LendingClub is a US peer-to-peer lending company, headquartered in San Francisco, California. This is the first peer-to-peer lender to register its offer as a securities with the Securities and Exchange Commission (SEC), and offers loan trading on the secondary market. Lending Club operates an online loan platform that allows borrowers to get loans, and investors to purchase records backed by payments made with loans. Lending Club is the largest peer-to-peer lending platform in the world. The company claims that the $ 15.98 billion loan comes from its platform until December 31, 2015.
Lending Club allows borrowers to create unsecured personal loans between $ 1,000 and $ 40,000. The standard loan term is three years. Investors can search and browse loan listings on the Lending Club website and choose the loan they want to invest based on information provided about the borrower, loan amount, loan rate, and loan objectives. Investors make money from interest. Lending Clubs make money by charging origination fees to borrowers and service cost investors.
Lending Club also makes direct loans to consumers, including car refinancing transactions, through WebBank, an industry bank falsified by FDIC, a hired state based in Salt Lake City Utah. These loans are not funded by investors but are assigned to other financial institutions.
The company raised $ 1 billion in what became the largest technology IPO by 2014 in the United States. Despite being seen as a pioneer in the fintech industry and one of the largest companies, the Lending Club suffered a problem early in 2016, with difficulties in attracting investors, scandals over several corporate loans and concerns by the board over the disclosure of prominent CEO Renaud Laplanche for a major drop in prices shares and Laplanche's resignation.
Video Lending Club
History
Lending Club was originally launched on Facebook as one of Facebook's first apps. After receiving $ 10.26 million in the Series A funding round in August 2007, from venture capital investors Norwest Venture Partners and Canaan Partners, Lending Club was developed into a full-scale peer-to-peer loan company.
On April 8, 2008, the Lending Club temporarily suspended new creditor registration, canceled its affiliate program and entered a "quiet period" while waiting for approval to issue a promissory note to the lender. On June 20, 2008, the Lending Club filed a S-1 statement with the Securities and Exchange Commission of the United States (SEC) requesting registration of $ 600 million in the "Members Payment Payment Notes" to be published on its Web site. On August 1, 2008, the Lending Club submitted an amendment on Form S-1 which outlined a new interest rate formula as well as more details on the "resale trading system". On October 14, 2008, the Lending Club announced the completion of the SEC registration process, posted the prospectus submitted on its website, and continued the registration of the new creditor. Notes issued on or after October 14, 2008 are Lending Club securities rather than direct obligations of the final and tradable (buyable and for sale) borrower on the Foliofn trading platform. In March 2009, the Lending Club collected $ 12 million in a Series B funding round led by Morgenthaler Ventures.
Pre-IPO growth
In April 2010, the company raised $ 24.5 million in Series C funding led by the Capital Foundation and joined existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.
In August 2011, the Lending Club raised an additional $ 25 million in venture capital from Union Square Ventures and Thomvest, owned by the Thomson-Reuters Thomson family. This resulted in the Lending Club getting a $ 275 million post-money valuation and a $ 80 million increase in valuations from the previous year. Thomson-Reuters founder Peter J. Thomson also invested an unspecified amount of his personal wealth into the Lending Club. In the fall of 2011, Lending Club headquarters moved to downtown San Francisco; Previous offices are located in Sunnyvale and Redwood City. Co-founder Soul Htite moved to China to start Dianrong.com, a peer-to-peer loan company based in Shanghai.
In 2012, the company employs about 80 people, with Renaud Laplanche continuing as corporate CEO and chairman of the Board of Directors. The company averages about $ 1.5 million in loans every day, for a total of $ 600 million since its inception. In April 2012, the SEC Lending Club's registration from 2008 was renewed to $ 1 billion USD in the Member's Payment Deposit Notes and entered into force on April 10, 2012. In June 2012, the company received $ 15 million in new funding from Kleiner Perkins Caufield & ; Byers and $ 2.5 million personal investment from John J. Mack. Mitra Kleiner Perkins, Mary Meeker, joined the board of directors of Mack on Lending Club. This resulted in the valuation of the company valued at $ 570 million. In November 2012, the Lending Club surpassed $ 1 billion in loans issued early on and announced that they are now a positive cash flow.
In May 2013, Google Capital bought shares in the Lending Club. The Lending Club also began partnering with smaller banks to help streamline their small lending operations. In June 2013, the company partnered with Titan Bank in Texas and Congressional Bank in Maryland to help them facilitate loans that were not profitable for them.
Initial Public Offer (IPO)
In March 2014, the Lending Club started lending to small businesses. In April 2014, Lending Club acquired Springstone Financial. In May 2014, the Lending Club formed a partnership with Union Bank. On August 27, 2014, the Lending Club filed an IPO with the SEC, an offer that took place in December 2014. On December 10, 2014, the company raised nearly $ 900 million in the largest US technology IPO in 2014. First-day stock ended up 56% company at $ 8.5 billion.
Car and mortgage loans
Laplanche told Forbes in April 2015 that the Lending Club will expand auto loans and mortgages. Lending Club also announced a partnership with Google to lend to small companies using Google business services. The company signed partnerships with Google, Alibaba.com, BancAlliance, and HomeAdvisor, including checking out community bank lenders for BancAlliance (a group of 200 banks), to send people on their platforms to various community financial institutions. That year, the Lending Club partnered with Fund Opportunities, announced by former President Bill Clinton at the Clinton Global Initiative. The partnership is intended to provide $ 10 million to small businesses in the California area that are not served by the lender. Lending Club and other small business lenders are partnering with Sam's Club to deliver "business lending center" products. In August 2015 the company created Lending Club Open Integration (LCOI). In October, the company launched a multi-product drawdown credit line for small businesses.
​​â € <â € <2016
Like other peer-to-peer lenders including Prosper, Sofi and Khutzpa.com, the Lending Club experienced an increasing difficulty attracting investors during early 2016. This caused the company to increase interest rates that borrowers charged on three occasions during the first months of the year this. The rise in interest rates and concerns over the deteriorating impact of the US economy led to a large drop in Lending Club stock prices.
In April 2016, a Lending Club employee reported to Laplanche that a date of about US $ 3 million in corporate loans appears to have been changed. The internal auditor of the Lending Club involves an outside company to investigate the report. This investigation found additional problems with the loan, including $ 22 million in loans that had been sold to the investment bank Jefferies in fact did not meet the investment criteria of the bank. Lending Club repurchases this loan from the bank and resells it.
The New York Times reported that the investigation found that Laplanche did not disclose to the board that he had a share of the investment funds being considered by the Lending Club. The Wall Street Journal also states that Laplanche was found not yet fully disclose what he knows about problem loans.
On the May 6 council the Lending Club explained to Laplanche that he no longer had their confidence, which led to his resignation on 9 May. The Wall Street Journal reports that Laplanche has been dismissed by the council. Three other company managers have also been dismissed or resigned at the time as a result of the problem loans. Lending Club's share price fell 34 percent after Laplanche's departure was announced. This puts the share price at 70 percent of the price at the company's initial public offering. As a result of the incident, the Securities and Exchange Commission is reportedly investigating the disclosure of Lending Club to investors.
In December 2017, the Financial Times reported that the Lending Club "has struggled to cope with the impact of the May government scandal", and that the company "has struggled to make big investors buy loans" despite improvements to its internal governance. These challenges have caused him to raise his estimate of losses, and have led to further declines in stock prices. At this time many other peer to peer loan companies are also experiencing difficulties.
Maps Lending Club
Business model
Overview
Lending Club allows borrowers to make a list of loans on their website by providing details about themselves and the loans they want to ask for. All loans are unsecured personal loans and can be between $ 1000 - $ 40,000. On the basis of the borrower's credit score, credit history, desired loan amount and debt to lender's revenue ratio, the Lending Club determines whether the borrower is creditworthy and assigns the approved loan to the credit score determining the interest rate and debt charge. The standard loan term is three years; a five-year period is available with higher interest rates and additional fees. Loans can be paid anytime without penalty.
Only investors in 39 US states are eligible to purchase records on the Platform Lending Club. However, the feasibility is different when buying records on the secondary market, FolioFN. Borrowers from all but two US states are eligible to apply for loans.
Investors can search and browse loan listings on the Lending Club website and choose the loan they want to invest based on information provided about the borrower, loan amount, loan rate, and loan objectives. Loans can only be selected at an interest rate determined by the Lending Club but the investor can decide how much funding for each borrower, with a minimum investment of $ 25 per note.
Investors make money from interest. Tariffs vary from 6.03% to 26.06%, depending on the credit rating set for loan demand. The value set for this request ranges alphabetically from A through G, with A being the highest grade loan, the lowest-interest loan. Each of these letter grades has five subtle sub-classes, numbering 1 to 5, with 1 being the highest sub-class. Lending Clubs make money by charging origination fees to borrowers and service cost investors. The size of the origination fee depends on the credit value and ranges from 1.1% -5.0% of the loan amount. The size of the service charge is 1% of all borrowers who pay. Companies facilitate better interest rates for lenders and borrowers than they would receive from most banks. It has an average of between six and nine percent returned to investors between its establishment and 2013. However, since lenders make personal loans to individuals on the site, their profits are taxed as personal income, not investment income. Therefore, the income from the Lending Club loan may be taxed at a higher rate than the taxable investment with the rate of capital gain.
Ownership of credit
After the note is issued, the Lending Club buys the loan from the issuing bank and the notes become the obligation of the Lending Club, and not from the ultimate borrower: the Lending Club promises to pay the notehold money it receives from the borrower minus its service charge, while the Lending Club record holder has unsecured creditor status from Lending Club. This means that there is a risk that investors may lose all or part of the investment if the Lending Club goes bankrupt or declares bankruptcy, even if the primary borrower continues to pay.
Investors have the ability to make notes for sale before the records have reached maturity. This service is offered in partnership with FOLIOfn Investments which charges 1% on record sales, making Lending Club the first peer-to-peer lending network offering secondary market for peer-to-peer loans. Other peer to peer lending networks such as Khutzpa.com have subsequently also partnered with FOLIOfn Investments to offer secondary markets.
By 2016, the proportion of high funds for loans facilitated by Lending Club comes from hedge funds. During May of that year, the Lending Club sought to sell loans worth hundreds of millions of dollars in bonds as part of a strategy to overcome difficulties in accessing adequate funding.
Credit risk
When initially established, the Lending Club positioned itself as a social networking service and arranged opportunities for members to identify group closeness, based on the theory that borrowers would tend to fail on lenders with whom they had social relationships and affinities. It develops an algorithm called LendingMatch to identify common relationship factors such as geographic location, educational and professional background, and connectedness within a particular social network.
After registering with the SEC, the Lending Club stops showing itself as a social network and maintains that social affinity will reduce the risk of default. Now presents algorithms only as a search tool for investors to find Notes they want to buy, using borrowers and loan attributes such as loan term, target weighted average interest rate, borrower's credit score, length of service, home ownership status, and others. To reduce the risk of default, the Lending Club focuses on borrowers who deserve high credit, declining about 90% of loan applications it receives in 2012 and setting a higher interest rate to risky borrowers in its credit criteria. Only borrowers with a FICO 660 or higher score can be approved for a loan.
Statistics on the Lending Club website state that, as of December 31, 2016, 62.3 percent of borrowers report using their loans to refinance other loans or pay off credit card debt.
Loan performance statistics
As of June 30, 2015, the average Lending Club borrower has a FICO score of 699, a 17.7% debt-to-income ratio (excluding mortgage), 16.2 years of credit history, $ 73.945 of personal income and taking an average loan of $ 14,553 which he used for debt consolidation or to pay off credit card debt. Investors have funded a loan of $ 11,217,348,156, with $ 1,911,759.192 coming from Q2 2015. The average nominal interest rate was 14.08%, default rate of 3.39%, and average annual net income (after default and service cost) of 8.93%. The average return on investment for Lending Club lenders is between 5.47% and 10.22%, with 23 consecutive quarters of positive returns in the second quarter of 2013.
Recognition
In 2011 and 2012 the company was named one of AlwaysOn Global 250. The Lending Club is the winner of the Pioneering Technology Technology 2012 World Forum Award. It has been recognized by Forbes as one of the 20 most promising companies in America in 2011 and 2012, and by Fast Company as one of the ten most innovative financial companies in the world. It was named one of Disruptor 50 by CNBC in May 2013 and 2014, as an annoying innovator in next generation financial services. In 2014, Lending Club has been recognized by Inc. as one of the 500 Fastest Growing Private Companies in America at # 248. Renaud Laplanche, founder of the company and CEO, also received The Economist Innovation Award in 2014 for consumer product categories.
See also
- Comparison of crowdfunding services
- Disintermediation
References
Further reading
- Peter Renton, Renaud Laplanche (2012), The Lending Club Story ISBN: 978-1-48113-173-5
Source of the article : Wikipedia
0 Comments