LendingClub

LendingClub Corporation

TypePublic
Traded asNYSE: LC, Russell 2000 Component
IndustryPersonal finance, software
Founded2006;
Headquarters595 Market Street, San Francisco, California, U.S.
ProductsPeer-to-peer lending
Websitelendingclub.com
  • Peer-to-peer lending.
    • LendingClub enabled borrowers to create unsecured personal loans between $1,000 and $40,000.
    • The standard loan period was three years; a five-year period was available at a higher interest rate and additional fees.
    • Investors were able to search and browse the loan listings on LendingClub website and select loans that they wanted to invest in based on the information supplied about the borrower, amount of loan, loan grade, and loan purpose.
    • Investors made money from the interest on these loans.
    • LendingClub made money by charging borrowers an origination fee and investors a service fee.
    • LendingClub enabled borrowers to create loan listings on its website by supplying details about themselves and the loans that they would like to request.
    • On the basis of the borrower’s credit score, credit history, desired loan amount and the borrower’s debt-to-income ratio, LendingClub determined whether the borrower was creditworthy and assigned to its approved loans a credit grade that determined the payable interest rate and fees.
    • The loans can be repaid at any time without penalty.
  • LendingClub also makes traditional direct to consumer loans, including automobile refinance transactions, through WebBank, an FDIC-insured, state-chartered industrial bank that is headquartered in Salt Lake City Utah.
  • The loans are not funded by investors but are assigned to other financial institutions.
  • End of P2P platform, 2019-2020
    • In 2020, Lending Club acquired Radius Bank and announced that it would be shutting down its peer-to-peer lending platform.
    • In April 2020, the company announced it would lay off around one third of its employees in anticipation of the economic downturn resulting from the COVID-19 pandemic.
    • In August 2020, the company discontinued its secondary trading platform, hosted by Folio, reducing liquidity for existing peer-to-peer investors.
    • In October 2020, the company ceased all new loan accounts on their website as part of restructuring into a neobank after the acquisition of Radius Bank.
    • As of December 31, 2020, Lending Club will no longer operate as a peer-to-peer lender.
  • Credit risk
    • To reduce default risk, LendingClub focuses on high-credit-worthy borrowers, declining approximately 90% of the loan applications it received as of 2012 and assigning higher interest rates to riskier borrowers within its credit criteria.
    • Only borrowers with FICO score of 660 or higher can be approved for loans.

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