Not a dumb question. Yes - as it is a personal loan you'll get P&I back each month on your investment. With a $500 investment it will be roughly $10 per month. Initially that will be mostly interest.

You're right that with a minimum bid in our platform of $500 you cannot reinvest small returns and that will lower your effective interest rate. You'd need to be regularly investing $500 into the platform to maximise your return or have a larger amount invested.