I began my hand at micro-lending at Prosper easrlier this year because it offered an opportunity to create an income while being part of a community of lenders helping borrowers. 

For those of you who are not familiar with Prosper, here is a simple explanation from their F.A.Q. page,

Prosper is a marketplace for credit that enables people to lend money to other people in a safe, efficient manner.

In other words, people can buy (Borrowers) and sell (Lenders) credit.  I began thinking about two of the most important questions I should be asking myself about investing in Prosper.

How long before I get my money back?

According to Prosper,

Borrowers can request 3-year, unsecured, fully amortized loans up to $25,000. Borrowers can repay the full amount of the loan at any time; there are no early payment penalties.

This answers my question two ways,

1. Any credit (loan) that I extend to the borrower will take at the most 36 months to return the full amount of my money.
2. The borrower can pay off the loan earlier than the standard length of the loan, 36 months.

How long will I continue to RECIEVE an income after I get my money back?

Prosper loans are set up to pay the lender the interest for the life of the loan. This means in response to question 2, there will be no further income beyond the final payment of the loan.

I can see now why these two questions are the most important questions when it comes to making an investment.  This opens up a whole new bunch of questions about whether lending is a good investment opportunity or not.

I will certainly be writing more about this vehicle in the future, in the meantime, I would like to hear what your thoughts are about Prosper.