As P2Plendingnews.com has researched Lending Club has invested 2.4 million US$ of its own money to fund loans since the relaunch in last October. The total volume of funded loans is approx. 10 million US$, that means that Lending Club funded about 24% of all loans itself.
The data is from weekly sales reports that Lending Club files with the SEC. The sales reports look like this and give details on each loan funded.
More details and numbers in the article (recommended reading) by P2Plendingnews.com.
While this may be contrary to the “pure” idea of peer to peer lending my take on this is:
- I see it as a positive development. By using own money to fund loans Lending Club demonstrates their belief in the business model and shares the same risk it expects lenders to take. By the way: There are ongoing discussions at MYC4 about changes that could lead to MyC4 and MYC4 providers to share more risk in funded loans.
- By co-funding loans Lending Club adds continuity. When supply of money by lenders is low, Lending Club co-funds more. That way the demand by borrowers can be served without interruptions.
- However since due to SEC filings very detailed information on the funded loans is publicly available, the explanation of Rob Garcia that the download data was removed due to privacy concerns (see previous post), seems stale.
- P2Plendingnews questions, if Lending Club can continue with co-funding for running out of funds. On the other hand, Lending Club earns interest from the funded loans and can sell the notes any time on the secondary market (that would explain why so many of the notes there are offered for sale immediately after the loan was funded).
- One further and important aspect: Only residents of 25 states can participate as lenders on Lending Club directly. However on the Note Trading platform residents of all but the states Kansas, Maryland, Ohio, Oregon, Texas and Vermontand the District of Columbia can buy notes.
That means by co-funding loans and selling part of their investments on the Note Trading Platform Lending Club enables a larger target audience to use their service.
Please share your opinion by commenting here or in the Lending Club forum. Thank you.