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Just as Facebook took a huge step forward earlier this year by opening up its platform to outside applications, person to person lending startup Prosper raised its ambitions today by filing to create a secondary market for its loans. This immediately strengthens the prospects for the Benchmark Capital and Accel Partners-backed San Francisco company.

Unless the borrower pays back the loan early, Prosper lenders currently must wait until the loan reaches maturity before getting their money back. The move to create a secondary market would enable lenders to resell their loans before maturity. They could even package loans with similar risk profiles together and sell them off. Activity should spike if the SEC approves its filing since, which will benefit Prosper since it garners a fee for every transaction completed on the site.

It will be interesting to see how person to person lending competitors Zopa and The Lending Corp. respond. - Joshua Jaffe

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