Taking out a prosper loan to buy stocks

[bad beetz]

If you loan Shoe money on Prosper, he defaults, and you are trying to collect then you can lose huge when you hand it over to a collections agency, as they will deal with the creditor, and he may get off with paying half of what he owes.

You also lose huge if he files bankruptcy...

It's not "secured" by a credit rating, although it's definitely something. Shoe has good credit, doesn't want to bone it, plus he has retirement accounts he can dig into if he is faced with default (although those may be protected in bankruptcy, I don' know)