Peer-to-peer lending company Prosper Marketplace president Ron Suber and CFO Macy Lee did an interview with BTIG analysts Mark Palmer and Giuliano Bologna this week, and it’s clear that the two execs are already laying the foundation for their IPO, expected later this year.

“People underestimate what it takes to do this,” said Suber, explaining why his company (along with Lending Club) has a significant moat. “It takes a lot more than branding and marketing to have an actual business that can scale.”

Prosper Marketplace

Prosper spins regulatory difficulties into its narrative

Lending Club, which has already gone public, has gotten more press, but Prosper is actually the older P2P lending company, having setup shop in February 2006. It got hit with a class action lawsuit, an SEC cease and desist order, and delinquency rates that made investors reevaluate getting involved. Ironically, Suber and Lee point to these difficulties as evidence that it’s not easy to start a P2P lending company because of the regulatory challenges and the need to build credit and risk models. Suber says that he has Prosper and Lending Club management have a good relationship because they don’t see each other – or traditional banks – as competition. Instead they just have to face ‘EAU – education, awareness and understanding’.

According to Palmer, Prosper is planning to hit ‘EAU’ on all fronts with direct mailings, digital marketing, blogging, social media – all of which should build buzz among individual investors when it’s time for the IPO.

Bove’s Lending Club criticism applies to Prosper as well

When Lending Club held its IPO, banking expert Dick Bove warned that it was a return to pre-2008 practices, where individual investors were being convinced to fund no doc loans to questionable debtors who don’t have access to normal loans (maybe the reason Prosper doesn’t consider the banks to be its competition). Since the companies aren’t considered banks or brokers they evade a lot of regulations, and Bove expects investors reaching for yield to get burnt.

Palmer is a lot more bullish. He gives Lending Club a Buy rating and a $31 price target (currently $20, down about 10% since its December IPO), and it’s clear from the tone of the article that he’s optimistic about Prosper’s prospects as well.