If you have debt, check out Prosper.com

I am intrigued by Prosper.com, the web site for borrowers and citizen lenders. Check it out at www.Prosper.com if you not familiar with it. I am writing about it, only because I think it is interesting; I have no vested interest in it.

If you are paying 18 percent or more on a substantial credit card balance, you need to look into this. The service offers a reasonable way to refinance that debt at a much more manageable interest rate.

Or if you are an entrepreneur looking for access to unsecured credit, this may be your answer. Loans up to $25,000 are available.

I think Prosper is an ingenious concept. Potential borrowers post their story on the web site, usually with a photo. They say how much money they need and what they are willing to pay for it. Potential lenders review the various borrowers and select the ones they want to fund.

Borrowers are required to sign up for an affinity group, which creates social pressure for the borrower to repay their loan on time. If the borrow defaults, others in that group have a much more difficult time obtaining additional credit through Prosper. (Grameen Bank in India has perfected this concept with micro lending to thousands of borrowers who, reportedly, rarely pay late.) Lenders on Prosper are encouraged to fund small portions of several loans in order to distribute their risk. Technically, Prosper makes the loans and sells participations to the lenders.

If you have money to invest, you might consider funding some loans. The interest rate is better than anything you will get at the bank, and you get the satisfaction of knowing you are directly helping someone. When you put your money in a mutual fund, you never get much of a sense for what that money is actually doing. Investors are so far removed from the borrower, that is, the people who are actually using that capital. The connection between investor and borrow is much more direct with Prosper.

I like entrepreneurship and this is one of the most entrepreneurial web services I have seen. The site itself is brilliant and it is helping entrepreneurs looking for investment opportunities as well as entrepreneurs looking to finance debt.