individually as well as in aggregate~~ to ~~get~~borrowers aregarding ~~more~~the ~~complete~~terms ~~picture~~ of ~~loan~~their ~~performance.~~loans;

~~Note:~~• ~~Expectation~~the ~~line~~federal ~~reflects~~Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit discrimination in the ~~weighted~~extension ~~average~~of ~~expected~~credit ~~loss~~on ~~rate~~the ~~across~~basis ~~all~~of ~~vintages~~age, atrace, color, sex, religion, marital status, national origin, receipt of public assistance or the ~~time~~exercise of ~~origination~~any right under the Consumer Credit Protection Act;


•	the federal Fair Credit Reporting Act, which regulates the use, reporting and disclosure of information related to each applicant's credit history;


•	the federal Fair Debt Collection Practices Act, which regulates debt collection practices by "debt collectors" and prohibits debt collectors from engaging in certain practices in collecting, and attempting to collect, outstanding consumer loans;


•	state counterparts to the above consumer protection laws;


•	state and federal securities laws, which require that any non-exempt offers and sales of the Notes be registered;


•	Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service;

•

the federal Gramm-Leach-Bliley Act, which includes limitations on financial institutions' disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and nonaffiliated entities as well as to safeguard personal customer information, and other privacy laws and regulations;


•	the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection;


•	the federal Servicemembers Civil Relief Act, which allows military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties;


•	the federal Military Lending Act, which provides specific protections for active duty service members and their dependents (or covered borrowers) in consumer credit transactions;


•	the federal Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines and restrictions on the electronic transfer of funds from consumers' bank accounts;


•	the federal Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures; and

~~Table~~• ofthe ~~Contents~~federal Bank Secrecy Act, which relates to compliance with anti-money laundering, customer due diligence and record-keeping policies and procedures.

We may not always be in compliance with these laws. Borrowers may make counterclaims regarding the enforceability of their obligations under borrower or consumer protection laws after collection actions have commenced, or otherwise seek damages under these laws. Investors may attempt to rescind their Note purchases under securities laws, and PFL or PMI's failure to comply with such laws could also result in civil or criminal liability. Compliance with these requirements is also costly, time-consuming and limits operational flexibility.

The Consumer Financial Protection Bureau is a new agency, and there continues to be uncertainty as to how the agency's actions or the actions of any other new agency could impact our business or that of our issuing bank.

The Consumer Financial Protection Bureau ("CFPB"), which commenced operations in July 2011, has broad authority over the businesses in which we engage. This includes authority to write regulations under federal consumer financial protection laws, such as the Truth in Lending Act and the Equal Credit Opportunity Act, and to enforce those laws against and examine large financial institutions for compliance. The CFPB is authorized to prevent "unfair, deceptive or abusive acts or practices" through its regulatory, supervisory and enforcement authority. To assist in its enforcement, the CFPB maintains an online complaint system that allows consumers to log complaints with respect to various consumer finance products, including the loan products we facilitate. This system could inform future CFPB decisions with respect to its regulatory, enforcement or examination focus.

We are subject to the CFPB's jurisdiction, including its enforcement authority. The CFPB may therefore request reports concerning our organization, business conduct, markets and activities. In addition, the CFPB may conduct on-site examinations of our business on a periodic basis if the CFPB were to determine, based on, for example, consumer complaints, judicial opinions, or administrative decisions, that we are engaging in activities that pose risks to consumers. In addition, the CFPB has announced that it plans to make a rule for the direct supervision of nonbank installment lenders, which may permit the CFPB to conduct periodic examinations of our business.

There continues to be uncertainty as to how the CFPB's strategies and priorities, including in both its examination and enforcement processes, will impact our businesses and our results of operations going forward. Actions by the CFPB could result in requirements to alter or cease offering affected loan products and services, making them less attractive and restricting our ability to offer them.

Although we have committed resources to enhancing our compliance programs, actions by the CFPB or other regulators against us, our issuing bank or our competitors that discourage the use of the marketplace model or suggest to consumers the desirability of other loan products or services could result in reputational harm and a loss of borrowers or investors. Our compliance costs and litigation exposure could increase materially if the CFPB or other regulators enact new regulations, change regulations that were previously adopted, modify, through supervision or enforcement, past regulatory guidance, or interpret existing regulations in a manner different or stricter than have been previously interpreted.

Noncompliance with laws and regulations may impair our ability to facilitate the origination of or service Borrower Loans.

Generally, failure to comply with applicable laws and regulatory requirements may, among other things, limit our or a third party collection agency's ability to collect all or part of the principal amount of or interest on the Borrower Loans on which the Notes are dependent for payment. In addition, non-compliance could subject us to damages, revocation of required licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm PFL's business and ability to maintain our marketplace and may result in borrowers rescinding their Borrower Loans.

Where applicable, we seek to comply with state lending, servicing and similar statutes. In all U.S. jurisdictions with licensing or other requirements that we believe may be applicable to our marketplace, we have obtained any necessary licenses or comply with the relevant requirements. Nevertheless, if we are found to not comply with applicable laws, we could lose one or more of our licenses or face other sanctions, which may have an adverse effect on our ability to continue to facilitate the origination of Borrower Loans through our marketplace, and on our ability to perform servicing obligations or make our marketplace available to borrowers in particular states, which may impair investors' ability to receive the payments of principal and interest on the Notes that they expect to receive.

~~Table~~If ofour ~~Contents~~marketplace was found to violate a state's usury laws, we may have to alter our business model and our business could be harmed.

If our marketplace was found to violate a state's usury laws, we may have to alter our business model and our business could be harmed. The interest rates that are charged to borrowers and that form the basis of payments to investors through our marketplace are based upon the ability under federal law of the issuing bank that originates the loan to export the interest rates of the state where it is located and on Prosper’s ability to assist the bank in arranging such loans. WebBank, the bank that issues loans through our marketplace, exports the interest rates of Utah, which allows parties to generally agree by contract to any interest rate. The interest rates offered by WebBank through our marketplace for Borrower Loans as of March 31, 2018 range from 5.31% to 32.32%, which equate to interest rates for Note investors that range from 4.31% to 31.32%. Some states where borrowers are located, including Utah, have no statutory interest rate limitations on personal loans, while other jurisdictions have a maximum rate less than the current maximum rate offered by WebBank through our marketplace. If a borrower were to successfully bring claims against us for state usury or other state law violations, we could be subject to fines and penalties. Further, if the current structure under which WebBank makes loans through our marketplace were successfully challenged, we may have to substantially modify our business operations and may be required to maintain state-specific licenses and only provide a limited range of interest rates for Borrower Loans, all of which may substantially reduce our operating efficiency and attractiveness to investors and possibly result in a decline in our operating results. Recent litigation has successfully challenged lending arrangements in which banks or other exempt entities make loans and sell those loans to a third party charged with servicing the loans.

In addition, it is possible that state usury laws may impose liability that could affect an assignee's (i.e., PFL's and/or an investor who purchases Borrower Loans from PFL) ability to continue to charge to borrowers the interest rates that they agreed to pay at origination of their Borrower Loans.

In May 2015, the U.S. Court of Appeals for the Second Circuit issued a decision in Madden v. Midland Funding, LLC that interpreted the scope of federal preemption under the National Bank Act (“NBA”) and held that a nonbank assignee of a loan originated by a national bank was not entitled to the benefits of federal preemption of claims of usury. On November 10, 2015, the defendant in the Madden case filed a petition for a writ of certiorari with the United States Supreme Court for further review of the Second Circuit’s decision. On June 27, 2016, the United States Supreme Court denied the petition and refused to review the case, leaving the decision of the Second Circuit intact and binding on federal courts in Connecticut, New York and Vermont. The Madden decision has created some uncertainty as to whether non-bank entities purchasing loans originated by a bank may rely on federal preemption of state usury laws, and may create an increased risk of litigation by plaintiffs challenging our ability to collect interest in accordance with the terms of Borrower Loans. While the decision specifically addressed preemption under the National Bank Act, it could support future challenges to federal preemption for other institutions, including an FDIC-insured, state chartered industrial bank like WebBank. However, although there can be no assurances as to the outcome of any potential litigation, or the possible impact of the litigation on our marketplace, we believe the Madden case addressed facts that are not presented by our marketplace lending platform and thus would not apply to Borrower Loans.

More recently, in January 2017, the Administrator of the Colorado Uniform Consumer Credit Code filed suits against online loan platforms Marlette Funding, LLC and Avant, Inc. The Administrator claims that loans to Colorado residents facilitated through these platforms were required to comply with Colorado laws regarding interest rates and fees, and that such laws were not preempted by the federal laws that apply to loans originated by Cross River Bank and WebBank, the federally regulated issuing banks that originate loans through the platforms operated by Marlette and Avant, respectively. In response to the Colorado regulator's lawsuits, Cross River Bank and WebBank have each filed its own lawsuit against the Administrator seeking declaratory relief that the loans originated by the bank are subject to federal requirements that pre-empt Colorado state requirements. We are currently in discussions with Colorado Department of Law regarding the terms of the loans offered to Colorado residents. However, no assurance can be provided as to the timing or outcome of these matters.

We and our counsel are monitoring these matters closely and, as developments warrant, we will consider any necessary changes to our marketplace required to avoid the impact of these cases on our business model. Because of investor demand, the maximum APRs offered through our marketplace may be lower in some states than others.

~~Table~~We ofrely ~~Contents~~on agreements with WebBank, pursuant to which WebBank originates loans to qualified borrowers on a uniform basis throughout the United States and sells and assigns those loans to PFL. If our relationships with WebBank were to end, we may need to rely on individual state lending licenses to originate Borrower Loans.

Borrower Loan requests take the form of an application to WebBank submitted through our marketplace. WebBank currently makes all loans to borrowers through our marketplace, which allows our marketplace to be available to borrowers on a uniform basis throughout the United States. If our relationships with WebBank were to end or if WebBank were to cease operations, one or both of us may need to rely on individual state lending licenses to originate Borrower Loans. Because neither of us currently possesses all required licenses to lend in every state, we might be forced to limit the rates of interest charged on Borrower Loans in some states and we might not be able to originate loans in some states altogether. We also may face increased costs and compliance burdens if the agreements with WebBank are terminated.

Several lawsuits have sought to recharacterize certain loan marketers and other originators as lenders. If litigation or a regulatory enforcement action on similar theories were successful against one or both of us, Borrower Loans originated through our marketplace could be subject to state consumer protection laws and licensing requirements in a greater number of states.

Several lawsuits in the lending industry primarily involving high-interest “payday loan” marketers have brought under scrutiny the association between those firms and out-of-state banks. These lawsuits assert the loan marketers use out-of-state lenders in order to evade the consumer protection laws imposed by the states where they do business. Such litigation has sought to re-characterize the loan marketer as the lender for purposes of state consumer protection law and usury restrictions. Similar civil actions have been brought in the context of gift cards and retail purchase finance. Although we believe that our activities are generally distinguishable from the activities involved in these cases, a court or regulatory authority could disagree.

Additional state consumer protection laws would be applicable to the Borrower Loans facilitated through our marketplace if one or both of us were re-characterized as a lender, and the Borrower Loans could be voidable or unenforceable. In addition, we could be subject to claims by borrowers, as well as enforcement actions by regulators. Even if we were not required to cease doing business with residents of certain states or to change our business practices to comply with applicable laws and regulations, we could be required to register or obtain licenses or regulatory approvals that could impose a substantial cost on us.

As Internet commerce develops, federal and state governments may draft and propose new laws to regulate Internet commerce, which may negatively affect our businesses.

As Internet commerce continues to evolve, increasing regulation by federal and state governments becomes more likely. Our businesses could be negatively affected by the application of existing laws and regulations or the enactment of new laws applicable to marketplace lending. The cost to comply with such laws or regulations could be significant and would increase our operating expenses, and we may be unable to pass along those costs to our users in the form of increased fees. In addition, federal and state governmental or regulatory agencies may decide to impose taxes on services provided over the Internet. These taxes could discourage the use of the Internet as a means of consumer lending, which would adversely affect the viability of our marketplace.

If one or both of us is required to register under the Investment Company Act, either of our ability to conduct business could be materially adversely affected.

The Investment Company Act of 1940, or the "Investment Company Act," contains substantive legal requirements that regulate the manner in which "investment companies" are permitted to conduct their business activities. PFL and PMI believe each has conducted its business in a manner that does not result in being characterized as an investment company. If, however, PFL is deemed to be an investment company under the Investment Company Act, it may be required to institute burdensome compliance requirements and its activities may be restricted, which would materially adversely affect its business, financial condition and results of operations. Any determination that PMI is an investment company under the Investment Company Act similarly could impair its ability to perform its obligations under the Administration Agreement and thereby impair PFL's ability to make payments on the Notes. If PFL or PMI were deemed to be an investment company, PFL or PMI may also attempt to seek exemptive relief from the SEC, which could impose significant costs and delays on their businesses.

~~Table~~If one or both of ~~Contents~~us is required to register under the Investment Advisers Act, either of our ability to conduct business could be materially adversely affected.

~~Note:~~The ~~Expectation~~Investment ~~lines~~Advisers ~~represent~~Act of 1940, or the ~~high~~"Investment ~~end~~Advisers ofAct," contains substantive legal requirements that regulate the ~~estimated~~manner ~~loss~~in ~~rate~~which ~~range~~"investment advisers" are permitted to conduct their business activities. PFL believes that its business consists of providing a platform for ~~each~~marketplace ~~Prosper~~lending ~~Rating~~for which investment adviser registration and regulation do not apply under applicable federal or state law, ~~except~~and does not believe that it is required to register as an investment adviser with either the SEC or any of the various states. The SEC or a state securities regulator could reach a different conclusion, however. Registration as an investment adviser could adversely affect PFL's method of operation and revenues. For example, the Investment Advisers Act requires that an investment adviser act in a fiduciary capacity for HRits clients. Among other things, ~~where~~this fiduciary obligation requires that an investment adviser manage a client's portfolio in the ~~high~~best ~~end~~interests of the ~~range~~client, ishave ~~100%~~a reasonable basis for its recommendations, fully disclose to its client any material conflicts of interest that may affect its conduct and weseek ~~have~~best ~~set~~execution for transactions undertaken on behalf of its client. It could be difficult for PFL to comply with this obligation without meaningful changes to its business operations, and there is no guarantee that it could do so successfully. If PFL were ever deemed to be in non-compliance with applicable investment adviser regulations, it could be subject to various penalties, including administrative or judicial proceedings that might result in censure, fine, civil penalties (including treble damages in the ~~expectation~~case ~~curve~~of atinsider ~~20%~~trading violations), the issuance of cease-and-desist orders or other adverse consequences. Similarly, any determination by regulators that PMI must register as an investment adviser could materially adversely affect PMI and impair its ability to continue to administer our marketplace on PFL's behalf.

InPMI's ~~aggregate,~~administration ~~all~~of ~~quarterly~~Quick ~~vintages~~Invest ~~are~~under ~~coming~~its inprevious ~~below~~offering ~~the~~and ~~expected~~PFL’s ~~loss~~administration ~~rates. Loss rates for some~~ of ~~the~~Quick ~~2009~~Invest, ~~vintages~~Recurring ~~have~~Investment, ~~been~~and ~~higher~~Auto ~~than~~Invest ~~expected~~under ~~for~~its ~~the~~current ~~lower risk Prosper Ratings~~offering, ~~AA-C,~~could ~~but~~create ~~subsequent~~additional ~~vintages~~liability ~~have~~for ~~generally~~PFL ~~been~~and atsuch orliability ~~below~~could ~~expectations. The~~be ~~higher risk Prosper Ratings, D-HR, have consistently performed at or better than expectations~~material.

WeQuick ~~review~~Invest ~~our~~was ~~actual~~a ~~losses~~loan onsearch atool ~~monthly~~that ~~basis~~allowed ~~and~~investors ~~analyze~~to ~~any~~identify ~~material~~Notes ~~variances~~that ~~from~~meet ~~our~~their ~~estimates~~investment criteria. To ~~the~~An ~~extent~~investor weusing ~~conclude~~Quick ~~that~~Invest ~~any~~was ~~such~~asked ~~variance~~to ~~seems~~indicate ~~likely~~(i) the Prosper Rating or Ratings he or she wished to ~~continue~~use as search criteria, we(ii) ~~adjust~~the ~~our~~total ~~loss~~amount ~~estimates~~he ~~accordingly. For~~or ~~example~~she wished to invest, ~~based~~and on(iii) the ~~continuing~~amount ~~exceptional~~he ~~risk~~or ~~performance~~she ofwished ~~repeat~~to ~~borrowers,~~invest weper ~~made~~Note. ~~adjustments~~Quick inInvest ~~April~~then ~~2011~~compiled toa ~~reduce~~basket ~~expected~~of ~~loss~~Notes ~~rates~~for onhis ~~repeat~~or ~~borrowers~~her consideration that met his or her search criteria.

~~Please~~Recurring ~~note~~Investment (formerly known as Auto Quick Invest) is an automated loan search tool that allows investors to easily invest in Notes that meet their specific investment criteria by automatically bidding any available funds in their account on Notes that match their selected parameters, in accordance with their specified instructions. An investor using Recurring Investment is asked to indicate (i) the ~~historical~~Prosper ~~performance~~Rating or Ratings he or she wishes to use as search criteria, and (ii) the amount he or she wishes to invest per Note. If he or she wishes, the investor can further customize his or her investment criteria by applying one or more of ~~PMI~~several ~~Borrower~~dozen ~~Loans~~additional ~~may~~search criteria, such as loan amount, debt-to-income ratio and credit score. The investor can also set aside a specific amount of his or her funds as a cash reserve that will not be ~~indicative~~invested ofby the ~~future~~Recurring ~~performance~~Investment oftool. After ~~our~~the ~~borrower~~investor ~~loans. See~~has ~~“Risk~~entered ~~Factors—Prosper~~and ~~Funding~~saved ~~LLC~~the parameters of his or her search, Recurring Investment automatically (i) runs searches on their designated criteria as new listings are posted on the ~~Platform~~marketplace, and ~~Our~~(ii) ~~Ability~~places tobids ~~Service~~on ~~the~~any Notes” ~~for~~identified by each such search. For more information about the Recurring Investment tool and how it works, see "About the Marketplace-How to Bid to Purchase Notes-Recurring Investment."

~~Criteria~~Auto Invest is an automated loan search tool that makes it easier for ~~Applying~~investors to build their desired portfolio of Notes by automatically investing any available funds in an investor’s account in Notes that match the investor’s specified investment criteria and allocation targets. An investor using Auto Invest is asked to select (i) a ~~Second~~loan ~~Loan~~allocation target, or a target mix of loans based on Prosper Ratings, and (ii) the amount he or she wishes to invest per Note. The investor has the option of selecting a target from Prosper’s series of preset loan allocations based on the recent historical loan inventory on the marketplace, any of which may be customized by changing the individual allocation targets for each Prosper Rating, or he or she can create a custom loan allocation target across Prosper Ratings based on his or her specific risk tolerance. If he or she wishes, the investor can further customize his or her investment criteria by applying additional filters, such as loan term and employment status. The investor can also set aside a percentage of his or her portfolio as a cash reserve that will not be invested by Auto Invest. Investors may update their target allocations, cash reserve and other investment criteria, and pause and restart Auto Invest, at any time. Once the investor turns on Auto Invest, the tool may immediately begin placing orders for Notes in accordance with the investor’s current and target allocations and other criteria. The mix of Notes in any particular order may not match the investor’s individual loan allocation targets, but over time Auto Invest will place orders so that the aggregate holdings in the investor’s portfolio will approximate, to the extent possible, the allocation specified in his or her investment criteria. For more information about the Auto Invest tool and how it works, see "About the Marketplace-How to Bid to Purchase Notes-Auto Invest."

Borrowers may have up to two loans outstanding at any one time, provided that the aggregate outstanding principal balance of both borrower loans does not exceed the then-current maximum allowable loan amount for borrower loans (currently $25,000). We treat any outstanding PMI Borrower Loan as a "loan" for purposes of this two loan limit. Currently, to be eligible to obtain a second borrower loan while an existing loan is outstanding:

·Borrowers must be current on their existing borrower loan, and must not have been more than 30 days past due in making their most recent monthly borrower loan payments for a specified number of months (between six and twelve, depending on the borrower’s credit score range at time the existing loan was obtained);

·Borrowers may not post a listing for a second borrower loan within six to twelve months (depending on the borrower’s credit score range at time the existing loan was obtained) following the date of origination of their existing borrower loan; and

·Borrower’s credit score must be 600 or more.

Underwriting requirements for borrower loans, including eligibility requirements for second loans, are subject to change from time to time.

~~Table~~Since the Notes purchased through Recurring Investment, Auto Invest and Quick Invest are the same as Notes purchased manually, they present the same risks of ~~Contents~~non-payment as all Notes that may be purchased through our marketplace. For example, there is a risk that a Borrower Loan identified through Recurring Investment, Auto Invest or Quick Invest may become delinquent or default, and the estimated return and estimated loss for that loan individually, or the estimated loss or return for the allocation target or the order or basket of Notes selected by Recurring Investment, Auto Invest or Quick Invest as a whole, may not accurately reflect the actual return or loss on such loan. If this were to occur, an investor who purchased a Note from PFL through Recurring Investment, Auto Invest or Quick Invest could pursue a claim against PFL in connection with its representations regarding the performance of the Borrower Loans bid upon through Recurring Investment, Auto Invest or Quick Invest, respectively. An investor could pursue such a claim under various anti-fraud theories under federal and state securities law.

~~Maximum~~We ~~Loan~~may ~~Amount~~face liability under state and federal securities law for statements in this Prospectus and in other communications that could be deemed to be an offer to the extent that such statements are deemed to be false or misleading.

~~The~~Loan ~~maximum~~listings ~~loan~~and ~~amount~~other ~~for~~borrower ainformation available on PFL's website as well as in sales and listing isreports ~~determined~~are bystatements made in connection with the ~~applicant’s~~purchase ~~Prosper~~and ~~Rating~~sale of securities that are subject to the antifraud provisions of the Exchange Act and the Securities Act. ~~The~~ ~~table~~In ~~below~~general, ~~shows~~these liability provisions provide a purchaser of the ~~maximum~~Notes ~~loan~~with ~~amount~~a right to bring a claim against one or both of us for ~~each~~damages ~~Prosper~~arising ~~Rating:~~from any untrue statement of material fact or failure to state a material fact necessary to make any statements made not misleading. Even though PFL and PMI have advised investors of what they believe to be the material risks associated with an investment in the Notes and PMI management rights, the SEC or a court could determine that they have not advised investors of all of the material facts regarding an investment in the Notes and PMI Management Rights, which could give investors the right to rescind their investment and obtain damages, and could subject PFL and PMI to civil fines or criminal penalties in addition to any such rescission rights or damages.

Prosper Rating	Maximum Loan Amount
AA	$	25,000
A		25,000
B		15,000
C		15,000
D		15,000
E		4,000
HR	$	4,000

PMI and PFL's activities in connection with the offer and sale of securities through our marketplace could result in potential violations of federal securities law and result in material liability to PFL and/or PMI.

~~Borrower~~PFL ~~Identity~~and PMI's respective businesses are subject to federal and ~~Financial~~state ~~Information~~securities ~~Verification~~laws that may limit the kinds of activities in which PFL and PMI may engage and the manner in which they engage in such activities. For example, changes to the manner in which PFL offers and sells Notes or other securities through our marketplace could be viewed by the SEC or a state securities regulator as involving the creation or sale of new, unregistered securities. In such circumstances, the failure to register such securities could subject PFL to liability and the amount of such liability could be meaningful. In addition, PMI previously entered into a settlement with the SEC and consented to the entry of a Cease and Desist order that requires PMI to cease and desist from committing or causing any violations or any future violations of the securities laws. Failure to comply with that order could result in material civil or criminal liability, which could materially adversely affect PMI's business and PFL's offering of Notes.

WeRATIO ~~reserve~~OF ~~the~~EARNINGS ~~right~~TO inFIXED our member agreements to verify the accuracy of all statements and information provided by borrower members and lender members in connection with listings, commitments and borrower loans. We may conduct our review at any time before, during or after the posting of a listing, or before or after the funding of a borrower loan. If we are unable to verify material information with respect to an applicant or listing, we will cancel or refuse to post the listing or cancel any or all commitments against the listing. We may also delay funding of a borrower loan in order to verify the accuracy of information provided by an applicant in connection with the listing, or to determine whether there are any irregularities with respect to the listing. If we identify material misstatements or inaccuracies in the listing or in other information provided by the applicant, we will cancel the listing or related loan.CHARGES

WeThe ~~verify~~following ~~the~~table ~~identity~~sets offorth ~~every~~our ~~borrower~~consolidated ~~who~~ratio ~~obtains a loan through the platform using a combination~~ of ~~documentary~~earnings ~~and~~to ~~non-documentary~~fixed ~~methods.~~charges Wefor ~~ask~~ each ~~applicant to submit a copy~~ of ~~her~~the ~~current~~periods ~~driver’s license, passport or other government-issued, photo identification card, which we authenticate using third-party reference materials~~indicated. In ~~addition,~~You weshould ~~compare~~read ~~the~~these ~~information~~ratios ~~contained~~ in ~~the~~connection ~~applicant’s credit report~~ with ~~the~~our ~~information~~consolidated ~~contained~~financial ~~in the application. We also run the applicant’s application information through a fraud database. Finally, we require the applicant to submit bank~~ statements, ~~cancelled~~included checks or other documentary evidence to verify the accuracy of her bank account information. To the extent any of these processes identify inconsistencies between the information submitted by the applicant and the information contained in ~~another~~Exhibit ~~data source, we require the applicant to submit documentation to resolve the discrepancy to our satisfaction~~99. ~~For~~1 ~~example, we might require the applicant~~ to ~~submit a recent utility bill to reconcile a discrepancy between~~ the ~~current~~Registration ~~address~~Statement ~~listed in her application and the one listed in her credit report. For the small number~~ of ~~applicants~~which ~~who~~this doprospectus ~~not~~is ~~have~~ a ~~current,~~part ~~government-issued photo identification card, we may rely on the other screening processes described above to verify their identity. But we obtain~~ and ~~authenticate~~incorporated ~~photo~~by ~~identification~~reference ~~from the great majority of applicants, and perform the other processes described above for all borrowers~~herein. ~~If we are unable to verify the identity of an applicant in the manner described above, we will cancel the applicant’s listing or pending loan.~~

In addition to the identity verification processes just described, we verify income and employment information for a subset of applicants based on a proprietary algorithm. The intention of this algorithm is to identify instances where the applicant’s self-reported income is highly determinative of the applicant’s Prosper Rating. The algorithm gives greatest weight to the following factors:

·Prosper Rating;

·loan amount;

·stated income; and

·debt-to-income ratio.

Table of Contents



	Quarter Ended March 31,
	2018		2017		2016		2015		2014
	(dollar amounts in thousands)
Fixed Charges
Interest expense	(10,729	)	(10,678	)	(9,722	)	(9,563	)	(9,422	)
Total fixed charges	(10,729	)	(10,678	)	(9,722	)	(9,563	)	(9,422	)
Earnings
Net Income (loss) before income taxes	(11,391	)	(23,857	)	(17,299	)	(7,203	)	(2,718	)
Add:
Fixed charges	(10,729	)	(10,678	)	(9,722	)	(9,563	)	(9,422	)
Total adjusted earnings	(662	)	(13,179	)	(7,577	)	2,360		6,704
Ratio of earnings to fixed charges (1)	—		—		—		0.2x		0.7x

To(1) ~~verify~~Our anearnings ~~applicant’s~~were ~~income,~~insufficient ~~we require the applicant~~ to ~~submit~~cover afixed ~~paystub~~charges ~~from~~by ~~within~~$0.7 ~~the~~million ~~last thirty days~~ and ~~a W-~~$13.2 ormillion ~~Form~~for ~~1099 from~~ the ~~prior~~quarter ~~calendar~~ended ~~year. To verify an applicant’s employment~~March 31, we2018 ~~obtain~~and ~~confirmation from the human resources department of the applicant’s employer~~2017, ~~verbally or by email, or phone the main phone number of the applicant’s employer and confirm that we can be connected directly to the applicant’s work number from that main number~~respectively.

~~Between~~USE ~~July~~OF 14, 2009 and September 30, 2011 (based on start time of the applicable bidding period), PMI verified employment and/or income on approximately 42% of the PMI Borrower Loans originated on the platform on a unit basis (6,316 out of 15,139) and approximately 65% of originations on a dollar basis ($55,766,041 out of $85,985,988). Breaking these numbers down by Prosper Rating:PROCEEDS

·PFL ~~for~~will ~~PMI~~use ~~Borrower~~the ~~Loans~~proceeds ~~with~~of aeach ~~Prosper~~series ~~Rating~~of Notes to facilitate the funding of ~~AA,~~the Arelated orBorrower B,Loan ~~PMI~~through ~~verified~~the ~~income~~marketplace ~~and/or~~designated ~~employment~~by ~~information~~the oninvestors ~~approximately~~purchasing ~~58%~~such series of ~~the~~Notes. ~~loans~~PFL ~~originated~~will onuse athe ~~unit~~proceeds ~~basis~~of ~~(3,047~~each ~~out~~series of ~~5,274)~~Notes ~~and~~to ~~approximately~~purchase ~~80%~~the ofcorresponding ~~originations~~Borrower onLoan afrom ~~dollar~~WebBank. ~~basis~~See ~~($31,388,823~~"About ~~out~~the ofMarketplace" ~~$39,303,272);~~for more information.

~~· for~~ PMI ~~Borrower~~will ~~Loans~~not ~~with~~receive aany ~~Prosper~~consideration ~~Rating~~for ofissuance ~~C or D, PMI verified income and/or employment information on approximately 42%~~ of the ~~loans~~PMI ~~originated~~Management onRights athat ~~unit~~accompany ~~basis~~each ~~(2,290 out of 5,493) and approximately 63% of originations on a dollar basis ($18,383,137 out of $29,292,670); and~~Note.

·PLAN ~~for~~OF PMI Borrower Loans with a Prosper Rating of E or HR, PMI verified income and/or employment information on approximately 22% of the loans originated on a unit basis (979 of 4,372) and approximately 34% of originations on a dollar basis ($5,994,081 out of $17,390,046).DISTRIBUTION

~~Our~~PFL ~~bases~~will ~~for~~offer ~~selecting~~the ~~listings~~Notes ~~for~~to ~~employment~~investors orat ~~income~~100% ~~verification~~of ~~are~~their ~~the~~principal ~~same~~amount. asThe ~~the~~Notes ~~ones~~will ~~used~~be byoffered ~~PMI~~only ~~for~~by ~~PMI~~PFL ~~Borrower~~through ~~Loans~~www. ~~Please~~prosper.com. ~~note,~~See ~~however,~~"About ~~that~~the ~~historical~~Marketplace" ~~data~~and ~~regarding~~"About ~~PMI~~Prosper ~~Borrower~~Funding ~~Loans~~LLC" ~~may~~for ~~not~~more beinformation. ~~indicative~~The ofPMI ~~the~~Management ~~future~~Rights ~~characteristics~~offered ofby ~~our~~PMI ~~borrower~~will ~~loans. See~~accompany ~~“Risk~~each ~~Factors—Prosper~~Note ~~Funding~~offered ~~LLC,~~through the ~~Platform and Our Ability to Service the Notes” for more information~~marketplace.

IfFINANCIAL anSUITABILITY applicant fails to provide satisfactory information in response to an income or employment verification inquiry, we will (a) request additional information from the applicant, (b) cancel the applicant’s listing or (c) refuse to proceed with the funding of the loan. Where we choose to verify an applicant’s income or employment information, the verification is normally done after the applicant’s listing has already been posted. This allows us to focus our verification efforts on the listings most likely to fund, and increases the percentage of funded loans that are subject to verification.REQUIREMENTS

~~When~~The weNotes ~~identify~~and ~~inaccurate~~PMI ~~employment~~Management orRights ~~income~~are ~~information~~highly inrisky ~~an application~~and orspeculative. ~~listing~~Investing ~~that has resulted~~ in the ~~applicant~~Notes ~~obtaining~~and aPMI ~~different~~Management ~~Prosper~~Rights ~~Rating~~should orbe ~~interest~~considered ~~rate~~only ~~for~~by ~~her~~persons ~~listing~~who ~~than~~can ~~she~~afford ~~would have obtained if she had provided~~ the ~~correct~~loss ~~information, we cancel the listing. If we identify inaccurate information in a listing that does not trigger cancellation~~ of ~~the~~their ~~listing,~~entire ~~we do not update the listing to include the corrected information~~investment. ~~Cancellation~~The ~~automatically~~marketplace ~~triggers~~currently aallows ~~notice~~investors to ~~the~~bid ~~applicant~~as ~~and~~little ~~any~~as ~~lender~~$25. ~~members~~All ~~who~~bids ~~made~~may ~~commitments~~be ~~that~~up ~~the listing has been cancelled, and we send an adverse action notice~~ to ~~the~~100% ~~applicant~~of ~~indicating~~ the ~~reasons~~requested ~~for~~loan ~~cancellation~~amount. ~~We make the funds committed by the lender members on the cancelled listing immediately available to them for bidding on other listings.~~

WeInvestors ~~generally~~can dobid ~~not~~on ~~verify information included by applicants in their~~ listings ~~other than identity, income and employment information. Similarly, we do not verify the information~~ in ~~any~~amounts ~~recommendations~~ranging from anas ~~applicant’s~~little ~~Prosper~~as ~~friends.~~$25 ~~We derive the applicant’s debt-to-income ratio, or “DTI,” from a combination of the applicant’s self-reported income~~ and ~~information~~as ~~from~~much ~~the~~as ~~applicant’s~~100% ~~credit report. The credit data that appears in listings is taken directly from the applicant’s credit report. Although applicants may provide proof~~ of ~~homeownership to establish homeownership status, in most instances, homeownership status is derived from~~ the ~~credit~~loan ~~report~~amount ~~as well~~requested. ~~For~~ ~~example,~~It ~~if the credit report reflects an active mortgage loan, the applicant~~ is ~~presumed~~typical to behave amultiple ~~homeowner.~~investors ~~Lender~~bid ~~members should not rely~~ on ~~unverified~~a ~~information~~single ~~provided by applicants~~listing.

Currently, the minimum amount an investor may bid is $25 and the maximum amount an investor may bid is 100% of the amount of the requested Borrower Loan. The maximum aggregate amount an individual investor may bid on the marketplace is currently $25,000,000. There is no maximum aggregate bid amount for institutional users. PFL may change the minimum bid amount.

To purchase Notes and PMI Management Rights, investors located in Alaska, Idaho, Missouri, Nevada, New Hampshire, Oregon, Virginia or Washington must meet one or more of the following suitability requirements:


a.	(i) You must have an annual gross income of at least $70,000; (ii) your net worth must be at least $70,000 (exclusive of home, home furnishings and automobiles); and (iii) the total amount of Securities you purchase cannot exceed 10% of your net worth (exclusive of home, home furnishings and automobiles); or

~~Table~~b. (i) Your net worth must be at least $250,000 (exclusive of ~~Contents~~home, home furnishings and automobiles); and (ii) the total amount of Securities you purchase cannot exceed 10% of your net worth (exclusive of home, home furnishings and automobiles).

~~Our~~Investors orthat ~~PMI’s~~are ~~participation~~residents inof ~~funding~~California ~~loans~~must onmeet ~~the~~one ~~platform~~or ~~from~~more ~~time to time has had, and will continue to have, no effect on our income and employment verification process, the selection~~ of ~~loan requests verified or~~ the ~~frequency~~following ofsuitability ~~income and employment verification.~~requirements:

Wea. ~~are~~(i) ~~continuously~~You ~~looking~~must ~~for~~have ~~ways~~had toan ~~improve~~annual ~~our~~gross ~~verification~~income ~~procedures~~of inat aleast ~~cost-effective~~$85,000 ~~manner~~during inthe ~~order~~last totax ~~increase~~year; ~~the~~(ii) ~~repayment~~you ~~performance~~must ofhave ~~loans. See~~a ~~“Risk~~good ~~Factors—Risks~~faith ~~Related~~belief tothat ~~Borrower~~your ~~Default—Information~~annual ~~supplied~~gross byincome ~~applicants~~for ~~may~~the becurrent ~~inaccurate~~tax oryear ~~intentionally~~will ~~false-~~be ~~Information~~at ~~regarding~~least ~~income~~$85,000; and ~~employment~~(iii) isthe ~~not~~total ~~verified~~amount inof ~~many~~Securities ~~cases”~~you ~~for~~purchase ~~more~~cannot ~~information.~~exceed 10% of your net worth; or

~~Our~~b. ~~Note~~(i) ~~Repurchase~~Your net worth must be at least $200,000 (or $300,000 with your spouse); and ~~Indemnification~~(ii) ~~Obligations~~the total amount of Securities you purchase cannot exceed 10% of your net worth; or

~~Under~~c. ~~the~~(i) ~~lender~~Your ~~registration~~net ~~agreement,~~investment in ~~the~~Securities ~~event~~cannot ofexceed ~~a material default under a series of Notes due to verifiable identity theft of the named borrower’s identity~~$2,500; ~~we will repurchase the Note~~ and credit the lender members’ account with the remaining unpaid principal balance of the Note. Our repurchase obligation will apply only if the relevant Note is at least 120 days past-due; provided, that we may in our sole discretion elect to repurchase such Note at an earlier time. The determination of whether verifiable identity theft has occurred is in our sole discretion. We generally recognize the occurrence of identity fraud upon receipt of a police report regarding the identity fraud. This remedy for identity fraud only provides protection against identity theft; in no way is it a guarantee of a borrower’s self-reported information (~~beyond identity~~ii) ~~or a borrower’s creditworthiness. We expect~~ the ~~incidence~~total ofamount ~~identity fraud on the platform to be low because~~ of ~~our~~Securities ~~identity~~you ~~verification~~purchase ~~process.~~cannot Asexceed of10% ~~September 30, 2011, PMI had experienced 23 cases~~ of ~~confirmed~~your ~~identity~~net fraud affecting 36 PMI Borrower Loans since inception, but has not experienced any cases of confirmed identity fraud during the year ended December 31, 2010 or in the nine months ended September 30, 2011worth. In the cases of identity theft PMI has experienced, it received a police report and identity theft affidavit from the victim evidencing that identity theft had occurred. Please note that historical data regarding PMI Borrower Loans may not be indicative of the future characteristics of our borrower loans. See “Risk Factors—Prosper Funding LLC, the Platform and Our Ability to Service the Notes” for more information.

WeThe ~~have~~Maine ~~the~~Office ~~exclusive right to investigate claims~~ of ~~identity~~Securities ~~theft~~recommends and ~~determine,~~the inOregon ~~our~~Division ~~sole~~of ~~discretion,~~Finance ~~whether~~and ~~verifiable~~Corporate ~~identity~~Securities ~~theft~~requires ~~has~~that ~~occurred. As~~an ~~PMI,~~investor's ~~acting~~aggregate asinvestment ~~Servicer~~in onthis ~~our~~offering ~~behalf, is the sole entity with the ability to investigate~~ and ~~determine~~similar ~~verifiable~~offerings ~~identity~~by ~~theft~~PMI, ~~which~~PFL ~~triggers~~or ~~our~~its ~~repurchase~~affiliates ~~obligation,~~not aexceed ~~conflict~~10% of ~~interest exists as~~ the ~~denial~~investor's ofliquid anet ~~claim of identity theft would save us from our repurchase obligation~~worth. ~~There~~For ~~are, however, three factors that mitigate the risk of~~ this ~~conflict. Without the protection offered by this repurchase obligation~~purpose, ~~fewer~~"liquid ~~potential~~net ~~lender~~worth" ~~members~~is ~~will~~defined ~~have~~as the confidence to participate on the platform, limiting our growth and long term profitability. In addition, our relationship with WebBank includes a requirement – and accompanying audit function – to insure that ~~claims~~portion of ~~identity~~net ~~theft~~worth ~~are thoroughly investigated and accurately reported. Finally, California statutes include severe penalties owed to the victim of identity theft if it is shown~~ that aconsists ~~claim~~ of ~~identity~~cash, ~~theft~~cash ~~was~~equivalents ~~not~~and ~~adequately~~readily ~~investigated~~marketable ~~or frivolously dismissed~~securities.

InFor ~~the~~purposes ~~event we breach any~~ of ~~our other representations and warranties in~~ the ~~lender~~suitability ~~registration~~requirements ~~agreement~~described ~~pertaining to the Notes~~above, ~~and~~you ~~such breach materially~~ and ~~adversely~~your ~~affects~~spouse a series of Notes, we will either indemnify the lender members, repurchase the series of Notes or cure the breach. The circumstances where this may occur include where the listing contained the wrong Prosper Score, or where we miscalculated the Prosper Score, resulting in the wrong Prosper Rating appearing in the listing. We are ~~not,~~considered ~~however, under any obligation~~ to ~~cure,~~be ~~indemnify or repurchase~~ a ~~series~~single ~~of Notes because a correctly determined Prosper Score or Prosper Rating fails to accurately predict the actual losses on a borrower loan~~person. In addition, we are not obligated to repurchase a Note or indemnify a lender member whose investment is not realized in whole or in part due to false or inaccurate statements or omissions of fact in a listing, whether in credit data, borrower’s representations, user recommendations, group affiliations or similar indicia of borrower intent and ability to repay the ~~loan.~~following ~~Finally,~~definitions ~~if we repurchase a Note, we will only return the outstanding principal balance to the lender member and not unpaid interest.~~apply:

"annual gross income" means the total amount of money you earn each year, before deducting any amounts for taxes, insurance, retirement contributions or any other payments or expenses;

"net investment" means the principal amount of Notes and PMI Management Rights purchased, minus principal payments received on the Notes and PMI Management Rights.

PFL and PMI intend to register the offer and sale of the Notes and PMI Management Rights in all 50 states as well as the District of Columbia. As part of this process, PFL and PMI expect that states in addition to those referenced above will impose minimum financial suitability standards and maximum investment limits for investors who reside in such states. Should this occur, PFL and PMI will set forth these requirements in a supplement to this prospectus. Under the investor registration agreement, investors are required to represent and warrant that they satisfy the applicable minimum financial suitability standards and maximum investment limits of the state in which they reside. Investors who fail to satisfy any such requirements will not be permitted to purchase the Notes and PMI Management Rights.

ABOUT THE MARKETPLACE

Overview

Prosper is a pioneer of online marketplace lending that connects borrowers and investors. Our goal is to enable borrowers to access credit at affordable rates and provide investors with attractive risk-adjusted rates of return. Our marketplace facilitated $0.7 billion in Borrower Loan originations during the three months ended March 31, 2018, and as of March 31, 2018, $11.9 billion in Borrower Loan originations since it first launched in 2006.

We believe our online marketplace model has key advantages relative to traditional banks, including (i) an innovative marketplace model that efficiently connects qualified supply and demand of capital, (ii) online operations that substantially reduce

~~Table~~the ofneed ~~Contents~~for physical infrastructure and improve convenience, and (iii) data and technology driven automation that increases efficiency, and improves the borrower and investor experience. We do not operate physical branches or incur expenses related to that infrastructure like traditional banks or consumer finance institutions do; instead, we use data and technology to drive automation and efficiency in our operation. As a result, we believe our business model has lower operating costs than traditional banks and consumer finance institutions, allowing us to deliver what we believe is higher value and a better experience for both borrowers and investors.

~~Historical~~To ~~Performance~~consumer ofborrowers, ~~PMI~~we ~~Borrower~~believe ~~Loans~~that we offer generally better pricing, on average, than the pricing those borrowers would pay on outstanding credit card balances or unsecured installment loans from a traditional bank. We also believe that we offer faster decisions and loan originations, and greater transparency, resulting in a better customer experience than that provided by traditional consumer finance lenders.

~~The~~To ~~performance~~individual ~~of borrower loans is a function of the credit quality of borrowers~~ and ~~the~~institutional ~~risk~~investors, ~~and~~we ~~return~~offer ~~preferences of lender members. Lender members can choose to pursue~~ a ~~variety~~new ofasset ~~bidding~~class ~~strategies, including strategies~~ that ~~may~~we orbelieve ~~may~~has ~~not~~attractive ~~maximize~~risk ~~the~~adjusted ~~return on their investment. When making commitment decisions~~returns, ~~lender members consider applicants’ Prosper Rating~~transparency, ~~credit~~access ~~score, debt-~~to~~-income~~ ~~ratios~~consumer ~~and~~loans, ~~other credit data~~ and ~~information~~lower ~~displayed~~duration ~~with listings~~risk. ~~See “Risk Factors—Risks Related to Borrower Default.”~~

~~The~~Our ~~following~~marketplace ~~seven~~offers ~~graphs~~fixed ~~show~~rate, ~~performance~~fully ~~for~~amortizing, ~~PMI~~unsecured consumer loans from $2,000 to $40,000. Loan terms of three and five years are available, depending upon the Prosper Rating assigned to the borrower at issue and loan amount being sought. All Borrower Loans ~~through~~are ~~September~~originated ~~30,~~and ~~2011~~funded by ~~delinquency~~WebBank, ~~rates~~an FDIC-insured, state chartered industrial bank organized under the laws of Utah. As part of operating our marketplace, we verify the identity of borrowers and ~~cumulative~~assess ~~principal~~borrowers' ~~default~~credit ~~rates~~risk profile using a combination of public and proprietary data. Our proprietary technology automates several loan origination and servicing functions, including the borrower application process, data gathering, credit scoring, loan funding, investing and servicing, regulatory compliance and fraud detection.

~~The~~Investors ~~table~~invest ~~below~~in ~~shows~~Borrower ~~1-30~~Loans ~~and~~through ~~31-120~~two ~~day~~channels ~~delinquency~~- ~~rates~~(i) bythe ~~quarter~~first ~~for~~channel ~~PMI~~allows ~~Borrower~~investors ~~Loans~~to ~~originated~~purchase ~~between~~Notes ~~July~~from 13PFL, ~~2009~~the ~~and~~payments ~~September~~of ~~30,~~which ~~2011. This~~are ~~graph~~dependent ~~shows~~on ~~delinquencies~~the aspayments amade ~~percentage~~on ofthe ~~total~~corresponding ~~outstanding~~Borrower ~~principal~~Loan ~~balance. We~~(the ~~consider~~"Note ~~loans~~Channel"); ~~more~~and ~~than~~(ii) 30the ~~days~~second ~~past~~channel ~~due~~allows toaccredited beand ~~severely~~institutional ~~delinquent~~investors ~~due~~ to ~~the~~purchase ~~significant~~a ~~decrease~~Borrower Loan in ~~the~~their ~~likelihood~~entirety ofdirectly ~~receiving~~from ~~future~~PFL ~~payment~~(the ~~once~~"Whole aLoan ~~loan has missed two payments~~Channel").

How Our Marketplace Works

The marketplace that we operate is an online marketplace that matches individuals who wish to obtain unsecured consumer loans ("borrowers") with those who are willing to help fund those loans ("investors"). A borrower who wishes to obtain a loan through our marketplace must post a loan listing to our marketplace. If a listing receives enough investor commitments to be funded, WebBank will originate the loan requested and then sell it to PFL. Each Note issued and sold by PFL comes attached with a PMI Management Right issued by PMI.

In order to obtain a loan through our marketplace, a borrower must first complete a loan application. We then obtain a credit report on the borrower and use data from that report as well as data supplied by the borrower to assign a risk grade to the listing, which is called a "Prosper Rating." Each time we post a group of listings on our marketplace, we determine the relative proportions of such listings that will be allocated to the Note Channel and the Whole Loan Channel, respectively, based on our estimate of the relative overall demand in each channel. We then use a random allocation methodology to allocate individual listings between the two channels based on those proportions. We currently post listings on our marketplace twice per day on weekdays and once per day on weekends, although the frequency with which we post listings may change in the future. The format for listings is shown below. The images are not from actual listings, but rather depict hypothetical listings created for purposes of illustration. Each listing includes the Prosper Rating, selected items from the borrower's credit report and the intended use of the potential loan.

~~Table~~Within the Note Channel, the minimum amount an investor may bid is $25. All bids may be up to 100% of ~~Contents~~the requested loan amount. It is typical to have multiple investors bid on a single listing.

The ~~following~~registration, ~~graphs~~processing ~~show~~and ~~cumulative~~payment ~~principal~~systems ~~default~~are ~~rates~~automated ~~for~~and ~~PMI~~electronic. ~~Borrower~~We ~~Loans~~have ~~originated~~no byphysical ~~year. The~~branches, ~~cumulative~~no ~~charge~~deposit-~~off~~taking ~~rate~~and isinterest ~~calculated~~payment asactivities ~~the~~and ~~sum~~limited ofloan ~~the~~underwriting ~~cumulative~~activities. ~~principal~~The ~~balance~~website, ~~charged-off~~which is located at www.prosper.com, ~~divided~~provides bydetailed ~~the~~information ~~original~~about ~~amount~~our ~~borrowed. The~~marketplace, ~~vertical~~including ~~axis~~detailed ~~shows~~fee information, the ~~percentage~~full text of ~~principal~~the ~~charged-off~~user legal agreements and help pages. ~~The~~ ~~horizontal~~In ~~axis~~addition ~~shows~~to the ~~age~~customer ofsupport ~~the~~materials ~~loan~~available inon ~~monthly~~the ~~cycles. We~~website, ~~only~~we ~~include~~make ~~data~~additional ~~for~~customer asupport ~~point~~available ~~along~~to ~~the~~users xby ~~axis~~email ifand atphone. ~~least~~Our ~~70%~~customer ofsupport ~~the~~team ~~original~~is ~~amount~~currently ~~borrowed~~located in ~~that~~Troy, ~~vintage~~Michigan, ~~has~~Phoenix, ~~been~~Arizona ~~outstanding~~and ~~for~~ at ~~least~~our ~~that~~headquarters ~~number~~in ofSan ~~cycles~~Francisco, California.

~~The~~We ~~following~~attract ~~table~~investors ~~shows~~and ~~cumulative~~borrowers ~~principal~~to ~~default~~the ~~rates~~website ~~for~~through ~~PMI~~a ~~Borrower~~variety ~~Loans~~of ~~originated~~sources, including referrals from ~~July~~other 13parties (such as online communities, ~~2009~~social tonetworks ~~December~~and 31marketers), ~~2009~~direct mail, assearch engine results and online and offline advertising. We are not dependent on any one source of ~~September~~traffic ~~30,~~to ~~2011~~the website.

~~The~~Marketplace ~~following table shows cumulative principal default rates for PMI Borrower Loans originated from January 1~~Participants, ~~2010~~Registration ~~through~~Requirements ~~September~~and ~~30,~~Minimum ~~2010,~~Credit ~~as of September 30, 2011.~~ Criteria

All marketplace participants must register with PFL and agree to our marketplace's rules and terms of use, including consent to doing business electronically. At the time of registration, individuals or authorized institutional agents must provide their name, address and an email address. After responding to an email verification, registrants must agree to the terms and conditions (including the applicable registration agreement) for the specific borrower or investor role for which they are registering.

~~Table of Contents~~Borrowers

~~The~~Any ~~following~~natural ~~table~~person ~~presents~~at ~~aggregated~~least ~~information~~18 asyears of ~~September~~age ~~30,~~who ~~2011,~~is ~~grouped~~a byU.S. ~~Prosper~~resident ~~Rating,~~in ~~for~~a ~~all~~state ~~PMI~~where ~~Borrower~~loans ~~Loans~~through ~~originated~~our onmarketplace ~~the~~are ~~platform~~available ~~from~~with ~~July~~a ~~13,~~U.S. ~~2009~~bank ~~through~~account ~~September~~and ~~30,~~a ~~2011. With~~social ~~respect~~security number may apply to ~~delinquent~~become ~~PMI~~a borrower by registering at www.prosper.com. After passing the anti-fraud and identity verification process, borrowers can request unsecured Borrower Loans, ~~the~~at ~~table~~interest ~~shows~~rates ~~the~~set ~~entire~~by ~~amount~~us. ofWe ~~the~~set ~~principal~~minimum ~~remaining~~credit ~~due~~and ~~(not~~other ~~just~~credit ~~that~~guidelines ~~particular~~for ~~payment)~~borrowers, as ofdiscussed ~~September~~in ~~30,~~the ~~2011~~risk grading section.

Loan Originations
July 13, 2009 - September 30, 2011
(as of September 30, 2011)
	Total Loan Originations						Current Loans								1-30 Days Past Due
Prosper Rating	Number			Amount			Number			Origination Amount			Outstanding Principal		Number			Origination Amount			Outstanding Principal
AA		1,393		$	10,873,454			973		$	8,340,325		$	5,956,394		4		$	27,500		$	23,284
A		2,348			15,928,899			1,858			13,403,704			10,310,546		15			76,165			49,957
B		1,487			11,318,661			1,240			9,685,457			7,968,677		12			86,500			74,709
C		1,672			9,235,753			1,228			7,080,821			5,702,736		23			145,200			98,790
D		3,771			19,336,546			2,941			15,929,843			13,634,230		89			419,620			352,042
E		2,474			11,152,797			1,985			9,232,551			8,203,297		75			359,008			322,333
HR		1,856			5,908,301			1,360			4,322,601			3,541,855		52			182,180			151,611
		15,001		$	83,754,411			11,585		$	67,995,301		$	55,317,735		270		$	1,296,172		$	1,072,727
	avg loan size:			$	5,583
percent of total								77.2	%		81.2	%				1.8	%		1.5	%
	Paid In Full						31+ Days Past Due								Defaulted 1
Prosper Rating	Number			Origination Amount			Number			Origination Amount			Outstanding Principal		Number			Origination Amount			Net Charged Off Principal
AA		389		$	2,262,728			9		$	75,500		$	51,114		18		$	167,400		$	124,989
A		401			2,126,643			15			67,500			46,246		59			254,887			198,674
B		198			1,278,604			12			85,300			71,400		25			182,800			155,873
C		324			1,502,083			23			142,950			112,460		74			364,700			309,354
D		474			1,890,618			102			485,657			426,843		165			610,809			523,679
E		241			857,527			73			342,502			320,180		100			361,210			319,449
HR		265			834,954			67			221,335			185,968		112			347,231			315,082
		2,292		$	10,753,157			301		$	1,420,745		$	1,214,211		553		$	2,289,037		$	1,947,100
percent of total		15.3	%		12.8	%		2.0	%		1.7	%				3.7	%		2.7	%
	Repurchased														Default due to Delinquency:
Prosper Rating	Number			Origination Amount															501		$	1,795,569
AA		-			-
A		-			-
B		-			-										Default due to Bankruptcy2 :
C		-			-														52		$	151,531
D		-			-
E		-			-
HR		-			-
		-			-
percent of total		0.0	%		0.0	%

When a borrower requests a loan, we first evaluate whether the borrower meets the underwriting criteria established in conjunction with WebBank. WebBank originates loans to borrowers and then sells and assigns the promissory notes evidencing those loans to PFL. The underwriting criteria apply for all Borrower Loans originated through our marketplace and may not be changed without WebBank's consent. All borrowers who request a loan are subject to the following minimum eligibility criteria: (1) have at least a 640 credit score, (2) have fewer than five credit bureau inquiries (after excluding duplicate inquiries) within the last 6 months, (3) have an annual income greater than $0, (4) have a debt-to-income ratio of no more than 50%, (5) have at least three open trades reported on their credit report, and (6) have not filed for bankruptcy within the last 12 months.

1	includes all loans >120 days past due
2	Only includes loans where the bankruptcy notification date is prior to the date the loan became 121 days past due. If we were notified of a bankruptcy after the loan reached 121 days past due, it is included in the "Default due to Delinquency" totals.

Borrowers may have up to two loans through Prosper outstanding at one time, provided that (1) the first loan is current, (2) the aggregate outstanding principal balance of both loans does not exceed the then-current maximum allowable loan amount for loans (currently $40,000, the maximum principal amount for listings in the Whole Loan Channel), and (3) the borrower complies with the prior-borrower constraints above.

~~From~~In ~~July 13~~addition, ~~2009~~for ~~through~~borrowers ~~September~~who ~~30,~~have ~~2011,~~previously ~~15,001~~obtained ~~PMI~~a Borrower ~~Loans~~Loan ~~were~~through ~~originated~~our onmarketplace, ~~the~~such ~~platform~~borrowers ~~with~~must analso ~~average~~(1) ~~original~~have ~~principal~~no ~~amount~~prior ofcharge-offs ~~$5,583~~on ~~and~~Borrower anLoans ~~aggregate~~originated ~~original~~through ~~principal~~our ~~amount of $83~~marketplace,~~754,411. As~~ ofand ~~September 30, 2011, 77.~~(2%) ofhave ~~these~~held ~~loans were current or had not reached~~ their first ~~billing cycle and 15.3% were paid in full, 1.8% were 1 to 30 days past due, 2.0% were more than 30 days past due, and 3.7% had defaulted. A PMI~~ Borrower Loan isfor ~~considered~~at toleast ~~have defaulted when it is more than 120 days past due or has been discharged in bankruptcy. Of these 15,001 loans, 1,282 loans, or~~ 9%, ~~have~~months ~~been greater than 15 days past due at any time, 952 loans, or 6%, have been more than 30 days past due at any time,~~ and ~~735~~never ~~or 5%, have~~ been ~~more than 60 days past due at any time~~delinquent.

OfUnderwriting ~~PMI~~requirements for Borrower Loans ~~originated after July 13~~, ~~2009,~~including ~~553~~eligibility ~~have~~requirements ~~defaulted~~for assubsequent ~~of September 30, 2011, equaling a total net defaulted amount of $1,947,110. Of these 553 defaulted~~ loans, ~~the~~are ~~borrowers~~subject ofto 52change ofover ~~the loans have filed for bankruptcy, resulting in a net defaulted amount of $151,531~~time.

~~The~~After ~~data~~receiving ina borrower's loan request, we verify the ~~preceding~~deposit ~~tables~~account ~~regarding~~into ~~PMI~~which the Borrower ~~Loans~~Loan ~~may~~proceeds ~~not~~will be ~~representative~~deposited to determine that the borrower is a holder of record of the ~~loss~~account. ~~experience~~Even if a listing receives bids that equal or exceed the minimum amount required to fund, we will ~~develop~~cancel ~~for~~the ~~our~~listing if we are unable to verify the borrower's ~~loans~~deposit account. In ~~addition~~While we attempt to authenticate each marketplace participant's identity, ~~the~~ ~~data~~our infraud ~~the~~checks ~~preceding~~could ~~tables~~fail ~~regarding~~to ~~prepayments~~detect ~~may~~identity ~~not~~theft, befraud ~~representative~~and ofinaccuracies. ~~the~~See ~~prepayments~~"Risk weFactors-Risks ~~expect~~Related ~~over~~to ~~time~~Borrower Default" for more information.

Investors

Investors are individuals and institutions that have the opportunity to buy Notes or Borrower Loans. Investors must register on our marketplace. An individual investor must be a natural person at least 18 years of age and a U.S. resident, must provide his or her social security number and may be required to provide his or her state driver's license or state identification card number. An institutional investor must provide its taxpayer identification number and entity formation documentation. During the investor registration process, potential investors who are individuals must authorize us to obtain their credit report for identification purposes. Individual and institutional investors also must consent to any applicable tax withholding statement and must agree to the terms and conditions of the website. Investors are not required to give credit information to the same extent as borrowers.

Investors who participate in the Note Channel must enter into an investor registration agreement, which agreement governs all sales of Notes to such investors. The investor registration agreement contains provisions that limit certain legal rights of investors in relation to PFL and PMI. See "Risk Factors -- Risks Inherent in Investing in the Notes" for more information. At the time an investor registers to participate in the Note Channel, the investor must satisfy any minimum financial suitability standards and maximum investment limits established for the Note Channel by the state in which the investor resides.

Only investors that are approved by us are eligible to participate in the Whole Loan Channel. At a minimum, an investor cannot participate in the Whole Loan Channel unless it is an institutional investor and meets the definition of an "accredited investor" set forth in Regulation D under the Securities Act of 1933, as amended. Investors who participate in the Whole Loan Channel must enter into loan purchase and loan servicing agreements.

~~Table~~Prior to bidding on a listing, investors must transfer funds to a funding account maintained on our marketplace. The funds of ~~Contents~~most investors are held in a single, pooled funding account, which is referred to as the "pooled funding account". We have also established dedicated funding accounts for certain investors that participate in the Whole Loan Channel, each of which is referred to as a "dedicated funding account". The pooled funding account and each dedicated funding account (collectively, the "FBO funding accounts") is a non-interest bearing, demand deposit account, currently maintained by PMI or PFL at Wells Fargo Bank, National Association ("Wells Fargo"). The pooled funding account is held in the name of PFL for the benefit of its investors, and each dedicated funding account is held in the name of PMI or PFL for the benefit of the applicable investor.

~~The~~We ~~following~~cause ~~table~~all ~~presents~~payments ~~aggregate~~made ~~information,~~or ascollected ofon ~~September~~any ~~30,~~Note ~~2011,~~or ~~regarding~~Borrower Loan owned by an investor to be deposited into the ~~results~~applicable FBO funding account. An investor that wishes to make a commitment to purchase a Note or Borrower Loan must have funds equal to the sum of ~~PMI’~~such commitment and all the investor's ~~collection~~other ~~efforts~~outstanding ~~for~~purchase ~~PMI~~commitments ~~Borrower~~in ~~Loans~~the ~~originated~~applicable ~~after~~FBO ~~July~~funding 13account. For the FBO funding accounts, ~~2009~~we ~~that~~maintain ~~became~~sub-account ~~more~~balances ~~than~~on 30our ~~days~~system ~~past~~to ~~due~~track commitments and purchases made and loan proceeds received at ~~any~~the ~~time,~~investor ~~grouped~~level. These sub-accounts are purely administrative and reflect balances and transactions concerning funds in the FBO funding accounts. Individual investors have no direct relationship with Wells Fargo by ~~Prosper~~virtue ~~Rating~~of funds or transactions within the FBO funding accounts or by virtue of participating on our marketplace.

Prosper Rating	Loans In Collections		Origination Amount		Aggregate Amount Sent to Collections		Gross Amount Collected on Accounts sent to Collections		Number of Loans Charged-off		Gross Aggregate Principal Balance of Loans Charged-Off		Gross Amount Recovered on Loans Charged-Off		Net Aggregate Charge-Off
AA		36	$	281,400	$	18,369	$	6,194		18	$	137,489	$	12,500	$	124,989
A		94		398,512		25,917		14,841		59		204,248		5,574		198,674
B		42		283,100		19,722		4,577		25		157,652		1,779		155,873
C		127		640,706		48,996		19,920		74		319,015		9,660		309,354
D		314		1,261,216		103,266		47,416		165		547,323		23,644		523,679
E		209		842,707		73,732		27,988		100		332,199		12,750		319,449
HR		211		664,453		58,848		31,519		112		320,318		5,236		315,082
Total		1,033	$	4,372,094	$	348,850	$	*152,455		553	$	2,018,244	$	71,144	$	1,947,100
* This amount excludes collection agency payments that were subsequently returned by the bank

Each FBO funding account is FDIC-insured on a "pass through" basis to each investor, subject to applicable limits. This means that each investor's cash balance is protected by FDIC insurance, up to the limits established by the FDIC. Other funds the investor has on deposit with Wells Fargo may count against any applicable FDIC insurance limits. Funds of an investor in an FBO funding account can consist of amounts deposited by the investor but never committed to Note or Borrower Loan purchases; amounts the investor has committed to one or more such purchases, where origination of the corresponding Borrower Loan has not yet occurred; or amounts received as principal and interest payments on Notes or Borrower Loans owned by the investor that the investor has not yet withdrawn. Upon request by an investor, we will transfer funds from the applicable FBO funding account to the investor's designated and verified external bank account, provided such funds are not already committed to Note and/or Borrower Loan purchases. To the extent an investor does not withdraw any such amounts, they will remain in the applicable FBO funding account indefinitely.

WeRelationship ~~may~~with alter the terms or make principal reductions on some loans, which may include cases where a reduction in the initial interest rate is required by law. The Servicemembers’ Civil Relief Act requires interest rates to be reduced to 6% while a borrower in the armed forces is on active duty.WebBank

WebBank is a FDIC-insured, Utah-chartered industrial bank that originates all Borrower Loans made through our marketplace, although in the future, either or both of us may enter into agreements with other banks to originate Borrower Loans through our marketplace in addition to, or in lieu of, WebBank. WebBank and Prosper are parties to a Marketing Agreement, under which PMI manages the operations of our marketplace that relate to the submission of Borrower Loan applications by borrowers, the making of related Borrower Loans by WebBank and the funding of such Borrower Loans by WebBank in exchange for a fee equal to the origination fee charged by WebBank. Under the Marketing Agreement, Prosper has agreed to indemnify WebBank with respect to any damages arising from WebBank's participation in the origination of Borrower Loans as contemplated in the Marketing Agreement. WebBank and Prosper are a parties to an Asset Sale Agreement, under which WebBank sells and assigns the promissory notes evidencing the Borrower Loans to PFL. As consideration for WebBank's agreement to sell and assign the promissory notes, PFL pays WebBank the purchase price of the promissory notes, as well as a monthly fee, which is partially tied to the terms and performance of the loans. PMI receives payments from WebBank as compensation for the activities it undertakes on WebBank's behalf.

~~The~~Risk ~~following table presents aggregated information about borrowers for PMI Borrower Loans originated over the period from July 13, 2009 to September 30, 2011, grouped by Prosper Rating.~~Management

Prosper Rating	Number		Amount		Average Loan Size		Weighted Average Lender Yield			Weighted Average Borrower Rate			Weighted Average Borrower APR
AA		1,393	$	10,873,454	$	7,806		7.85	%		8.85	%		9.27	%
A		2,348		15,928,899		6,784		10.05	%		11.06	%		13.10	%
B		1,487		11,318,661		7,612		14.59	%		15.59	%		17.69	%
C		1,672		9,235,753		5,524		19.45	%		20.45	%		23.30	%
D		3,771		19,336,546		5,128		25.54	%		26.54	%		29.79	%
E		2,474		11,152,797		4,508		30.57	%		31.57	%		35.30	%
HR		1,856		5,908,301		3,183		31.19	%		32.19	%		35.52	%
Total		15,001	$	83,754,411	$	5,583		19.21	%		20.22	%		22.74	%

Our risk management has evolved from its inception. We have consistently worked to improve the information provided to investors in order to help them make sound investment decisions. A major source of improvement has been to progressively incorporate the historical performance of Borrower Loans originated through our marketplace into our proprietary rating system (the "Prosper Rating") as more Borrower Loan outcome data becomes available over time. We intend to continuously refine the Prosper Rating system by regularly reassessing the system. For more information about how the Prosper Rating and estimated loss rates are calculated and reassessed, see the following sections under this discussion of "Risk Management".

The following table presents aggregated information about borrowers for PMI Borrower Loans originated over the period from July 13, 2009 to September 30, 2011, grouped by Prosper Rating. The information for each borrower was obtained from a credit reporting agency at the time the borrower’s loan application was submitted. PMI has not independently verified this information:

Prosper Rating	Average Experian ScorexPlus Score		Average Number of Current Delinquencies	Average Number of Open Credit Lines		Average Number of Total Credit Lines
AA		800	0.03		8.95	26.44
A		752	0.10		9.07	25.89
B		739	0.19		8.55	25.30
C		701	0.23		8.92	27.30
D		695	0.41		7.90	25.17
E		673	0.64		8.18	26.95
HR		667	0.79		7.78	26.75

Please note that historical data regarding PMI Borrower Loans may not be indicative of the future characteristics of our borrower loans. See “Risk Factors—Prosper Funding LLC, the Platform and Our Ability to Service the Notes” for more information.

~~Table~~Prosper ofRating ~~Contents~~Assigned to Listings

~~Posted~~Each listing is assigned a Prosper Rating. The Prosper Rating is a letter that indicates the expected level of risk associated with the listing. Each letter grade corresponds to an estimated average annualized loss rate range. The rating associated with a listing reflects the loss expectations for that listing as of the time the rating is given. This means that otherwise similar borrowers may have different Prosper Ratings at different points in time as the Prosper Rating is updated to incorporate more recent information. There are currently seven Prosper Ratings, but this, as well as the loss ranges associated with each, may change over time as our marketplace dictates. We intend to regularly update the loss rates calibration to reflect the actual performance of Borrower ~~Loan~~Loans. ~~Listings~~The updates will occur at least annually.

~~Once~~The acurrent ~~loan~~Prosper ~~listing~~Ratings isand ~~completed by an applicant,~~ the ~~listing~~estimated isaverage ~~posted~~annualized onloss ~~our~~rate ~~website~~ranges ~~and~~associated ~~then~~with ~~becomes~~them ~~available~~are ~~for~~as ~~bidding by lender members. A loan listing is a request by the applicant for a borrower loan in a specified amount.~~follows:

When creating a listing, the applicant may opt for partial funding. Partial funding means the applicant’s loan does not have to receive bids for 100% of the amount requested to fund, but can be funded if it receives bids for 70% or more of the amount requested. Each listing indicates whether the applicant has elected partial funding and, if so, the minimum amount of bids required for the loan to fund. We may change the percentage threshold for partial funding, which is currently set at 70%, from time to time. Any such change will be disclosed on our website, and will only affect listings created after we have implemented such change.



Prosper Rating		Est. Avg. Annualized Loss Rate
AA		0.00% - 1.99%
A		2.00% - 3.99%
B		4.00% - 5.99%
C		6.00% - 8.99%
D		9.00% - 11.99%
E		12.00% - 14.99%
HR		>=15.00%

~~Borrower~~The ~~loans~~estimated ~~are~~average ~~unsecured~~annualized ~~obligations~~loss ~~of individual borrowers with an interest~~ rate ~~determined~~for byeach uslisting ~~and~~is ~~with~~based aprimarily ~~specified~~on ~~loan term, currently set at one, three or five years, but which we may in~~ the ~~future~~historical ~~extend~~performance toof ~~between~~Borrower ~~three~~Loans ~~months~~with tosimilar ~~seven~~characteristics ~~years.~~and ~~Applicants~~is ~~may~~primarily ~~currently~~determined ~~request~~by ~~loans~~two ~~within~~scores: ~~specified~~(i) ~~minimum~~a ~~and~~custom ~~maximum~~Prosper ~~principal amounts (currently~~Score, ~~between $2,000~~ and ~~$25,000~~(ii), ~~which~~a ~~are~~credit ~~subject~~score toobtained ~~change~~ from ~~time~~a tocredit ~~time~~reporting agency. ~~Borrower~~The ~~loans~~custom ~~may~~Prosper beScore ~~repaid~~is atupdated ~~any~~periodically ~~time~~to byinclude ~~borrowers~~new ~~without~~information ~~prepayment~~that ~~penalty.~~is Apredictive of borrower ~~loan~~risk ~~will~~as beit ~~made~~becomes toavailable anor ~~applicant~~as ~~only~~the ifevidence ~~the~~supporting ~~applicant’s~~a ~~listing~~particular ~~has~~datum ~~received~~becomes ~~bids~~strong ~~equal~~enough to ormerit ~~exceeding~~its ~~the~~inclusion ~~minimum~~in ~~amount required for~~ the ~~listing~~custom toProsper ~~fund~~Score.

InIf ~~addition~~a particular piece of information is found to ~~the~~be ~~applicant’~~highly predictive of a borrower's ~~requested~~risk ~~loan~~prior ~~amount~~to a custom Prosper Score re-development, ~~listings~~then ~~include:~~it may be added to the rating process as an overlay until its impact on borrower risk is sufficiently captured by the combination of the custom Prosper Score and the credit bureau score.

~~·the~~For ~~interest~~loan ~~rate~~listings begun on or after December 21, ~~annual~~2016, ~~percentage~~the ~~rate~~borrower's Prosper Rating and ~~monthly~~Prosper ~~payment~~Score ~~amount~~have been determined based on information obtained from the ~~requested~~borrower's ~~loan;~~TransUnion credit report. For all listings begun prior to December 21, 2016, the Prosper Rating and Prosper Score were determined using information obtained from Experian.

~~·the~~Prosper ~~servicing fee lenders must pay;~~Score

·The Prosper Score predicts the ~~lender~~probability ~~yield~~of ~~percentage~~a ~~(interest~~Borrower ~~rate~~Loan ongoing "bad," where "bad" is defined as going more than 60 days past due within twelve months of the ~~loan~~application date. To create the Prosper Score, ~~net~~we developed a custom risk model using our historical data as well as a data archive from a consumer credit bureau. We built the model on a population of users that applied for a Borrower Loan so that it would incorporate behavior that is unique to that population. In contrast, a credit score obtained from a credit reporting agency is based on a much broader population, of which borrowers through our marketplace are just a small subset. We use both the ~~servicing~~Prosper ~~fee);~~Score and a credit score to assess the level of risk associated with a listing.

·To build and validate the ~~Prosper~~custom ~~Rating~~risk model, we used borrowers from November 2013 through December 2015 and ~~estimated~~measured ~~loss~~their ~~rate;~~performance for the twelve months following their date of application. We analyzed variables available at the time of listing for potential inclusion in the final model. Potential variables included those from the credit report and also those provided by the borrower. We dropped or kept variables in the final model based on their contribution and stability over time, and went through a number of iterations before finalizing the model in its current form. The final model includes variables such as "Inquiries

·the Prosper Score and credit score range;

·the minimum amount required for the loan to fund and whether the applicant has opted for partial funding;

·the number of accounts on which the applicant is currently late on a payment, including unpaid derogatory accounts;

·the total past-due amount the applicant owes on all delinquent and derogatory accounts;

·the number of 90+ days past due delinquencies on the applicant’s credit report;

·the number of public records (e.g., bankruptcies, liens, and judgments) on the applicant’s credit report over the last 12 months, and over the last 10 years;

·the number of inquiries made by creditors to the applicant’s credit report in the last six months;

·the month and year the applicant’s oldest recorded credit line (e.g., revolving, installment, or mortgage credit) was opened;

·the total number of credit lines appearing on the applicant’s credit report, along with the number that are open and current;

·the total balance on all of the applicant’s open revolving credit lines;

~~Table~~last six months" and "Debt-to-Income Ratio". The former is an example of ~~Contents~~a credit report variable and the latter uses both credit report information as well as income information provided by the borrower.

·The model consists of a large number of decision trees that are combined to generate a prediction of default. Selection of the ~~applicant’s~~variables ~~bankcard~~used ~~utilization~~is ~~ratio,~~based ~~expressed~~on astheir combined accuracy in the prediction of default or "probability of bad." For a ~~percentage~~given borrower, ~~reflecting~~the model estimates the ~~ratio~~probability of the ~~total~~borrower ~~balance~~becoming ~~used~~bad, towhich is called the ~~aggregate~~borrower's ~~credit~~"probability ~~limit~~of onbad." The probability of bad for a borrower is then mapped to a Prosper Score, ~~all~~which is displayed as part of that listing. Prosper Scores range from 1 to 11, with 11 being the ~~applicant’s~~best, ~~open~~or ~~bankcards;~~lowest risk value. The probability of bad ranges and the corresponding Prosper Scores are as follows.

·whether the applicant owns a home;



Probability of Bad		Prosper Score
> 13.00%		1
12.00 < x <= 13.00%		2
9.50 < x <= 12.0%		3
8.00 < x <= 9.50%		4
6.90 < x <= 8.00%		5
5.90 < x <= 6.90%		6
5.00 < x <= 5.90%		7
4.20 < x <= 5.00%		8
3.50 < x <= 4.20%		9
2.70 < x <= 3.50%		10
0.00 < x <= 2.70%		11

~~·DTI~~For ~~percentage;~~example, a probability of bad of 3.29% equates to a Prosper Score of 10 and a probability of bad of 12.00% equates to a Prosper Score of 3. The probability of bad ranges may change over time as additional performance data is acquired and the custom model is updated.

~~·the~~Credit ~~applicant’s~~Bureau ~~self-reported income range, occupation, employment status, and intended use of funds;~~Score

·In addition to the ~~amounts~~Prosper Score, another major element used to determine the Prosper Rating for a listing is a credit score from a consumer reporting agency. We currently use TransUnion's FICO08 score, although we may use one or more different scores in the future. We used Experian's FICO08 score for all listings begun between September 6, 2013 and ~~dates~~December of20, 2016, and Experian's Scorex PLUS score for all ~~lender~~listings ~~member~~begun ~~bids;~~prior to September 6, 2013. The minimum credit score required for a borrower to post a listing is 640.

~~·the~~We ~~applicant’~~obtain a borrower's ~~Prosper~~credit ~~friends~~score ~~who~~at the time the listing is created, unless we already have ~~bid~~a credit score on file that is not more than thirty days old. This credit score is used to determine the Prosper Rating for the listing, ~~together~~and the range that credit score falls within is also included in the listing. If available, we obtain updated credit scores on a monthly basis for borrowers with outstanding Borrower Loans. We do not disclose the borrower's exact credit score to any ~~narrative~~marketplace ~~recommendation~~users, ~~from~~except afor ~~bidding~~the ~~Prosper~~borrower ~~friend;~~himself.

~~·the~~Assigning ~~applicant’s~~Estimated ~~group~~Loss ~~affiliations, if any; and~~Rates

~~·if~~Estimated ~~the~~average ~~applicant~~annualized ~~previously~~loss ~~obtained~~rates ~~one~~are orbased ~~more~~on ~~loans~~the ~~through~~historical ~~the~~performance ~~platform,~~of aBorrower ~~description~~Loans oforiginated ~~such~~through ~~loan~~our ~~activity,~~marketplace ~~including~~with ~~the~~similar ~~number~~characteristics and ~~aggregate~~are ~~principal~~primarily ~~borrowed~~determined onby ~~such~~Prosper ~~loans,~~Scores ~~the~~and ~~current~~credit ~~outstanding~~scores. ~~principal~~The ~~balance~~starting ofpoint ~~any~~for ~~existing~~this ~~loan,~~determination is the ~~payment~~base ~~history~~loss onrate ~~such~~table, ~~loans~~shown below, ~~and~~which was created by dividing the ~~applicant’s~~range of Prosper Scores and credit ~~score~~scores ~~ranges~~into asmultiple ofsegments ~~the~~and ~~four~~combining ~~most~~them ~~recent~~into ~~dates~~a ~~credit~~single ~~reports~~grid. ~~were~~A ~~obtained~~base loss rate is estimated for each cell in the table, based on the ~~applicant~~historical inperformance ~~connection~~of ~~with~~Borrower Loans originated through our marketplace that occupied the ~~applicant’s~~same ~~listings~~cell (i.e., ~~with~~that anhad ~~arrow~~the ~~indicator~~same ~~denoting~~point ~~whether~~of ~~the~~intersection ~~applicant’s~~for their Prosper Score and credit score). ~~has~~Cells ~~improved~~may be given the same loss rate due to small volume, ~~declined~~similar behavior or ~~remained~~both. ~~unchanged~~We ~~since~~review loan performance on a monthly basis to see how the ~~applicant’s~~loss ~~most~~rate ~~recent~~estimates ~~Prosper~~compare ~~loan~~to the actual performance of Borrower Loans, and make adjustments as necessary based on such reviews. Please refer to the website

Part of an applicant’s credit profile displayed in listings is a DTI ratio. DTI is a measurement of the applicant’s ability to take on additional debt. This number takes into consideration how much debt the applicant has or will have, including the requested loan amount. The DTI is expressed as a percentage and is calculated by dividing the applicant’s monthly debt payments, including the debt resulting from the borrower loan being requested, by the applicant’s monthly income. Such debt amounts are taken from the applicant’s credit report without verification and exclude monthly housing payments, and the applicant’s income is self-reported and may not be verified by us.

Listings may include the applicant’s narrative description of why the loan is being requested, and of the applicant’s financial situation.

For PMI Borrower Loans funded between July 13, 2009 and September 30, 2011, borrowers identified their intended use of loan proceeds by unit distribution as follows:

·debt consolidation (approximately 47%);

·business use, such as financing their home-based or small businesses (approximately 10%);

·home improvement (approximately 10%);

·financing the purchase of an automobile (approximately 6%); and

·other (approximately 27%).

_________________________

Applicants typically state the use of funds in a short sentence or clause, such as “Consolidate my credit card debt and be rid of it.” Please note that historical data regarding PMI Borrower Loans may not be indicative of the future characteristics of our borrower loans. See “Risk Factors—Prosper Funding LLC, the Platform and Our Ability to Service the Notes” for more information.

~~Table~~for the estimated base loss rate table currently in use. Estimated base loss rates for the cells in the table below correspond to those in effect as of June 21, ~~Contents~~2018.

Loan listings and other borrower information available on the platform or in our sales and listing reports are statements made in connection with the purchase and sale of securities, and are therefore subject to Rule 10b-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as well as the antifraud provisions of the Securities Act of 1933, as amended (the “Securities Act”). In general, Section 10b-5 and the antifraud provisions of the Securities Act provide the purchaser of securities with a right to bring a claim against the issuer for damages arising from any untrue statement of material fact or failure to state a material fact necessary to make any statements made by the issuer not misleading. In this prospectus, we advise you of the limitations on the reliability of the information provided by applicants with respect to loan listings. Accordingly, a court could determine that we have advised you of all material facts regarding the information supplied by applicants and your recourse in the event this information is false or misleading may be extremely limited under the securities laws because you have been so advised. Alternatively, the SEC or a court could determine that we have not advised you of all of the material facts regarding an investment in the Notes, which could give you the right to rescind your investment and obtain damages, and could subject us to civil fines or criminal penalties in addition to any such rescission rights or damages.



TransUnion FICO08 Credit Score
Prosper Score	639 -659	659 -679	679 -699	699 -719	719 -739	739 -759	759 -779	779 -799	799 -829	829 -850
1	22.25%	22.25%	22.25%	22.25%	22.25%	22.25%	22.25%	22.25%	22.25%	22.25%
2	17.75%	17.75%	17.75%	17.25%	16.75%	14.25%	14.25%	14.25%	14.25%	13.75%
3	16.25%	15.25%	15.25%	12.25%	12.25%	12.25%	12.25%	12.25%	11.25%	10.75%
4	12.25%	12.25%	12.25%	11.75%	11.25%	10.25%	10.25%	10.25%	9.75%	9.75%
5	11.75%	11.75%	10.25%	9.75%	8.99%	8.99%	8.99%	8.74%	8.49%	8.49%
6	10.75%	9.75%	8.99%	8.74%	8.74%	7.99%	7.99%	7.99%	7.74%	7.74%
7	8.99%	8.49%	8.24%	6.74%	6.74%	6.24%	6.24%	5.99%	5.99%	5.99%
8	7.99%	7.74%	6.24%	6.24%	5.99%	5.74%	5.74%	5.74%	5.74%	5.74%
9	6.74%	6.24%	5.99%	5.49%	3.99%	3.99%	3.99%	3.24%	3.24%	3.24%
10	5.24%	5.24%	4.74%	3.99%	3.74%	3.49%	3.49%	3.24%	2.74%	2.24%
11	4.49%	3.49%	3.24%	2.74%	2.24%	1.99%	1.24%	0.99%	0.74%	0.74%

~~How~~The totable ~~Bid~~above applies to ~~Purchase~~borrowers ~~Notes~~seeking their first Borrower Loan through our marketplace. For example, we make adjustments for whether the borrower has already been a borrower through our marketplace and for the term of the Borrower Loan. The final loss rate determines the Proper Rating. The value of the adjustments are based on historical data, where available, as well as observed industry performance and behavior. An example of a potential adjustment is shown below:

AHere ~~bid on a listing~~ is aan ~~lender~~example ~~member’s binding commitment to purchase a Note in the principal amount~~ of ~~the~~how ~~lender member’s bid, should~~ the ~~listing~~final ~~receive~~loss ~~bids~~rate ~~equaling~~and orProsper ~~exceeding~~Rating ~~the amount required~~ for ~~the listing to fund. Lender members bid the amount they are willing to commit to purchase~~ a ~~Note dependent for payment on payments we receive on the borrower~~ loan ~~described~~listing inwould ~~the~~be ~~listing.~~ calculated:

~~The~~• ~~bidding~~Borrower ~~period~~credit ~~for~~bureau ascore ~~listing~~= ~~begins~~730 ~~when the listing is posted on the platform~~ and ~~ends~~Prosper ~~either~~score ~~14days~~= after posting or on the first date on which the listing has received bids totaling the loan amount requested, whichever is earlier. Lender members cannot place bids on a listing once its bidding period has ended. If the applicant opts for partial funding, the bidding period still will not end prior to the end of the 14 day listing period unless the listing has received bids totaling the full amount of the loan requested.8

If• ~~the~~Borrower ~~listing~~selects ~~does~~a ~~not~~60 ~~receive~~month ~~bids equal to or exceeding the minimum amount required for the~~ loan to fund by the end of the bidding period, the listing will terminate and will not be funded. Applicants whose listings expire due to an insufficient amount of bids may post a new listing on the platform, although we have the right under our borrower registration agreement to limit the number of listings a borrower member may post on the platform.term

In order to bid on a listing, a lender member must have funds on deposit in his lender member account in at least the amount of the bid. Once bids are placed, they are irrevocable. Lender members may not cancel their bids or withdraw the amount of their bids from their accounts unless the bidding period expires without the listing having received bids in the required minimum amount, or unless the listing is withdrawn or cancelled. See “About the Platform—Structure of Lender Member Accounts and Treatment of Lender Member Balances” for more information.



Base Loss Rate:	5.99%
Adjustments:
-Loan Term:	2.25%
Final Loss Rate:	8.24%
Prosper Rating:	C

~~Currently,~~Calculating ~~the~~Loss minimum amount a lender member may bid is $25, and the maximum amount a lender member may bid is the amount of the requested borrower loan. The maximum aggregate amount a single lender member may bid on the platform is currently $5,000,000 for individuals and $50,000,000 for institutions. We may change the minimum bid amount or the maximum aggregate bid amounts from time to time. Depending on the amount of the winning bids at the end of the bidding period, there may be a winning bidder on a listing with a winning bid of less than $25. But there cannot be more than one partial winning bid on a listing.Estimates

ALoss ~~listing~~rates ~~that~~for ~~gets~~a ~~funded~~particular ~~typically~~group ~~receives~~of ~~bids~~Borrower ~~from~~Loans ~~many~~will ~~different~~be ~~lender~~a ~~members.~~function ~~For~~of ~~example,~~the ~~from~~group's ~~July~~delinquency ~~2009~~and ~~through~~loss ~~September~~behavior ~~30,~~over ~~2011~~time, ~~the~~pre-payment ~~average~~behavior ~~aggregate~~over ~~size~~time, ofand aresponsiveness ~~PMI~~to ~~Borrower~~collections ~~Loan~~activity. ~~was~~For ~~approximately~~Borrower ~~$5,583~~Loans ~~and~~originated ~~the~~through ~~average~~our ~~bid~~marketplace, ~~was~~the ~~approximately~~largest ~~$59.~~driver ~~Please~~of ~~note~~the ~~that~~loss ~~historical~~rate ~~data~~is ~~regarding~~the ~~PMI~~rate ~~Borrower~~at ~~Loans~~which ~~may~~a ~~not~~group ~~be indicative~~ of ~~the~~Borrower ~~future~~Loans ~~characteristics~~becomes ofdelinquent ~~our~~and ~~borrower~~charges ~~loans~~off. ~~See~~ ~~“Risk~~A ~~Factors—Prosper~~loan ~~Funding~~becomes ~~LLC,~~"charged ~~the~~off" ~~Platform~~ and ~~Our~~is ~~Ability~~considered toa ~~Service~~loss ~~the~~when ~~Notes”~~it ~~for~~becomes 121 or more ~~information~~days past due.

Lender members may browse online through available listings displayed on the platform by desired borrower loan amount, yield percentage, Prosper Rating, estimated loss rate, debt-to-income ratio, group or other applicant characteristics. Alternatively, lender members can use our loan search tool, Quick Invest, to identify loan listings that meet their investment criteria. A lender member can bid on as many listings as the lender member desires, subject to the aggregate bidding limit. A lender member can diversify her risk of default if she elects to do so. It is solely up to the individual lender members to select their bidding method and the credit characteristics that are acceptable to the lender member and to determine a diversification strategy.

~~Table~~Modeling Loss Rates. The loss rate is the balance-weighted average of ~~Contents~~the monthly loss rates for the group of Borrower Loans over the term of such loans. The gross loss rate is adjusted for principal recovery net of collection expenses to arrive at a net loss rate.

~~Quick~~Estimating ~~Invest~~Losses. We determine the loss component of the loss rate calculation by analyzing losses for Borrower Loans and making adjustments to reflect anticipated deviations from historical performance that may exist due to the current macro-economic or competitive environment. Changes in delinquency and losses have the largest impact on the expected loss rate of a group of Borrower Loans, and so changes in loan delinquency and loss performance are monitored on at least a monthly basis.

~~Our~~Calculating ~~loan~~Average ~~search tool, Quick Invest, allows lender members to identify listings that meet their investment criteria~~Balance. ATo ~~lender~~calculate ~~member using Quick Invest is asked to indicate (i)~~ the ~~Prosper~~average ~~Rating~~balance orfor ~~Ratings~~each ~~she wishes to use as search criteria~~period, ~~(ii)~~we ~~the~~used ~~total amount she wishes to invest and (iii)~~ the amount ~~she~~of ~~wishes~~loan toprincipal ~~invest~~on ~~per~~Borrower ~~Note.~~Loans Ifthat ~~she~~are ~~wishes~~still toopen ~~search~~and ~~for~~have ~~Notes~~not ~~using~~been ~~criteria~~charged-off ~~other~~or ~~than,~~paid oroff. inAs ~~addition~~loan ~~to,~~payments ~~Prosper~~are ~~Rating~~made, ~~she~~the ~~can~~principal ~~use~~balance ~~one or more~~ of ~~several~~each ~~dozen~~Borrower ~~additional~~Loan ~~search~~declines ~~criteria,~~over ~~such as loan amount, debt-to-income ratio and credit score~~time.

~~Quick~~When ~~Invest then compiles~~ a ~~basket~~Borrower ofLoan ~~Notes~~pays ~~for~~faster ~~the~~than ~~lender~~its ~~member’s~~amortization ~~consideration~~schedule ~~that~~(pre-payment), ~~meet her search criteria. If~~ the ~~pool~~portion of ~~Notes that meet her criteria exceeds~~ the ~~total~~principal ~~amount~~that ~~she~~is ~~wishes~~pre-paid tois ~~invest,~~no ~~Quick~~longer ~~Invest~~included ~~selects~~in ~~Notes from~~ the ~~pool~~outstanding ~~based~~balance ~~on how far the listings corresponding to the Notes have progressed through our loan verification process, i.e., Notes from the pool that correspond to listings~~ for ~~which~~subsequent ~~we have completed our loan verification process will be selected first~~periods. If ~~the~~Once ~~pool~~a ofBorrower ~~Notes~~Loan ~~that~~has ~~meet~~been ~~the lender member’s criteria and for which we have completed loan verification still exceeds the amount she wishes to invest~~charged-off, ~~Quick Invest selects Notes from that pool based on~~ the ~~principle~~principal ofassociated ~~first in, first out, i.e., the Notes from the pool~~ with ~~the~~such ~~corresponding~~loan ~~listings that were posted on our website earliest will be selected first. To the extent available Notes that meet the lender member’s criteria are insufficient to fill her order, the lender member~~ is ~~advised~~considered ofa ~~this~~credit ~~shortfall~~loss and ~~given~~is anno ~~opportunity~~longer ~~either~~included toin ~~reduce~~ the ~~size~~outstanding ofperiodic ~~her order or modify her search criteria to make her search more expansive~~balance.

IfCollection ~~the~~Expense ~~lender~~and ~~member’s~~Recovery ~~search~~Adjustments. ~~criteria~~When ~~included~~an ~~multiple~~account ~~Prosper~~becomes ~~Ratings~~past due, ~~Quick~~we ~~Invest~~may ~~divides~~collect ~~her~~on ~~basket~~the ~~into~~account ~~equal~~directly ~~portions,~~or ~~one~~refer ~~portion~~the ~~representing~~account ~~each~~to ~~Prosper~~a ~~Rating~~third-party ~~selected,~~collection ~~and~~agency. ~~then~~Our ~~attempts to fill each portion~~ in-house ~~the~~collections ~~manner~~department ~~just~~and ~~described. To~~third-party ~~the~~collection ~~extent~~agencies ~~there~~ are ~~insufficient~~compensated ~~Notes~~by ~~available~~keeping ~~with~~ a ~~particular Prosper Rating to fill that~~ portion of the ~~lender~~payments ~~member’s~~they ~~basket,~~collect ~~Quick~~based ~~Invest~~on ~~attempts~~a topredetermined ~~make~~schedule. upOnce ~~the~~an ~~deficit~~account byhas ~~including~~been ~~additional~~charged-off, ~~Notes~~any ~~with~~subsequent ~~the~~payments ~~other~~received ~~Prosper~~or ~~Ratings~~proceeds ~~selected~~from inthe ~~equal~~sale ~~proportions.~~of To the ~~extent~~Borrower ~~available~~Loan ~~Notes~~in ~~with~~a ~~these~~debt ~~other~~sale ~~Prosper Ratings~~ are ~~still~~considered ~~insufficient~~recoveries ~~to fill the lender member’s order, the lender member is advised of this shortfall~~ and ~~given an opportunity either to~~ reduce the ~~size~~amount of ~~her~~principal ~~order or to modify her search criteria to make her search more expansive~~lost.

~~For~~Comparing ~~example,~~Estimated ifLoss aRates ~~lender member using Quick Invest indicated that she wished~~ to ~~invest~~Actual a total of $600 in Notes with a Prosper Rating of B, C or D, Quick Invest would first attempt to fill her order with equal portions of B, C and D Notes ($200 – B; $200 – C; $200 – D). If there were only $100 of D Notes available, the search tool would attempt to increase the allocation of B and C Notes from $200 to $250 ($250 – B; $250 – C; $100 – D). If there were $250 of B Notes available but only $200 of C Notes available, the search tool would then attempt to make up the remaining gap by increasing the allocation of B Notes from $250 to $300 ($300 – B; $200 – C; $100 – D). But if there were only $275 worth of B Notes available, the lender member would be given the choice of expanding her search criteria or reducing the total size of her order from $600 to $575. If she elected to reduce the size of her order, her final order would consist of $575 of Notes: $275 of B Notes, $200 of C Notes and $100 of D Notes.Losses

~~Our~~We ~~Auto~~review ~~Quick~~the ~~Invest~~performance ~~feature~~of ~~allows~~Borrower ~~lender~~Loans ~~members~~on ~~(i)~~a monthly basis to ~~have~~determine ~~Quick~~how ~~Invest~~loss ~~searches~~rate ~~run~~estimates oncompare ~~their~~to ~~designated~~actual ~~criteria~~performance. ~~automatically~~As ~~each~~part ~~time~~of ~~new~~this ~~listings~~monthly review, the processes for calculating and assigning loss rates and Prosper Ratings are ~~posted~~reassessed onto ensure continued accuracy. The graphs below show the ~~platform~~estimated versus actual cumulative dollar loss rates by Prosper Rating for Borrower Loans, ~~and~~collectively, ~~(ii)~~booked tofrom ~~have~~July ~~bids~~13, ~~placed~~2009 ~~automatically~~through onSeptember 30, ~~any~~2017. ~~Notes~~Performance ~~identified~~is as of March 31, 2018. The loss performance is tracked by vintage, meaning each ~~such~~line ~~search.~~represents Asall ~~with~~Borrower Loans originated in a ~~lender~~given ~~making~~period. ~~manual~~The ~~bids~~graphs only include Borrower Loans that have been outstanding at least 6 months. In addition, data for a ~~lender~~point ~~member~~along ~~using~~the ~~Quick~~x ~~Invest~~axis is ~~not~~only ~~permitted~~included toif ~~place~~the aentire ~~bid~~vintage ~~unless~~is ~~the~~at ~~funds~~least that mature. So, although Borrower Loans originated in ~~her~~April ~~account~~2017 have 11 months of performance, only 9 months of performance are ~~sufficient~~reflected toin ~~cover~~the graphs below because the ~~bid~~June 2017 Borrower Loans, ~~and~~which ~~funds~~are ~~will~~also ~~only~~a bepart ~~debited~~of ~~from~~the ~~her~~2017 ~~account~~Q2 ifvintage, ~~and~~have ~~when~~only ~~her~~completed ~~bid~~9 ismonths ~~successful~~of performance.

~~Setting~~Vintages ~~Interest~~generally ~~Rates~~contain enough loan volume for their performance curves to be meaningful. For presentation purposes, some of the older vintages have been grouped into annual and half-year vintages.

PMI has an interest rate committee, consisting of its Chief Executive Officer, Chief Financial Officer, Executive Vice President, Acquisition and Risk Management, and General Counsel, which meets regularly to set interest rates for all borrower loans. These rates are set forth in a rate table, which is posted at www.prosper.com. The table dictates the interest rate for all borrower loans, based on Prosper Rating, as well as additional factors, such as loan terms, group affiliations, competitive conditions and the general economic environment. The yield percentage on each series of Notes is equal to the interest rate on the related borrower loan, minus our servicing fee, currently set at 1%, which we may increase in the future to up to 3%.

~~Table~~Below are two graphs that show the actual 3-year (36M) and 5-year (60M) term cumulative gross charge-offs as a percentage of ~~Contents~~originations in the respective term, across all Prosper Ratings by vintage for Borrower Loans, collectively, originated from July 13, 2009 to March 31, 2018. The addition of "H1" means that the information reported reflects the first six months of the year presented, while "H2" reflects the second 6 months of the year presented. Similarly, "Q1" or "Q2" means that the information reported reflects the first or second quarter of the year presented.

~~The~~Overall, ~~interest~~the ~~rate~~majority ~~committee~~of ~~meets~~vintages oncontinue atto ~~least~~track abelow ~~monthly~~the ~~basis,~~cumulative ~~but~~loss ~~may~~rates ~~meet~~experienced ~~more~~for ~~frequently~~the as2009-2012 ~~changes~~vintages. The inlowest ~~market~~risk ~~conditions~~vintages ~~and~~originated ~~the~~to ~~general~~date ~~economic~~were ~~environment~~originated ~~dictate~~in 2013-2014. At Vintages ~~each~~originated ~~meeting,~~from ~~the~~2015 ~~committee~~onward ~~reviews~~have ~~the~~exhibited ~~interest~~greater ~~rate~~volatility ~~table~~relative to 2013 and ~~makes~~2014. The ~~adjustments~~higher toabsolute itlevel of risk for the ~~extent~~2017Q1 and 2017Q2 vintages is primarily the ~~committee~~result ~~deems~~of ~~necessary. The~~a ~~factors~~riskier ~~besides~~mix ~~Proper~~of ~~Rating~~assets ~~that~~and ~~the~~is ~~committee~~not ~~takes~~a ~~into~~result ~~consideration~~of inperformance ~~updating~~deterioration when compared to the ~~table,~~2015 asand ~~well~~2016 asvintages. Mix ~~the~~adjusted ~~weight~~performance ~~the~~for ~~committee~~2015-2017 ~~accords~~vintages ~~each~~remains ~~such~~relatively ~~factor,~~stable ~~may~~with ~~change~~2016H1 ~~from~~vintages ~~time~~currently toexhibiting ~~time~~the highest risk on a rating adjusted basis.

The interest rate table currently in effect is set forth below. In addition, the interest rate for each loan listing, as well as the yield percentage for the corresponding Notes, is included in the listing report we file for that listing. This information is also included in the listing itself when it is posted on our website. In addition, we keep the copy of the current interest rate table posted on our website.

Prosper Rating	Term (years)	Number of Previous Prosper Loans	Borrower Rate
AA	1	1+	5.65%
AA	3	1+	6.25%
AA	5	1+	9.11%
AA	1	0	5.65%
AA	3	0	6.49%
AA	5	0	9.61%
A	1	1+	6.09%
A	3	1+	8.99%
A	5	1+	12.96%
A	1	0	6.08%
A	3	0	9.99%
A	5	0	13.96%
B	1	1+	9.58%
B	3	1+	14.49%
B	5	1+	18.45%
B	1	0	9.58%
B	3	0	14.49%
B	5	0	18.45%
C	1	1+	12.59%
C	3	1+	18.74%
C	5	1+	22.93%
C	1	0	14.34%
C	3	0	20.49%
C	5	0	24.68%
D	1	1+	16.72%
D	3	1+	22.87%
D	5	1+	27.05%
D	1	0	18.37%
D	3	0	24.52%
D	5	0	28.70%
E	3	1+	29.99%
E	5	1+	33.04%
E	3	0	29.58%
E	5	0	33.04%
HR	3	0	31.77%

~~Table~~The graphs below show the estimated and actual 3-year (36M) and 5-year (60M) term cumulative gross charge-offs for Borrower Loans, collectively, as a percentage of ~~Contents~~originations for respective term and for each Prosper Rating presented by vintage from July 13, 2009 to March 31, 2018.

Purchase of Notes by Prosper Funding LLC or Related Parties

From time to time, we or PMI may bid on listings and hold any Notes we or PMI purchase as a result of such bids for our or PMI’s own account. Any bid on a loan by us or PMI will be made public in the same manner in which bids by other bidders on a particular listing are made public. In addition, loans upon which we or PMI bids will be identified to other bidders through the use of a special symbol and a user profile that are intended to make it clear that we or PMI are bidding on a particular listing.

We and PMI will participate in bidding on the listings under the same terms and conditions and through the use of the same information that is made available to other lender members on the platform. In some cases, our or PMI’s bidding on a listing may cause it to fund, and in some cases, fund faster, than it would fund in the absence of such bid. The amount that we or PMI may choose to bid on any particular listing may vary significantly and we and PMI each reserve the right to bid up to the entire amount of a listing.

Some of our or PMI’s executive officers, directors and 5% shareholders have bid on listings and purchased PMI Notes from time to time in the past, and may purchase Notes in the future. As of September 30, 2011, these individuals had purchased $3,313,654 in PMI Notes or loans. These loans and PMI Notes were obtained on the same terms and conditions as those obtained by other lender members. However, as certain of these executive officer and directors, by virtue of their duties as employees or directors of PMI, have access to information not available to the general population of lender members, we and PMI have adopted the following procedures to prevent or detect the improper use of non-public information in bidding activities by any of our respective officers and directors:

· PMI’s corporate policies, distributed to all employees, prohibit an employee’s use of non-public information and any violation of this policy is grounds for immediate termination.

·Security features of our system limit access to data needed to perform particular employee job functions. These limitations are defined by “security group,” which corresponds to both job title and function and the number of PMI’s employees that have access to such non-public information on a “bulk” or “query” basis is extremely limited.

· In addition to prevention efforts, we have developed an audit process that identifies and investigates bidding and funds transfer activities that are classified as “suspicious.”

Structure of Lender Member Accounts and Treatment of Lender Member Balances

We maintain a pooled account at Wells Fargo Bank, N.A. to hold the funds of lender members. This account is titled “Prosper Funding LLC for the benefit of its lender members” and we refer to it as the “FBO account”. In order to bid on listings, a lender member must have sufficient funds in the FBO account. A lender member can transfer funds into the FBO account by authorizing an electronic transfer using the Automated Clearing House, or ACH, network from the lender member’s designated and verified bank account to the FBO account. All payments on Notes are made by deposit into the FBO account. Upon request by the lender member, we will transfer lender member funds in the FBO account to the lender member’s designated and verified bank account by ACH transfer, provided such funds are not already committed to the future purchase of Notes.

On our system, we divide the FBO account into sub-accounts for each lender member. These sub-accounts allow us to track and report for each lender member the funds the lender member has transferred into and out of the FBO account, the funds the lender member has committed to purchase Notes, and the payments the lender member has received on outstanding Notes. We refer to each lender member’s sub-account as his or her “lender member account”. Lender members have no direct relationship with Wells Fargo Bank by virtue of having a lender member account or participating on the platform.

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The FBO account is FDIC-insured on a “pass through” basis to the individual lender members, subject to applicable limits. This means that each lender member’s balance is protected by FDIC insurance up to the aggregate per person limit established by the FDIC. Other funds the lender member has on deposit with the same institution where the FBO account is maintained may count against the FDIC insurance limits for that member. We will always maintain the FBO account with an FDIC member financial institution. Funds of a lender member may stay in the FBO account indefinitely and do not earn interest. We never commingle our assets or any assets of PMI with the assets in the FBO account.

Borrower Loan Funding and Purchases; Sale of Notes

Once the bidding period for a listing ends, if the listing has received bids from lender members equal to or exceeding the minimum amount required to fund, the funding of the corresponding borrower loan and the sale of the Notes to the lender members who bid on the listing will proceed.

Applicants execute an electronic borrower registration agreement at the time they post a listing on the platform. After expiration of the bidding period for the listing and satisfactory completion of our pre-funding verification process, the applicant executes an electronic promissory note in favor of WebBank in an amount equal to the total amount of winning bids. WebBank then electronically endorses the promissory note to us and sells and assigns the promissory note to us without recourse. The promissory note and the borrower registration agreement contain customary agreements and covenants requiring the applicants to repay their loans and describing the process of posting listings and obtaining loans through the platform.

WebBank funds all loans originated on the platform, and we disburse the loan proceeds on WebBank’s behalf to the borrower. Each borrower authorizes the loan proceeds to be disbursed by ACH transfer into the borrower’s designated bank account.

Borrowers pay an origination fee out of the proceeds of the loan at the time of funding. As of September 30, 2011, borrowers with a AA Prosper Rating pay an origination fee equal to 0.5% of the loan amount, borrowers with a Prosper Rating of A and B pay 3% of the loan amount, and borrowers with Prosper Ratings C through HR pay 4.5%. The origination fees are charged by WebBank, and we receive payments from WebBank equal to the origination fees as compensation for its loan origination activities on WebBank’s behalf.

Lender members know only the screen names, and do not know the actual names, of applicants. The actual names and mailing addresses of the applicants are known only to us. We maintain custody of the electronically-executed promissory notes evidencing borrower loans as well as the Notes in electronic form on the platform.

When we issue and sell a Note to a lender member, we register the Note in the name of the lender member on our books and records. For each loan originated on the platform, we transfer the principal amount of the Notes corresponding to that loan from the FBO account to Web Bank. This transfer represents the payment (i) by the lender members who have agreed to purchase the Notes to us of the purchase price for the Notes and (ii) by us to WebBank of the purchase price for the corresponding loan. WebBank is the lender for all borrower loans, which allows the platform to be available on a uniform basis to borrowers throughout the United States. The lender registration agreement provides that, in the event of a material breach of our representations and warranties pertaining to a Note, we must either cure the defect, repurchase the Note, or indemnify and hold the lender member harmless against losses resulting from the breach.

Loan Servicing and Collection

Following our purchase of borrower loans and our sale of Notes corresponding to the borrower loans, we begin servicing the borrower loans and Notes. We have entered into a servicing agreement with PMI, pursuant to which we have engaged PMI to assist us in performing these duties and to perform various other tasks on our behalf relating to the operation of the platform. In general, any actions described below that we take in servicing the borrower loans or Notes may be taken on our behalf by the Servicer acting as our agent. See “Summary of Indenture, Form of Notes and Servicing Agreement - Servicing Agreement.”

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We collect payments from borrowers on borrower loans. We transfer amounts collected to the lender members who own Notes corresponding to the borrower loan, after deducting servicing fees. On Notes, the payment dates will fall on the sixth business day after the due date for each installment of principal and interest on the corresponding borrower loan.

To the extent we do not receive the anticipated payments on a borrower loan, we will not make any payments on the Notes related to that borrower loan, and a holder of a Note will not have any rights against us or the borrower in respect of the Note or the corresponding borrower loan. Each holder’s right to receive principal and interest payments and other amounts in respect of that Note is limited in all cases to the holder’s pro rata portion of the amounts we receive on the corresponding borrower loan, including without limitation, all payments or prepayments of principal and interest, subject to servicing fees and charges retained by a third party, as set forth in the following chart. Our current collection agencies charge collection fees from 17.0% to 30.0% of the amount recovered up to the “total amount delinquent.” To the extent that we place loans with another collection agency, we will disclose the collection fees percentages on its website.

Description of Fee	Fee Amount	When Fee is Charged	Effect on Lender Member
Prosper Borrower Notes
Servicing fee	Annualized rate currently set at 1% of outstanding principal balance, but which we may increase in the future to an amount greater than 1% but less than or equal to 3%. The servicing fee percentage is subject to change from time to time, is disclosed in all loan listings and is posted in the Fees and Charges section at www.prosper.com, but will not change during the course of the loan.	The servicing fee is payable on all payments received on borrower loans, including, without limitation, partial payments.	The servicing fee will reduce the effective yield below the interest rate on the borrower loan. This reduction is reflected in the yield percentage included in each listing.
Non-sufficient funds fee	$15, unless a lesser amount is required by applicable law.	First failed payment for each billing period.	We retain 100% of the non-sufficient funds fees to cover our administrative expenses.
Late payment fee	Equal to greater of 5% of the unpaid installment amount or $15, unless a lesser amount is required by applicable law.	After 15-day grace period, we assess a late fee. The late payment fee is charged only once per payment period.	Any late payment fees we receive are paid to the lender members, subject to deductions for Collection Charges and Servicing Fees.

Collection Charges		Our current collection agencies charge collection fees from 17.0% to 30.0% of the amount recovered up to the “total amount delinquent,” plus any legal fees incurred in the event legal action is taken to collect a loan. The collection fees vary depending upon the collection agency used. These fees are posted in the Fees and Charges section of the our website.		After a borrower loan becomes more than 30 days past due, the loan may be referred to a collection agency. Collection charges and any related legal fees are only charged if delinquent amounts are collected. Our servicing fee is also deducted from the net payments we receive as a result of any collection efforts on a delinquent borrower loan.		Lender members will not receive any collection fees we or a third-party collection agency charges, which fees will be retained by the party charging the fees as additional servicing compensation. The collection fees and any related legal fees will be deducted from any borrower loan payments we receive. These fees will reduce the lender member’s effective yield, and are not reflected in the yield percentage shown on the listing.
Loan modification fees		We will not charge a fee for restructuring a borrower loan.		We may work with the borrower to structure a new payment plan in respect of the borrower loan without the consent of any holder of the Notes corresponding to the borrower loan. This generally would only occur in lieu of bankruptcy or a similar proceeding.		Not applicable.

Table of Contents

Our procedures for collecting borrower loan payments generally involve the automatic debiting of borrower bank accounts by ACH transfer. Such funds are transferred to a master servicing account in our name that we maintain with Wells Fargo Bank, N.A. Thereafter, we make payments on the Notes by transferring the appropriate funds from the master servicing account to the FBO account and allocating amounts received on specific borrower loans to the appropriate lender member accounts. We transfer amounts due to us for servicing from the master servicing account to another operating account of ours. A lender member may transfer uncommitted funds out of the FBO account by ACH transfer to the lender member’s designated bank account at any time, subject to normal execution times for such transfers (generally 2-3 days).

We will make payments on the Notes upon receiving payments under the corresponding borrower loan, in accordance with the payment schedule for each Note. Each Note will have a payment schedule providing for monthly payments over a term equal to the corresponding borrower loan. The payment date for Notes will fall on the sixth business day after the due date for each installment of principal and interest on the corresponding borrower loan. The stated interest rate on each Note will be the lender yield percentage set forth in the loan listing. The yield percentage is net of the servicing fee.

We disclose borrowers’ payment performance on loans to the relevant lender members on our website and also report such information to consumer reporting agencies.

We subtract a servicing fee from every loan payment we receive. The amount of the servicing fee with respect to a particular payment is calculated by (a) multiplying the applicable annual servicing fee rate by a fraction, the numerator of which is equal to the number of days since the borrower’s last payment and the denominator of which is 365, and (b) multiplying the product obtained by the outstanding principal balance of the loan prior to applying the current payment. The rate of our annual servicing fee is currently set at 1.0%, but we may increase that in the future to a rate greater than 1% but less than or equal to 3%. Our servicing fees are subject to change from time to time, and are posted in the Fees and Charges section at www.prosper.com.

We keep lender members apprised of the delinquency status of borrower loans by identifying delinquent loans on our website as “1 month late,” “2 months late,” “3 months late,” or “current.” Borrower loans that become more than 120 days overdue are charged off and designated as such on our website. Through their online Prosper account, lender members are able to monitor the borrower loans corresponding to their Notes, but cannot participate in or otherwise intervene in the collection process.

~~Table~~Note: Estimated lines represent the high end of ~~Contents~~the estimated loss rate range for each Prosper Rating, except for HR, where the high end of the range is 100% and the estimated curve was set at 19.75% cumulative principal loss.

IfBecause aProsper ~~borrower~~tracks ~~dies~~gross ~~while~~losses, ait ~~borrower loan~~ is inimportant ~~repayment,~~to wenote ~~require~~that the ~~executor~~curves orabove ~~administrator~~do ofnot reflect the ~~estate~~meaningful toimprovements ~~send~~made ain ~~death~~2015 ~~certificate~~and 2016 to ~~us. Depending~~Prosper’s recovery rates on ~~the~~charged ~~size~~off ofBorrower ~~the~~Loans. In ~~estate~~2015, weProsper ~~may~~adopted ~~not~~a benew ~~able~~program tofor ~~recover~~obtaining ~~the~~recoveries ~~outstanding~~on ~~amount~~charged ofoff ~~the~~Borrower ~~loan~~Loans. If Prior ~~the estate does not include sufficient assets~~ to ~~repay~~implementation ~~the~~of ~~outstanding~~this ~~borrower loan in full~~program, weProsper’s ~~will~~recovery ~~treat~~rates ~~the~~on ~~unsatisfied portion of that borrower loan as~~ charged off ~~with~~Borrower ~~zero~~Loans ~~value~~ranged from 2-3%. In To ~~addition~~date, ifrecovery arates ~~borrower~~on ~~dies~~charged ~~near~~off ~~the~~Borrower ~~end~~Loans ofunder the ~~term~~new ofprogram ahave ~~borrower~~ranged ~~loan,~~from it7-8%. Although isProsper ~~unlikely~~expects ~~that~~to ~~any~~devote ~~further~~substantial ~~payments~~efforts ~~will~~to bemaximizing ~~made~~recoveries on ~~the~~charged ~~Notes~~off ~~corresponding~~Borrower toLoans ~~such~~for ~~borrower~~its ~~loan~~investors going forward, ~~because~~there ~~the~~can ~~time~~be ~~required~~no ~~for~~guarantee that the ~~probate~~recovery ofrates under the ~~estate~~new ~~may~~program ~~extend~~will ~~beyond~~continue ~~the~~to ~~final~~range ~~maturity~~from ~~date~~7-8% ofin the ~~Notes~~future.

~~When~~Please wenote ~~receive~~that ~~notice of a borrower bankruptcy filing, it ceases all automatic monthly payments on~~ the ~~borrower~~historical ~~loan~~performance ~~and defers any other collection activity, as required by law. The status~~ of ~~the~~Borrower ~~borrower~~Loans ~~loan, which the relevant lender members~~ may ~~view~~not ~~through~~be ~~their~~indicative ~~online Prosper account, switches to “bankruptcy.” We then determine whether we have a basis to object to the inclusion~~ of the ~~debt~~future inperformance ~~any~~of ~~bankruptcy~~Borrower ~~action (e~~Loans.g., based on the time between loan origination and bankruptcy filing). If the proceeding is a Chapter 7 bankruptcy filing seeking liquidation, we attempt to determine if the proceeding is a “no asset” proceeding, based on instructions we receive from the bankruptcy court. If the proceeding is a “no asset” proceeding, we take no further action and assume that no recovery will be made on the borrower loan.

In all other cases, we file a proof of claim involving the borrower. The decision to pursue additional relief beyond the proof of claim in any specific matter involving a borrower will be entirely within our discretion and will depend upon certain factors including:

·if the borrower used the proceeds of the loan in a way other than that which was described in the listing;

·if the bankruptcy is a Chapter 13 proceeding, whether the proceeding was filed in good faith and if the proposed plan reflects a “best effort” on the borrower’s behalf; and

·our view of the costs and benefits to us of any proposed action.

Note Trader Platform

Lender members may not transfer their Notes except through the Note Trader platform operated and maintained by FOLIOfn Investments, Inc., a registered broker-dealer. The Note Trader platform is an internet-based trading platform on which lender members may offer their Notes for sale or bid on and purchase Notes offered for sale by other lender members. Lender members must first establish a brokerage relationship with FOLIOfn Investments, Inc. before using the Note Trader platform. In this section, we refer to lender members who have established such brokerage relationships as “subscribers.” Only transactions involving the sale of previously-issued Notes will be effected through the Note Trader platform; the Note Trader platform will not handle any aspect of transactions involving the initial offer and sale of Notes by us.

Subscribers who sell Notes on the Note Trader platform will be subject to transaction fees charged by FOLIOfn Investments, Inc. The transaction fee is currently equal to one percent of the sale price of the Note sold.

Neither we nor PMI is a registered national securities exchange, securities information processor, clearing agency, broker, dealer or investment adviser. All securities services relating to the Note Trader platform are provided by FOLIOfn Investments, Inc. Neither we, nor PMI nor FOLIOfn Investments, Inc. will make any recommendations with respect to transactions on the Note Trader platform. There is no assurance that subscribers will be able to establish a brokerage relationship with FOLIOfn Investments, Inc. Furthermore, we cannot assure subscribers that they will be able to sell Notes they offer for sale through the Note Trader platform at the offered price or any other price, nor can we offer any assurance that the Note Trader platform will continue to be available to subscribers.

~~Table~~Maximum ofLoan ~~Contents~~Amount

~~Sale~~The ofmaximum loan amount for a listing is determined by the ~~Notes~~borrower's Prosper Rating. The table below shows the maximum loan amount for each Prosper Rating as of June 21, 2018:

Notes Subject to Sale by Subscribers. All Notes, including Notes for which the corresponding borrower loans have become delinquent, will be eligible for sale on the Note Trader platform. There is no limit on the number of times a Note may be sold on the Note Trader platform, so long as the Note is outstanding.



Prosper Rating	Maximum Loan Amount
AA	$	40,000
A	40,000
B	40,000
C	35,000
D	25,000
E	15,000
HR	7,500

~~Lender~~Borrower ~~Members~~Identity Eligible to Bid on Note Listings. Lender members must first establish a brokerage relationship with FOLIOfn Investments, Inc. before using the Note Trader platform. To open an account, FOLIOfn Investments, Inc. may require lender members to confirm that they satisfy certain minimum financial suitability standards and ~~maximum~~Financial ~~investment~~Information limits, if any, that may be imposed by the state in which the lender member resides. If the lender member does not satisfy these suitability requirements he or she will not be able to participate on the Note Trader platform.Verification

~~Creation~~PFL reserves the right in its user agreements to verify the accuracy of ~~Note~~all ~~Listings~~statements and information provided by borrowers and investors in connection with listings, commitments and Borrower Loans. ~~Subscribers~~ We may ~~offer~~conduct ~~one~~our review at any time before, during or ~~more~~after the posting of ~~their~~a ~~Notes~~listing, ~~for~~or ~~sale~~before onor after the ~~Note~~funding ~~Trader~~of ~~platform~~a byBorrower ~~creating~~Loan. ~~and~~If ~~posting~~we are unable to verify material information with respect to a ~~“Note~~borrower or listing~~.” Subscribers~~, ~~may~~we ~~offer~~will cancel or refuse to ~~sell~~post the listing or cancel any or all ofcommitments against the ~~Notes~~listing. ~~they~~We ~~own~~may ~~and~~also ~~may~~delay ~~offer~~funding of a Borrower Loan in order to ~~sell~~verify ~~more~~the ~~than~~accuracy ~~one~~of ~~Note~~information atprovided by a borrower in connection with the ~~same~~listing, ~~time~~or to determine whether there are any irregularities with respect to the listing. ~~When~~If ~~posting~~we aidentify ~~Note~~material misstatements or inaccuracies in the listing or in other information provided by the borrower, we will cancel the ~~subscriber~~listing or related loan. Our participation in funding Borrower Loans through our marketplace from time to time has had, and will ~~designate~~continue ato ~~minimum~~have, ~~sale~~no ~~price~~effect on the ~~subscriber~~income isand ~~willing~~employment toverification ~~receive~~process, ~~for~~the selection of loan requests verified or the ~~Note~~frequency of income and employment verification.

~~Note~~We ~~listings~~verify ~~will~~the ~~have~~identity aof ~~seven-day~~borrowers ~~auction~~by ~~bidding~~comparing ~~period~~supplied names, ~~but~~social ~~selling~~security ~~subscribers~~numbers, ~~may~~addresses ~~elect~~and totelephone ~~end~~numbers against the ~~listing~~names, ~~early~~social atsecurity ~~any~~numbers, ~~time~~addresses ~~after~~and telephone numbers in the records of a ~~winning~~consumer ~~bid~~reporting isagency, ~~made. Selling~~as ~~subscribers~~well ~~may~~as ~~also~~other ~~add~~anti-fraud anand ~~“automatic~~identity ~~sale”~~verification ~~feature~~databases. In addition, we ask certain borrowers to submit a copy of their ~~Note~~current ~~listing~~driver's license, passport or other government-issued, photo identification card, which ~~would~~are ~~end~~then authenticated using third-party reference materials. Finally, we verify the ~~bidding~~accuracy ~~period~~of oneach aborrower's ~~Note~~bank ~~listing~~account ~~immediately~~information. ~~after~~To the ~~listing~~extent ~~receives~~any anof ~~initial~~these ~~bid~~processes ~~equal~~identify toinconsistencies anbetween ~~automatic~~the ~~sale~~information ~~price~~submitted ~~set~~ by the ~~selling~~borrower ~~subscriber~~and the information contained in another data source, the borrower must submit documentation to resolve the discrepancy to our satisfaction. In ~~such~~For ~~instances~~example, the ~~Note~~borrower ~~would~~might be ~~immediately~~required ~~sold~~to submit a recent utility bill to reconcile a discrepancy between the ~~subscriber~~current ~~who~~address ~~placed~~listed in his or her application and the ~~bid~~one listed in his or her credit report. If we are unable to verify the identity of a borrower in the manner described above, we will cancel the borrower's listing or pending loan.

~~The~~In ~~selling~~addition ~~subscriber~~to ~~may~~the ~~withdraw~~identity ~~Note~~verification ~~listings~~processes ~~without~~just ~~charge~~described, atwe ~~any~~verify ~~time~~income ~~prior~~and toemployment ~~expiration~~information offor ~~the~~a ~~auction~~subset ~~bidding~~of ~~period,~~borrowers ~~before~~based ~~any~~on ~~bids~~a ~~are~~proprietary ~~received~~algorithm. ~~Note~~ ~~listings~~The ~~with~~intention atof ~~least~~this ~~one~~algorithm ~~bid~~is ~~cannot~~to beidentify ~~withdrawn~~instances bywhere the ~~selling~~borrower's ~~subscriber~~self-reported income is highly determinative of the borrower's Prosper Rating. The algorithm gives greatest weight to the following factors:

~~Display~~• ofProsper Note Listings. Note listings will be displayed for auction on the Note Trader platform, and include the selling subscriber’s screen name, the offered sale price of the Note, the interest rate on the Note, the remaining term of the Note, and the yield to maturity that corresponds to the offered sale price. Note listings will also include the repayment status of the borrower loan corresponding to the Note (i.e., current or delinquent), the payment history on the borrower loan and the next scheduled payment on the Note. In addition, Note listings will include the remaining duration of the Note listing, the number of bids, and whether the Note listing has an automatic sale feature.Rating;

~~Note~~• ~~listings will include a link to the original listing (including the listing title, description, credit data, recommendations and original bidding history) for the borrower~~ loan that corresponds to the Note being offered for sale. Although Note listings will be displayed publicly on the Note Trader platform, the borrower’s payment history and corresponding listings will be viewable only by registered subscribers.amount;

~~Bidding~~• onstated ~~Note~~income; ~~Listings. Only registered subscribers are eligible to bid for~~ and purchase Notes listed for sale on the Note Trader platform. Subscribers may bid for and purchase one or more Notes from selling subscribers. As with bidding on loan listings, subscribers who bid on Note listings must have funds on deposit in the subscriber’s funding account in at least the aggregate amount of the subscriber’s bids. Subscribers are prohibited from withdrawing amounts from the subscriber’s funding account to the extent any such withdrawal would reduce the balance below the aggregate amount of the subscriber’s pending bids on loan listings and Note listings. Subscribers are not eligible to bid on their own Note listings.

~~Subscribers~~• ~~bidding~~debt-to-income ~~on Note listings must bid for the full amount of the Note being sold, and there may be only one winning bidder for a Note offered for sale by a selling subscriber~~ratio.

To verify a borrower's income, we will request documents such as recent paystubs, tax returns or bank statements. To verify a borrower's employment, we may contact the borrower's employer or use other databases.

~~Table~~Between July 14, 2009 and March 31, 2018 (based on start time of ~~Contents~~the applicable bidding period), we verified employment and/or income on approximately 65% of the Borrower Loans originated through our marketplace on a unit basis (594,363 out of 911,015) and approximately 76% of such loans on a dollar basis ($8.9 billion out of $11.8 billion). Breaking these numbers down by Prosper Rating:

~~Bids~~• ~~may~~for beBorrower ~~made~~Loans bywith ~~subscribers~~a ~~until~~Prosper ~~the~~Rating ~~end~~ of ~~the~~AA, ~~auction~~A ~~bidding~~or ~~period~~B, ~~specified~~we inverified ~~the~~income ~~Note~~and/or ~~listing. The~~employment ~~selling~~information ~~subscriber~~on ~~may,~~approximately ~~however,~~68% ~~end~~of ~~the~~such ~~auction~~loans ~~bidding~~on ~~period early at any time after~~ a ~~winning~~unit ~~bid~~basis is(301,911 ~~made. The~~out ~~winning~~of ~~bidder~~444,731) isand ~~the~~approximately ~~subscriber~~77% ~~who has bid the highest price as~~ of ~~the~~such ~~end~~loans ofon ~~the~~a ~~auction~~dollar ~~bidding~~basis ~~period~~ (or$4.9 ~~the~~billion ~~automatic~~out ~~sale~~of ~~price~~$6.3 ~~with respect to a Note listing with such a feature~~billion).;

~~Proxy~~• ~~Bidding. The~~for ~~Note~~Borrower ~~Trader~~Loans

Filing Compare · Prosper Funding LLC