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.
What this SEC registration means for lenders and borrowers:
- 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.
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Zopa, the UK based peer to peer lending company, is shutting down their US branch due as a result of toughening conditions that are currently being experienced by the US economy. Zopa provides loan services in the UK, as well as in Italy and Japan through a pure P2P style marketplace. Borrowers would request loans, and then the individual lenders would contribute as much or as little as they wanted to, towards the request. Then when enough funding has been collected, the loan is finally put together and granted. As the borrower pays back the loan, interest earned goes back to the lenders. This micro lending model has made the system popular in the UK and the Italy, and Zopa is soon to open a branch in Japan following the same model.
