Lending Club announced yesterday that it has filed a registration statement with the Securities and Exchange Commission relating to its social lending platform. The full 100+ page registration statment is available on the SEC website. Here is the prospectus summary:
This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our financial statements and related notes, and the risk factors beginning on page 11, before deciding whether to purchase our Member Payment Dependent Notes.
Lending Club is an Internet-based social lending platform that enables its borrower members to borrow money and its lender members to purchase Member Payment Dependent Notes, the proceeds of which fund specific loans made to individual borrower members. We operate in the space known as “social lending.”
About the Loan Platform
Through our online platform, we allow qualified borrower members to obtain unsecured loans with lower interest rates than they could through credit cards or traditional banks. We also provide our lender members with the opportunity to indirectly fund specific member loans with credit characteristics, interest rates and other terms the lender members find attractive by purchasing Notes that in turn are dependent for payment on the payments we receive from those borrower member loans. As a part of operating our lending platform, we verify the identity of members, obtain borrower members’ credit profiles from consumer reporting agencies such as TransUnion, Experian or Equifax and screen borrower members for eligibility to participate in the platform. We also service the member loans on an ongoing basis. See “About the Loan Platform.”
The Notes. Our lender members will have the opportunity to buy Notes issued by Lending Club. Lender members will be able to designate the particular member loan that they want the proceeds of each Note they purchase to be used to fund. The holders of Notes of each series will have the right to receive their pro rata portion of principal and interest payments on their Note but only if, and to the extent, that we receive loan payments on the corresponding member loan, net of our service charge.
The Notes will be special, limited obligations of Lending Club only and not obligations of any borrower member. The Notes are unsecured and holders of the Notes do not have a security interest in the corresponding member loans or the proceeds of those corresponding member loans.
Lending Club is obligated to pay principal and interest on each Note in a series only if and to the extent that Lending Club receives payments from the borrower member on the corresponding member loan funded by the proceeds of that series, and such borrower member payments will be shared ratably among all Notes of the series after deduction of Lending Club’s service charge and any unsuccessful payment fees, collection fees or payments due to Lending Club on account of the portion of the corresponding member loan, if any, funded by Lending Club in its capacity as a lender on the platform. If Lending Club were to become subject to a bankruptcy or similar proceeding, the holder of a Note may have a general unsecured claim against Lending Club that is not limited in recovery to such borrower payments, but, as described in more detail below, the matter is not free from doubt. See “Risk Factors — If we were to become subject to a bankruptcy or similar proceeding.”
The Member Loans. All member loans are unsecured obligations of individual borrower members with a fixed interest rate and three-year maturity. Each member loan is originated through our website and funded by WebBank at closing. WebBank is an FDIC-insured, Utah-chartered industrial bank that serves as the lender for all member loans originated through our platform. Immediately upon closing of a member loan, WebBank assigns the member loan to Lending Club without recourse to WebBank in exchange for the aggregate purchase price we have received from lender members who have committed to purchase the Notes dependent on payments to be received on such member loan plus any amounts of the member loan that we have determined to fund ourselves. WebBank has no obligation to purchasers of the Notes. See “About the Loan Platform — How the Lending Club Platform Operates — Purchasers of Notes and Loan Closings.”
LendingMatch™. In making loan purchase commitments under our prior structure (as discussed below), roughly 50% of lender members used Lending Club’s “LendingMatch” system, a proprietary search engine that creates a sample listing of Notes responsive to search criteria based on the lender member’s target weighted average interest rate for the lender member’s portfolio. See “About the Loan Platform — How the Lending Club Platform Operates — LendingMatch.”
About Lending Club
We were incorporated in Delaware in October 2006 under the name SocBank Corporation. We changed our name to LendingClub Corporation in November 2006. Our principal executive offices are located at 440 North Wolfe Road, Sunnyvale, CA 94085, and our telephone number is (408) 524-1540. Our website address is www.lendingclub.com. Information contained on our website is not incorporated by reference into this prospectus.
From the launch of our platform in May 2007 until April 7, 2008, the operation of our platform differed from the structure described in this prospectus, and we did not offer Notes. Instead, our platform allowed lender members to take assignment of member loans directly. Under this system, lender members received the assignment of anonymized individual promissory notes corresponding to their purchase price, subject to our right to service the member loans.
From April 7, 2008 until the date of this prospectus, we did not offer lender members the opportunity to make any purchases on our platform. During this time, we also did not accept new lender member registrations or allow new funding commitments from existing lender members. We continued to service all previously funded member loans, and lender members had the ability to access their accounts, monitor their member loans and withdraw available funds without changes. The borrowing side of our platform was generally unaffected during this period. Borrower members could still apply for member loans, but these member loans were funded and held only by Lending Club.
We have made significant changes to the operation of our lending platform that will become effective as of the date of this prospectus. Our historical financial results and much of the discussion in “About Lending Club” reflects the structure of our lending platform and our operations prior to the date of this prospectus.