Tuesday, April 8, 2008

Lending Club halts lending, plans promissory notes

Lending Club has halted new lender registrations, stopped accepting new commitments from existing lenders, and terminated their referral program. They plan to allow lenders to purchase promissory notes and have terminated peer lending operations in order to register with the appropriate authorities. All previously funded loans will continue to be serviced and borrowers may still request loans which will be funded by Lending Club.

The announcement was made on their (newly redesigned) blog and in the following email to members:

Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.

The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.

Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

Q&A:
Q1. What about money I have begun moving, but is still in transit to Lending Club?


A1.1. If you are in the process of verifying your bank account, you will be able to complete that verification but will not be able to add new funds

A1.2 If you have initiated a transfer, the funds will be displayed in your Lending Club account balance as soon as those funds are available.

A1.3 If you have uncommitted funds, you may request that Lending Club return those funds via the same method used to load the funds. For example,
  • If you have initiated an ACH to add funds, these funds will be transferred into your Lending Club account but you will not be able to lend these funds out. You can go into your Lending Club account once the ACH transfer has been completed and withdraw funds back into your linked bank account.
  • If you've wired funds into your Lending Club account and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to wire these funds back to you at no charge.
  • If you've sent funds by check, and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to send you a check by mail for the same amount at no charge.

Q2. What about referrals?

A2.1 The current referral program is terminated. If you have referred someone who has already signed up as a lender or a borrower, or if you have been referred by someone and have already signed up as a lender or a borrower, you will be receiving your referral payment within the next few days.

Update: Lending Club is now back open with the SEC's blessing.

2 comments:

Mike Hardin said...

I was interested in applying for a loan on Lending Club, but with the corporation handling the loans themselves, and no lenders bidding on them, how are rates determined?

Tom said...

Rates are determined the same way. Check out this link:

http://www.lendingclub.com/info/check-borrower-rates.action

Lending Club sets rates based on credit grades. Prosper uses the auction format.