November 14th, 2008 — Lending Club
http://blog.lendingclub.com/2008/11/14/welcome-back-fellow-californians/
After opening partially at the time of registration with the SEC Lending Club has now reopened to California lenders…
Congrats Lending Club!
Keeping this one short and sweet as it is Friday night…
Related Articles Related StoresOctober 28th, 2008 — Lending Club
Renaud Laplanche, founder and CEO of Lending Club in California recently spoke with Jackie Hyland from ABC News Money Matters about Lending Club, where borrowers with good credit can obtain personal loans from complete strangers. It was touted as providing a unique and creative way to get a loan that will offer lower interest rates than most credit card companies and banks can. (Note: Prosper is in a quiet period and has more or less shut down lender operations. Loanio (Loanio Blog) has just launched but lack the secondary market of Lending Club.
Here is my synopsis of the interview…
Lending club operates in the same way as a normal marketplace, however instead of having buyers and sellers, the website caters to borrowers and lenders. “Borrowers are there to get a loan, and lenders are there to make investments in these loans requested by the borrowers and fair interest rates as a result, and at the same time feel good about it because they’re helping other people.” Renaud Laplanche told Money Matters.
Peer to Peer lending or P2P lending allows borrowers and lenders to cut the middle man out, exchanging loans for an average interest rate of 10% to 12% instead of whatever high interest rates lending institutions are currently offering. With the recent credit crunch, not only is the demand for peer to peer lending alternatives going up, but Lending Club has also experienced a dramatic increase in the supply of lending options as lenders look for new ways to invest as returns on the stock market slow.
Since May of 2007 when Lending Club was founded, more than $20,000,000 dollars in loans have been offered through the website on a peer to peer basis. A new SEC-backed program was introduced to Lending Club only ten days ago, and has already facilitating the lending of more than $1 million dollars from lenders to borrowers on the website.
Related Articles Related StoresOctober 16th, 2008 — Features, In the News, Lending Club, P2P Lending
Back in April of this year, the Lending Club announced that it would be going into a quiet period due to the beginning of a registration process involving the SEC, the United States Securities and Exchange Commission. Now the Lending Club is pleased to announce that the process has been completed, and now the Lending Club is available both to borrowers and to lenders as well. The Lending Club community is taking a major step forward with this SEC registration, which is also a grand step forward for social lending in general. Because of this SEC registration, the Lending Club is establishing itself as a viable investment alternative to the more traditional set of debt and credit instruments and products that only the larger financial institutions tend to offer.
- It means that under the registered offer, lenders with the Lending Club will be able to invest in notes corresponding to portions of loans that are made to members who are borrowers. These notes will have stated interest rates that range from 6.69% to 18.63%, once a 1% service charge has been applied.
- It means that Lending club is going to become the first social lending network that gives lenders the option of a trading platform, because Lending Club partnered with FOLIO Investments Inc. On this trading platform, the lenders who become customers of the FOLIO Investments, Inc. Company will also be able to put up notes for sale in the event that liquidity is needed before a note’s term is completed.
- It is also believed that the SEC Registration will significantly accelerate the mainstream adoption of the social lending concept, which will allow more potential borrowers to get the funding they need more quickly.
As a result of the current financial crisis that our economy is experiencing, consumers are beginning to build a great distrust of larger financial institutions. For this reason, consumers are beginning to demand alternatives that allow them to have much more control over their investments and finances. Lending Club is leading the way to delivering this much needed alternative by crafting a network where lenders can fund loans that were posted by borrowers. The Lending Club community continues to show borrowing behavior that is exceptionally responsible, especially over the past 18 months. Since May of 2007, the default rate for these loans has remained below a mere 2 percent.
The prospectus that the Lending Club filed with the SEC is available in PDF format. In a time where the financial landscape is making the concept behind Lending Club even more useful both to borrowers and to lenders, the Lending Club is clearly thrilled that they are once again able to accept business from new lenders as this allows them to facilitate healthy lending relationships between responsible borrowers and responsible lenders, providing a much needed alternative form of borrowing and lending in times of economic crisis.
Related Articles Related StoresJuly 21st, 2008 — Features, Lending Club, Site Review
A few weeks ago Rob Garcia at Lending Club announced updates to the lending account management features. I apologize it has taken me this long to cover the update, but I have been busy at work and frankly without lenders having the ability to lend money I was lacking motivation. Well I got to it this weekend and so I thought I would give a quick writeup…
This has been a long time coming. On page 2 is exactly what I need in order to track Lending Club in Quicken the way I track Prosper in Quicken. Here is the information on that page for Jan 08 (more interesting than then months since the quiet period began.)
Lending Club Statement
This information is also now available via the account activity tab… Here is my recent activity…
Lending Club Account Activity
This seems like it might be a good way to group loans so that loan performance could be compared by loan groups. It is up to the account holder to define the “portfolios”. This seems like a good feature for the large lender interested in dissecting their performance; however, there is a major thin data problem for any loan group of less than 35 to 50 loans minimum.
There are some other change when it comes to traversing your account. basically around retrieving and sorting loan while on the Lending Club website…
Statements were sorely overdue and I am glad to have them. When is this quiet period going to end?
Related Articles Related StoresJune 28th, 2008 — Lending Club
I read through the Lending Club S1 finally… I found a few parts of the S1 interesting… Over the next few day I will lighlight a few of my favorite sections. I am not a lawyer nor do I claim to fully understand everything that I am reading. I am simply copying verbatim parts of the Lending Club S1 that I found interesting…
Related Articles Related StoresThe financial statements included in this registration statement have been prepared assuming that the Company will continue as a going concern; however, the conditions discussed below raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
The Company has incurred operating losses since its inception. For fiscal 2008, the Company incurred a net loss of $7.0 million and had negative cash flow from operations of $6.0 million. Additionally, the Company has an accumulated deficit of $7.8 million since inception and a stockholder deficit of $4.8 million as of March 31, 2008.
Since its inception, the Company has financed its operations through debt and equity financing from various sources. The Company is dependent upon raising additional capital or seeking additional debt financing to fund its current operating plans for the foreseeable future. Failure to obtain sufficient debt and equity financing and, ultimately, to achieve profitable operations and positive cash flows from operations could adversely affect the Company’s ability to achieve its business objectives and continue as a going concern. Further, there can be no assurance as to the availability or terms upon which the required financing and capital might be available.
Net cash used in operating activities from inception through March 31, 2008 consisted mostly of increases in headcount costs, expenses for consultants and temporary personnel and other professional service providers to the Company.
Net cash used in investing activities was $7.3 million for the fiscal year ended March 31, 2008, and $38,100 for the fiscal year ended December 31, 2007. In fiscal 2008, net cash used in investing activities consisted mainly of our $7.0 million investment in loans to borrower members. Other investment activities included opening certificates of deposits tied to our loans payable and from capital expenditures for purchases of property and equipment. Net cash provided by financing activities was $18.6 million for the fiscal year ended March 31, 2008, and $0.7 million for the fiscal year ended March 31, 2007. Cash provided by financing activities consisted primarily of proceeds from the issuance of our convertible preferred stock in our first round of venture capital funding in August 2007 and our issuance of long-term debt.
On October 29, 2007, we entered into a secured $3.0 million loan facility with Silicon Valley Bank (“SVB”). As of March 31, 2008, we had drawn down the entire amount of the facility. Interest on borrowings under the loan facility is at a per annum rate fixed as of the funding date of each advance equal to the greater of (i) SVB’s prime rate of interest plus 0.75% or (ii) 8.50%. We also paid a commitment fee of $15,000 on the effective date of the loan facility and $11,400 of SVB’s expenses in connection with the facility. The borrowings under the credit facility are secured by a blanket lien on substantially all of our assets, except for our intellectual property rights. Following the date of this prospectus, payments we receive in respect of borrower member loans on which the Notes are dependent will also be excluded from the blanket lien. In connection with this facility, we issued a fully vested warrant to purchase 98,592 shares of Series A convertible preferred stock to SVB. SVB also received the right to invest up to $500,000 in our next round of equity financing on the same terms as offered to other investors. Additionally, the SVB facility requires us to maintain a certificate of deposit with SVB of $150,000 until repayment.
On February 20, 2008, we entered into a secured $5.0 million credit facility with Gold Hill Venture Lending 03, LP (“Gold Hill”). As of March 31, 2008, we had drawn down $3.6 million under this facility. Interest on the borrowings under the credit facility is at a fixed rate of 10% per annum. Under the terms of this facility, we agreed to remit to Gold Hill, at the end of the amortization period, an amount equal to 1% of the total amount borrowed under that facility. We also paid a commitment fee of $25,000 on the effective date of the credit facility. Borrowings under the credit facility are secured by a lien on substantially all of our assets, except for our intellectual property rights. Following the date of this prospectus, payments we receive in respect of borrower member loans on which the Notes are dependent will also be excluded from the blanket lien. Gold Hill’s lien is pari passu with SVB’s lien described above. In connection with this facility, we issued fully vested warrants to purchase an aggregate of 289,201 shares of Series A convertible preferred stock and Gold Hill received the right to invest up to $500,000 in our next round of equity financing on the same terms as offered to other investors. The Gold Hill facility requires us to maintain a certificate of deposit with SVB of $250,000 until repayment.
As of the date of this filing, we are in violation of certain covenants under our SVB and Gold Hill facilities because we stopped accepting lender member commitments during the SEC registration process and also because we have not maintained our primary operating account with SVB. Although the continuing existence of these covenant violations constitutes events of default under the facilities, we entered into forbearance agreements with SVB and Gold Hill in June 2008, under which they agreed to forbear from exercising their rights against us with respect to these events of default through September 15, 2008.
In January 2008, we issued subordinated convertible promissory notes to Norwest Venture Partners X, LP and Canaan VII L.P., with principal sums of $500,000 each, under the terms of a note and warrant purchase agreement. The convertible notes are subordinate to our capital loan facility and our credit facility and bear interest at a rate of 8% per annum. Principal and interest are due in full on the maturity date of January 24, 2010, unless an equity financing with total proceeds of at least $3 million occurs prior to such date. If such an equity financing occurs, the principal balance and accrued interest of the notes will automatically convert into equity securities at the same price and under the same terms as those offered to the other equity investors. In connection with the issuance of the convertible notes, we issued warrants to purchase an aggregate of 234,742 shares of Series A convertible preferred stock to the convertible note holders.
From April to June 2008, we issued a series of promissory notes to accredited investors totaling $3,632,964. Each note is repayable over three years and bears interest at the rate of 12% per annum. In addition, investors in these promissory notes will receive warrants to purchase a total of 355,197 shares of our Series A convertible preferred stock. We used the proceeds of these notes to fund loans to qualified borrower members.
We used the proceeds from borrowings under the SVB and Gold Hill facilities, the sale of our convertible notes and the sale of promissory notes primarily to participate in the lending platform as a lender in order to insure a sufficient level of funding for borrowing requests. Beginning April 7, 2008, and until the date of this prospectus, all loans funded on the platform have been and will continue to be funded and held only by Lending Club. As of June 10, 2008, we had provided approximately $8.5 million in funding to borrower members. We expect that we will continue to fund loans to borrower members ourselves for some time, although there can be no assurance that will do so or if we do so, what level of funding we will be able to provide. Furthermore, following the date of this prospectus, if we fund loans ourselves we will hold the loans directly and will not hold Notes for our own account. Following the date of this prospectus, we will reopen the lender side of our platform to accept new lender member registrations and funding commitments to purchase Notes.
We have incurred losses since our inception and we expect we will continue to incur losses for the foreseeable future. We require cash to meet our operating expenses and for capital expenditures and principal and interest payments on our debt, as well as to fund loans we will hold for investment. To date, we have funded our cash requirements with proceeds from our debt issuances and the sale of equity securities. At March 31, 2008, we had approximately $5.6 million in cash and cash equivalents. We primarily invest our cash in interest bearing money market funds.
We anticipate that we will continue to incur substantial net losses for a number of years as we grow our online platform. We do not have any committed external source of funds. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our cash needs through public or private equity offerings or debt financings. Additional equity or debt financing may not be available on acceptable terms, if at all.
Since our inception, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.
June 21st, 2008 — Lending Club
Lending Club has filed an S1 with the SEC (link to S1 filing). It looks to be similar in nature to the Prosper filed an S1 reported here on 10/30/2007.
This continues the Lending Club quiet period started on 4/8/2008. Originally I had guessed 7 months to 1.5 years for the Lending Club quiet period and I stand by that guess… 2 months and counting… Good luck Lending Club, your lenders are eagerly waiting the outcome…
I thought the following portion of the Q&A was interesting…
Q: Will the Notes be listed on an exchange?
A: No. The Notes will not be listed on any securities exchange.
Q: Will I be able to sell my Notes?
A: The Notes will not be transferable unless and until we are able to establish a resale platform for Notes. Although we are working to establish a resale platform, there can be no assurance we will be able to do so, or, if we are able to do so, when a resale platform would be available. Therefore, lender members must be prepared to hold their Notes to maturity.
Here is the email announcement I received from Lending Club…
Related Articles Related StoresDear Kevin,
We filed with the SEC earlier today. You can read the registration statement on the SEC Website at www.sec.gov. This is an important step in the process that we announced on April 7. Until the registration process is complete, we continue to be in a quiet period and are not at liberty to disclose more details on the process and timing. Please find below the text of our press release.
Kind Regards,
Patrick Gannon
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 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.
May 16th, 2008 — Collections, Lending Club
Much to my chagrin, I have managed to pick a Lending Club loan that is now 121+ days late. I thought it a good time to go over how Lending Club handles these situations… They take a different approach and it seems a much more clear cut approach from my account’s perspective.
Here is the page where Lending Club details there approach: http://www.lendingclub.com/info/collection-agencies.action. Here is the relevant portion:
If a payment can not be collected for 3 months after the loan was sent to the collection agencies (that is, 120 days past due), the loan will be removed from the lenders’ portfolios as a total loss (a charge-off). Lending Club will continue to collect on the charged-off loans until the loans are finally packaged and sold to a debt purchaser, which may take another six to nine months. Any recovery of the loan will be credited to the lenders’ accounts as extraordinary income.
The key points:
This is a clean approach from my perspective (trying to keep an accurate representation of the account in Quicken.)
I also now have a total of 4 loans from Lending Club that are in some form of late and I continue to move money out on a semi-regular basis until such time as Lending Club reopens to lenders. Here is my current account screen.
May 15th, 2008 — Kiva, Lending Club, Zopa
Zopa took the Webby in Financial Services (Mint was People’s Choice). On Zopa you can buy a CD and help reduce my loan without giving up any of your entitled interest (current rate 3.75%): Start Here When Buying Your CD
Lending Club took the Webby in Banking / Bill Paying (Mint was People’s Choice). Lending Club is currently in a quiet period and is not currently accepting new commitments from lenders or allowing new members to register as lenders.
Kiva took the People’s Choice for Charitable Organizations NonProfit. Kiva is a very worthwhile charity, but you don’t make any interest.
Here is the website to see all the nominees and winners: 12th Annual Webby Awards Nominees
Related Articles Related StoresApril 22nd, 2008 — Lending Club, Loanio, Prosper.com, Zopa
Another late loan and another withdrawal. Eagerly awaiting the end of the “quiet period.” I think competition is good for the market and at the exact moment it feels like Prosper is the loan dog (pun intended) in the p2p lending market… Zopa provides a CD and Lending Club doesn’t have lenders. Will loanio launch at finovate startup? Are there others in stealth mode waiting to launch… Now seems like the time…
April 9th, 2008 — Lending Club
UPDATE: After a second reading I think my assumption about the secondary market is incorrect… (My own hopes for such a market might have clouded my vision.) It looks like LC is just registering for a license that they think they need to continue working with “lenders”: http://www.techcrunch.com/2008/04/08/lending-club-puts-moratorium-on-lending-activity/
I am leaving hte rest of my original post unchanged: http://www.rateladder.com/2008/04/08/big-lending-news/
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