Lending Club adds Washington and New Hampshire

Lending Club opened for lenders from 15 states and borrowers from all states a couple weeks ago. Since then they have added six more states. The two most recent additions are Washington State and New Hampshire. Rob Garcia, Director of Product Strategy, told me one of the top priorities for Lending Club is to add states as soon as they get clearance from state authorities.

Lending Club issues $1M in loans in 10 days

Lending Club's CEO Renaud Laplanche was interviewed today on ABC's Money Matters.


Laplanche said Lending Club has issued over $1,000,000 in loans over the last ten days. He said the number of borrowers and lenders has gone up dramatically due to recent events. The number of borrowers has increased due to tighter credit. Lenders have also increased due to a stock market which is not performing as well as normal and investors who are looking for alternative investment opportunities.

Although Laplanche did not mention Prosper, he tried to differentiate Lending Club from other peer to peer lending companies that have higher default rates by emphasizing their exclusive focus on prime borrowers. He said Lending Club has been very careful on protecting lenders from sub-prime borrowers and risk. According to Laplanche, the default rate since May 2007 has been “less than 2%.”

Lending Club was also featured on ABC News back in April.

Lending Club opens referral program while Prosper shuts their program down

For a little more than a year, Prosper managed a referral program which rewarded new lenders with a $25 bonus and the referring party with bonuses as high as $50. Over time the program experienced many changes but remained a valuable means to drive new business to Prosper. Last week Prosper entered a quiet period and yesterday they sent the following message to members of their affiliate program:

We are writing to inform you that the Prosper Referral Program has been shut down and is no longer in effect. Our lender activity is limited. Click here to learn more.

As a result we request you take down any reference to Prosper immediately.

Thank you for your immediate attention in this matter.

It is uncertain what "any reference to Propser" includes. Presumable it only refers to advertisements. While we have typically used referral links when linking to Prosper we have not served Prosper ads for quite some time.

Websites which rely on referral income can now turn to Lending Club. Lending Club started a referral program with Commission Junction earlier this month. Here are the details of the program:

Description: Lending Club is a social lending network where members lend and borrow money from each other at better rates, bypassing the banks.

We have already issued more than $20,000,000 in loans at better rates than banks' and we are looking to spread the word of this great alternative.

We will reward publishers for every user they refer that fill out the loan application form, independent of the loan issuing or not.

Lending Club accepts only US-based credit worthy borrowers with 640+ FICO score and no current delinquencies.

Here are some answers you may be looking for before you advertise for us:

What will you pay for?
We will reward publishers for sending us qualified traffic:
$35 for first 10 applications/month
$40 for each additional loan application

What is your conversion rate?
Our current conversion rates are very high (upwards of 60%) if the user is looking for a loan and has good credit.

Do you have a dedicated affiliate manager?
Yes. We have asked CJ to manage the program initially, and in addition, we have a dedicated SEM resource on board.

What is your average order amount?
Typical order amount is between $80-$150(fees charged once a loan is issued). We don't charge a fee for application, and about 80% of the applications actually become loans.

Is your website attractive and easy to navigate?
Very much. We won the Webby award 2008 as best banking and payments site as well as a 2008 WebAward for Outstanding financial services site.

How does your commission structure compare with other advertisers in your category?
We feel we are very competitive and in most cases, we pay higher than other advertisers.

If a publisher consistently performs, will you increase their commission?
YES. We are willing to discuss better pay-offs based on performance, quality of borrowers and volume.

Based on my own experience with various referral programs I'm optimistic towards Lending Club's new referral program. With Prosper, hundreds of new members have joined Prosper after clicking on links from this site but very few have become borrowers or lenders. Prosper did not pay a referral bonus until the borrower made their first payment so, even if the borrower converted, it was still several months until a payment occurred.

Lending Club pays immediately after a person fills out a loan application, so their referral program is much more likely to result in referral bonuses and much more likely to result in payments. Hopefully Lending Club will expand their program to lenders as well as borrowers in the near future.

Here is an example of one of Lending Club's new ads available through Commission Junction. Click through for the improved landing page.

Media touts p2p lending - ignores upheaval

The Associated Press published an article yesterday - Peer-to-peer lending — Weighing benefits and risks. Although the article was published on October 20th, it seems like it was written at least a week ago. There is no mention of Prosper's lending halt. In fact, despite the quiet period, the author quotes Prosper's CEO. Here is an excerpt:

Getting loans through peer-to-peer lending isn’t as easy as you may think. These days, many have just as much trouble getting loans on Prosper.com as they might at a bank.

That’s because the lending site is getting a new wave of people with good credit who were turned away by banks, said Chris Larsen, the company’s CEO.

“So lenders are pickier about who they fund,” he said.

Only 5 percent of people with credit grades that fall in the bottom three brackets (out of seven) now get loans on the site, with about 40 percent of loans going to people with scores in the two highest brackets.

Lending Club rapidly adding more states

On Tuesday, Lending Club completed their registration with the SEC and opened for lenders from 15 states. Already, in less than a week, they have added four more states - Utah, Wyoming, Hawaii, and Nevada. We expect Lending Club to continue to rapidly add states as they work with state regulators.

Lending Club's re-emergence could not have been timed better. With Zopa and Prosper now closed, Lending Club now only has to compete with upstart Loanio for the p2p lending market.

Maneo becomes first p2p lending platform in Japan

The past few days have been exciting for peer to peer lending - Loanio opened, Zopa closed, Lending Club emerged from their quiet period and Prosper halted lending. There is also big news overseas - Maneo launched the first peer to peer lending platform in Japan.


Over a year ago, Prosper announced plans to expand to Japan. There has been no news from Prosper since. Now that Prosper has entered a quiet period and is distracted with SEC regulations in the U.S., it is unlikely we will hear anything more about Prosper's planned expansion to Japan for some time.

Maneo is actually a play on the English words money and new. Maneo's CEO Tadatoshi Senoo said the platform has been in development since August 2006. Like the United States, Japan has extensive regulatory hurdles which had to be overcome.

Here are details about Maneo from their press release:

How to use maneo's social lending service

After initially registering as a member with maneo, borrowers and lenders can utilize maneo's social networking service. Registered members can easily and effectively communicate with other members utilizing "mane blog," "maneo message," and "mane tomo."

Creating an auction

People who want to borrow on maneo create loan listings explaining how much they desire, why they want to borrow and the maximum interest rate they are willing to pay lenders. Potential lenders select the loan listings they are interested in and bid on these loans. maneo connects borrowers with lenders through an auction process in which the lender willing to provide the lowest interest rate "wins" the borrower's loan.

Member requirements

Members must be between 20-65 years old and reside in Japan.

Borrower requirements

Borrowers must be between 20-60 years old and have annual income of at least 3 million yen. Borrowers must also successfully pass maneo's credit check and submit the following documentation: proof of identity and annual income.

Lender requirements

Lenders must be between 20-65 years old. Lenders must also successfully pass maneo's review process and submit proof of identity.

Prosper enters quiet period; halts lending

This has not only been a crazy week in the stock market - it's been a crazy week for p2p lending as well. Over the past couple of days Loanio has opened, Zopa has closed and Lending Club has emerged from their quiet period and announced a secondary market. Now, to top it off, Prosper is entering a quiet period to register with the SEC. Lending Club's registration took about six months.

This is the message Prosper has sent to members:

Prosper 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.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.

If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.

Lending Club and Loanio present at FINVOATE 2008

Two dozen companies including Lending Club and Loanio presented at FINOVATE 2008 in New York City today. Netbanker reported on the various presentations throughout the day.

Of course, the big news is Lending Club re-opened to lenders today. They also opened the first secondary market for p2p loans. According to Netbanker's report of the presentation, Lending Club has "been experiencing a 2% default rate and have been approving 14% of applications received."

As for Loanio, Netbanker's Jim Bruene reported, "Solomon walked the audience through the Loanio loan application process emphasizing the option to have a co-borrower, a first for a U.S. P2P lender, and the optional Platinum loan listing, which includes a host of verifications to give lenders more assurance the borrower is being truthful with their application."

Our review of Loanio is here. Loanio was a last-minute addition to FINOVATE after Pertuity Direct delayed their launch to ensure they meet regulatory requirements.

Lending Club opens for investors from 15 states; allows lenders to sell loans

Six months ago Lending Club halted lending operations in order to register with the SEC. They have now completed the registration and have opened their doors to lenders again from selected states. If you are from Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Louisiana, Minnesota, Mississippi, Montana, New York, Rhode Island, South Dakota, West Virginia, or Wisconsin you can lend on the new platform.

In addition, Lending Club has a trading platform where lenders can now sell loans to other investors. This is the first p2p lending company to offer liquidity.

According to the official announcement this registration will bring the following changes:

• Under the registered offering, Lending Club lenders will now invest in notes that correspond to portions of loans made to borrower members. The notes have stated interest rates ranging from 6.69 percent to 18.63 percent, after a 1 percent service charge is applied.
• By partnering with FOLIOfn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where lenders have the option of a trading platform. On the trading platform, lenders who become customers of FOLIOfn will be able to put notes up for sale in the event they need liquidity before the completed term of a note.

Recession's likely impact on p2p lending

"In the financial news you can find a story almost every day about the weakness in real estate markets, rising foreclosure rates, and increases in the number of bankruptcy filings. Some economists worry about the effects spreading across the broader economy and triggering a recession. The bearish outlook suggests that lenders will tighten up their borrowing criteria, consumer spending will decrease, and unemployment will start to increase." - Matt here on Prosper Lending Review, June 28, 2007

The stock market just had its worst week ever based largely on fears we are entering a recession. Last year Matt wrote an article about the likely impact of a recession on P2P lending. His points are all still valid. It's worth another look now.

What effect would a recession have on the Prosper marketplace?