social lending Archive

It’s been a while since we’ve taken a look at the social lending industry in the U.S. Both Lending Club and Prosper are out with new updates that are worth taking a look at. It’s no shock that social lending has taken off during the current economic crisis. If you are new to social lending, check out our 3-part series.

Lending Club

Earlier this week, Lending Club Sr. Director, Product Strategy Rob Garcia posted an update on the company’s progress. Rob noted the following stats:

• $1 billion in loan demand (these are people requesting loans)
• $95 million in funded loans
• 10,000 loans funded since June 2007

Lending Club provides a near real-time stats page that shows figures including: loans funded, total dollars funded, use for funds and investor return rates.

Prosper

Last month Prosper released findings that showed debt consolidation loans at an all time high. “Over the course of the last six months, debt consolidation loans have been ticking up, and in January hit an all time high of 59% of loans. Historically debt consolidation has tracked at approximately 45% of loans.”

The Prosper release also discusses the new credit card rules and notes that will be included in customer’s statements beginning this month. Chris Larsen, Chief Executive Officer and Co-founder of Prosper noted, “We’ve always believed that credit cards provide a convenient payment mechanism, but are terrible as a financing solution. As more consumers start realizing it will take them approximately 30 years to pay off their credit card if they pay only the minimum payment each month, we think more will realize that they need to eliminate their credit card balances quickly. So seeing more people turning to Prosper to pay off destructive, high interest credit card debt is probably a trend that will continue for the foreseeable future.”

Have you used social lending tools to help with debt refinancing or new purchases? Leave a comment (you can post anonymously) about your experiences.

Social lending company Prosper has announced that they have resumed lending beginning today. Prosper CEO Chris Larsen has a blog post explaining the changes that are part of the updated offering.

From the release, “The California Department of Corporations, recognizing the urgent need to get consumer and small business credit flowing, accelerated the process of granting regulatory approval to Prosper so that it could reopen immediately. Prosper had ceased all lending activity on Prosper Loans Marketplace and has been in a quiet period since October 2008 while it registered for approval with the Securities & Exchange Commission. That process has not yet been completed and is still ongoing. As such, Prosper is open to borrowers nationwide, but for the time being only residents of California and institutional investors whose primary place of business is in California can take advantage of the alternative investment opportunity Prosper loans provide. Likewise, only California lending companies can list loans on the Prosper Open Market.”

The updated Prosper Loans Marketplace now require that individual borrowers have credit scores above 640 as part of their new “Prosper Ratings” system. Prosper notes, “Prosper Ratings are based on historical loan performance data and are designed to better convey risk. While the estimated loss rate and estimated returns have been shown at the point of bidding since October 2007, the Prosper Rating letter grade as well as the estimated loss rate will be shown in the listing along with a narrower credit score range and other extended credit data.”

Prosper has also launched an Open Market initiative which lets financial insitutions participate in their network.

Competitor Lending Club exited the SEC quiet period last October. If you are new to social lending, our three-part social lending series will get you up-to-speed. 

Two common and popular themes in our big old Internet conversation lately have revolved around the meaning of money.

A lot of people are increasingly convinced that capital is no longer solely tied up in dollars and cents; the concept of value is beginning to carry as much weight as traditional concepts of cost/price, largely due to public relations and marketing in social media.

In other words, try explaining to a client, a typical B2C brand, that they’ve just spent $10,000 to create a Facebook app that will generate no revenue. You have to get that client to agree that mindshare and conversation, a.k.a. social capital, are as necessary in the new marketplace as more traditional media measurements such as impressions and conversions.

So, as my checking account teeters along the fine line between “I can afford a good sandwich” and “I can’t afford to take calls from debt collectors,” my social accounts are beginning to grow and thrive in a separate but related economy.

This becomes exciting when I realize that I can trade my mindshare for goods and services (maybe a website design from a rad youth branding firm, maybe a better laptop from a sponsor who wants to associate itself with my video blogging).

It becomes even more exciting when I think about leveraging that mindshare into enough microdonations to accomplish a noble goal, say, helping my little sister raise money for cancer research.

Yep, the little ladybug is all grown up; in addition to being passionate about the environment and working hard in her undergraduate studies, she’s also a conscientious philanthropist who is trying to raise a paltry $200 for Relay for Life (a program run by the American Cancer Society).

What do you think: With my social capital, would it be possible to leverage enough microdonations to blow Rachel’s $200 goal out of the water? She has $15 at this very moment. If ten percent of my Twitter followers donate $5 each, she’d come close to trippling her goal. If influencers retweeted this request – what would happen then?

So, let’s start this little experiment and see if the concept of social capital works for something like fundraising through microdonations: Click here to go to Rachel’s fundraising page, and click here to see clickthru stats from Bit.ly.

Needless to say, cancer patients, doctors, researchers, Rachel, and I would all appreciate any retweets, reposts, or link love you care to give!

Jolie O’Dell is a designer, writer, and consultant based in Richmond, Virginia.

Just a week after announcing a $12 million series B venture capital round, social lending company Lending Club has announced a new partnership with EntrustCAMA. The new partnership will allow lenders to use monies from their IRA retirement accounts as funding sources for loans made on Lending Club.

Renaud Laplanche, CEO and Founder of Lending Club said regarding the launch, "Now investors have more choice for their retirement accounts beyond traditional asset classes."

EntrustCAMA will serve as the administrator for the accounts. Check out the full press release which includes links about the program. Clearly there are a lot of pros and cons about using your retirement account in this manner and the best advice I could give you is to speak to someone who fully understands the retirement account market and can guide you and your monies.

P2P social lender LendingClub has announced they have raised $12 million in a Series B round of funding. Morgenthaler Ventures led the round and is joined by existing investors, Norwest Venture Partners and Canaan Partners. Renaud Laplanche, Lending Club’s CEO and Founder noted, "This additional capital will allow us to continue to expand our capabilities and accelerate the growth of our customer base." The company has raised just over $28 million to-date.

Lending Club has also announced Pamela Kramer as the company’s first CMO. Pamela has spent the last two decades in the online financial space.

Interestingly enough, p2p lending news caught a twitter message from LucHardy, president of Sagax, a venture capital firm. The message, posted on Tuesday, noted the funding amount but was quickly deleted.

p2p lending news has another post that is well worth reading which has a lengthy breakdown of the loans that Lending Club is currently funding. Lots of charts and graphs along with their analysis on the lending. They note that 24% of the loans Lending Club makes come from them versus the p2p community. I can’t comment on this as it’s not my area of expertise but the information came from the SEC filings that Lending Club is required to make.

Check out all of our social lending coverage including our interview with Renaud.

We’ve got a couple updates on the social lending front this morning. First, Prosper has entered a quiet period which they note, "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."

During this time Prosper will not accept any new loans but will continue to service the loans that have already been completed. Lending Club just completed this process which took about six months to complete.

I’ve also received some loan numbers from Lending Club on the 10-day period since the quiet period completion. They have signed up 1,072 new lenders and in total have transferred just under $2 million to their Lending Club account. These numbers are higher than before the quiet period began earlier this year.

If you are new to social lending, our three-part social lending series will get you up-to-speed.

Back in April we reported on P2P social lender LendingClub entering a "quiet period" from the SEC. In June Lending Club filed with the SEC for $600 million in notes. Today Lending Club will announce at the Finovate conference in NYC that they have completed the SEC registration process which ends its six-month quiet period. The updated Lending Club website is available again to lenders and borrowers.

Lending Club notes that the average interest rates for a person with good credit will be 12%. They are also launching LendingMatch which provides lenders with loan information to create a well diversified portfolio. Loans becomes notes registered with the SEC and Lending Club is also launching a secondary P2P loan market.

Lending Club is pushing the concept of "people lending to people" — this concept online is called social lending or social finance. To-date Lending Club has originated more than 2,000 loans with a value of over $19 million.

With the current economic situation, will more people turn to P2P lending if denied by their bank or financial institution. Something tells me that today’s announcement from Lending Club comes at the perfect time. Check out my interview with Lending Club CEO Renaud Laplanche.