Consumers Find Investors Eager to Make 'Peer-to-Peer' Loans

Prosper and a bigger competitor based a few blocks away, Lending Club Corp., dominate an obscure corner of the financial-services sector called "peer-to-peer" lending, in which consumers bypass banks altogether to borrow money from other individuals. It is part of a shadow-lending system that has thrived since the 2008 financial crisis caused many banks to tighten their credit standards.There are, of course, plenty of would-be borrowers. Lately, however, there has been even greater interest from lenders—mostly individual investors so starved for high yields that they are jumping to fund unsecured, high-interest-rate loans. Even some investment funds are getting into the game, snapping up entire loans before individual investors act.