Prosper Marketplace on Monday announced a three-year agreement to offer financing to consumers making improvements to their homes through the website HomeAdvisor.com.
Under the deal, the San Francisco-based marketplace lender will be the exclusive provider of financing for HomeAdvisor’s users.
Home-improvement contractors registered with HomeAdvisor will be able to refer customers who need financing to a cobranded website in order to apply for a Prosper loan. HomeAdvisor, of Golden, Colo., connects homeowners to a network of contractors and other home-improvement firms that have been prescreened.
The deal’s full financial terms were not disclosed. But over the course of the partnership, Prosper is expected to pay multiple millions of dollars to HomeAdvisor.
Those payments will include both fixed amounts and sums that are tied to the partnership’s performance, said Nick Yoong, vice president of business development at Prosper.
Personal loans from Prosper carry annual percentage rates of 5.99% to 36%. The unsecured loans may be an attractive choice for home owners who do not have sufficient home equity to qualify for a second mortgage or who need their loan proceeds in a short period of time.
“Home improvement projects are a great way to increase the value of a home, but not all homeowners have access to home equity lines as a financing option,” Prosper Chief Executive Aaron Vermut said in a press release.
For Prosper, the HomeAdvisor partnership offers one potential avenue for diversifying a business that currently relies heavily on consumers refinancing their existing credit card debt.
Today, about 4% to 5% of Prosper’s loans are used to pay for home improvements, Yoong said.
In recent months, the mortgage lenders Quicken and loanDepot have started offering personal loans, presenting new competition for marketplace lenders like Prosper.