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.

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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. 

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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.

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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.

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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.

Find more stories about: Lending Club, money, Quick News, Social Finance, social lending, Venture Capital

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.

Find more stories about: Lending Club, Prosper, Quick News, Social Finance, social lending

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.

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NY-based Loanio, a new peer-to-peer (p2p) social finance lender, has launched today. Loanio says what differentiates them from the other p2p lenders is that they allow co-signers to help others get credit.

Loanio CEO and Founder Michael Solomon notes, "only around
10% of borrowers on p2p lending sites wind up getting a loan." Loanio is attempting to help people with no credit and poor credit by attached a co-borrower to the loan. Loanio charges an origination fee to borrowers and a service fee to lenders.

Loanio’s suggested interest rates range from a max of 7-14% for A credit through 22%+ for E credit.

Loanio also offers a service to borrowers named "Platinum Verification Service". By paying a fee to Loanio, they will verify self-reported data which can help with the a lender’s assessment. One interesting note from the Loanio Web site, "all loans are originated by Loanio and then sold to website lenders who are legally considered the loan purchasers."

Check out our 3-part social lending overview and our coverage of p2p social lenders Lending Club, Prosper and Zopa.

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In June 2008, Lending Club filed with the SEC for registration of $600 Million in Member Payment Dependent Notes. Lending Club has been in a "quiet period" since April 2008 while working on the registration. Today the DoughRoller blog was able to gather new information on the SEC registration filing.

DoughRoller notes, "In its Amended S-1, LendingClub disclosed that under a new formula, it will also use several other credit markers in calculating interest rates. Specifically, LendingClub will factor in a borrower’s number of open accounts, the number of credit inquiries in the last six months, how much of a borrower’s available credit is used up, and length of credit history." Previously Lending Club used only an applicant’s FICO score, debt-to-income (DTI) ratio, and amount borrowed. This new set of loan criteria should provide a more balanced picture of the applicant for potential lenders. Many times an applicant will apply for a large number of credit cards at once but they won’t show up as tradelines for several months. By viewing current inquiries, a lender can get an idea if the borrower has been out grabbing lots of new credit. 

We will continue to actively monitor the social lending space. Considering the current financial picture, social lending could become even more active than it is currently.

If you are new to the concept of peer-to-peer lending, check out our social lending series. Also check out our exclusive interview with Lending Club CEO Renaud Laplanche.

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We were the first to report on Lending Club’s quiet period on social lending back in April. At that point, Lending Club stopped originating or issuing new loans during the quiet period. If you are new to social lending, our three-part social lending series will get you up-to-speed.

Below is the announcement that Lending Club is making today regarding their moving forward. Here’s my simple take – lenders will buy "notes" and then use the funds from those notes to provide loans to Lending Club members. Since this information is very specific, I’ve decided to post the entire press release below. It’s important to note that Lending Club is still in a quiet period until the filing is effective.

In contrast, social lending competitor Zopa is using insured CDs with their loan products.

Lending Club Files Registration Statement with the SEC

SUNNYVALE, CA – June 20, 2008 – Lending Club announced today that it has filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933 relating to its social lending platform.

The registration statement seeks to register the offer and sale of up to $600,000,000 in Member Payment Dependent Notes to be issued by Lending Club in a continuous offering following the effective date of the registration statement. The Notes will be issued in series with each series of Notes corresponding to a single consumer loan to a borrower member. Lender members will direct Lending Club to apply the proceeds Lending Club receives from the sale of each series of Notes to fund a particular consumer loan selected by the lender member and originated through the Lending Club platform.

A series of Notes will be issued only if and when the corresponding member loan closes and is funded. Lending Club will have an obligation to make payments of principal and interest on the Notes only to the extent that Lending Club receives payments on the corresponding member loan.  The terms of the Notes, including interest rate and initial maturity, will correspond to the terms of the corresponding member loans but will reflect a four business day lag on payment dates and maturity to allow the platform to confirm payments received on the corresponding member loan.

Lending Club will offer the Notes only through its website directly to lender members.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but it has not yet become effective. Copies of the Lending Club registration statement can be accessed on the SEC website: http://www.sec.gov/. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such state.

About Lending Club (TM)

LendingClub.com is a social lending network headquartered in Sunnyvale, CA.

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Earlier today we wrote about Lending Club and the abrupt change to their lending policy. Basically for the time being they are not allowing any further p2p (peer-to-peer) loans, only loans made directly with them. I am not sure what amount of funds Lending Club has to lend. I have heard back from CEO Renaud Laplanche and he can’t share anything at this time.

I’ve also noticed some commentary from Lending Club lenders across the net. Here are a couple:

• Scott notes that Lending Club is "no longer peer-to-peer lending"
• Jason Crews is annoyed that he wasn’t informed sooner so he could add more funds to his account to allow for more loans

We will continue to monitor the status and report updates as they become available.

Find more stories about: Insights, Lending Club, social lending

Social lending site Lending Club has posted a notice on their site and blog yesterday. The notice which I have copied below notes that new loans for the time being will come directly from Lending Club and not from other individuals as they have in the past. In summary, Lending Club works by individuals lending money in groups to other Lending Club members at interest rates determined by their credit score. Check the Lending Club blog for more details.

Could the company be working towards an IPO? My guess is not and that this is a standard process to protect Lending Club as they grow. The term "quiet period" is being used and we hear this period could last as long as three months. I have an email into Lending Club to try to get more details. In any event, we will keep you informed as the situation progresses.

Important Information

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.

Check out our 3-part social lending series to learn how this new lending option works.

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We’ve written about social lending several times before including our 3-part series looking at Zopa, Prosper and LendingClub. Jim Bruene at NetBanker has put together a good financial analysis of the social lending scene for the first quarter of 2008. LendingClub and Prosper share their loan information while Zopa does not.

From Jim’s analysis, "In Q1, Prosper and Lending Club combined for more than $30 million in originations, up $10.7 million (55%) compared to about $20 million in Q1 2007." Jim goes on to note that for the lower risk loans, LendingClub actually passed Prosper in total volume.

If the economy continues to sour, my guess is that loan applications at Zopa, Prosper and LendingClub will increase dramatically.

Find more stories about: Insights, Lending Club, Prosper, Social Finance, social lending, Zopa

Social lending company Lending Club announced their national launch last month. They offered me a t-shirt and naturally I said that they must give some to the awesome CN readers. They agreed and so we have a few tshirts to give away. Five size Large Lending Club t-shirts.

On the front pocket area, the shirt says: LendingClub and on the back it says: We are all bankers and the URL.

If you want one, shoot over your details but make sure you can fit into a L-sized shirt. And check out all of our social lending coverage including Zopa and Prosper.

Find more stories about: Lending Club, Quick News, Social Finance, social lending

With this new world of social lending, just how many bad debts will a lender be willing to take? In our 3-part social lending series we took an in-depth look at the industry and the companies in the space but with the area so new, it was difficult to anticipate the percentage of bad debt that would be forthcoming.

Andy Swan has been documenting his travels into social lending and his latest post discusses the bad debt in his account with Prosper. We originally wrote about Swan when one of his borrowers, a Slim123, defaulted on the loan. Today Andy’s back with an overall update where he shares the following bad debt in his portfolio:

• 15 day late (2)
• 30 day late (2)
• 60 day late (1)
• 90 day late (1)

This amounts to 6 of the 49 total loans which results in a current bad debt at 12%. Swan ends the post with, "It’s almost as if the kind of people who take out loans on prosper are in some type of credit situation. I feel a “write-down” coming in Q2." I have requested updates from Prosper, Zopa and Lending Club regarding late payments and defaults and will post once received.

Find more stories about: Insights, Prosper, Social Finance, social lending