I have been reviewing through a large number of Lending Club loans and noticed some humorous descriptions of the reasons why people want the loan. These should serve as advice for anyone who is planning to write up a Lending Club loan application. Remember that most all lenders are investors and want their money back with interest. The main reason that people loan borrowers money is not because you need it but because they believe that you can and will pay back the loan.

Loans are similar to requesting a tourist visa to come to visit the US — the person deciding whether to give the potential visitor the visa wants to know the reason you want to visit mainly to see that it is reasonable. The main thing that they want to know is that you plan to return to your country after you visit.

• You need to say SOMETHING in your loan reasoning. Loans numbered 76775, 89258 have the description field left entirely blank and even the subject line does not give any indication of what the money is for. Loan 76775 was not funded but the other one was.
• A loan should not be an income supplement. “I just need something that can help me supplement my income a little” People do not loan you money for your day to day income. If you cannot make your current obligations, how are you going to pay off the loan? Loan 74288 was not funded.

Read the rest of this entry »

Since I posted that I am excited about the Lending Club IRA and plan to invest in the Lending Club IRA, I wanted to hear what your opinion is on the topic. The first question is what do you think overall of the idea of the Lending Club IRA and the second asks if you personally plan to invest in a Lending Club IRA>

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Please vote and share your thoughts in the comments below.

I am thrilled to hear about the new Lending Club IRA account to allow peer to peer lending in an retirement account. EntrustCAMA, part of the Entrust Group, is the account administrator. I heard of the Lending Club IRA only a few weeks ago through the comments by a beta tester on my initial review of Lending Club post.

Why is this the Lending Club IRA Big News? Read the rest of this entry »

I made a quick video demonstrating how to purchase loans on the Lending Club secondary market with FolioFN. In is very easy to purchase these — It only took a few minutes to purchase. There are a few things to keep in mind when purchasing Lending Club loans via FolioFN:

• You must meet certain income and net worth requirements
• It is not available in every state
• Even if your state does not allow you to directly buy loans through the primary market, you can likely participate in the secondary market.
• You pay no fees as a buyer — the seller pays a 1% fee
• You can resell the loan on FolioFN when you wish (less a 1% fee)

An additional item that I should have demonstrated in the video is Read the rest of this entry »

When signing up for FolioFN to buy and sell Lending Club notes (loans) on the secondary market, there is a series of questions that you must answer to be eligible. You must give your social security number, Income, Liquid Net worth, and Net Worth. It is now somewhat like a hedge fund where you must meet certain requirements to participate in the market. Although, the requirements at FolioFN are lower than those of a hedge fund. According to the FAQ, “the current State and Financial Suitability conditions” (the income and net worth requirements) are:

individual lenders who are residents of states other than California must (a) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000. Individual lenders who are California residents must (a) have an annual gross income of at least $100,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $100,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000.

The prospectus for the Lending Club secondary market can be found on Lending Club’s website.

I have signed up and I am working on a video to show you how easy it is to purchase loans on the secondary market. I’ll post the video when it is available.

Below is the text of the forms that you must go through to become trader in the secondary market.
Read the rest of this entry »

I mentioned earlier that I had one Lending Club loan fall behind, but the loan recovered in less than 30 days. I now have one Lending Club loan more than 30 days late.

I had my doubts when I bid on it because the person sounded too desperate to get out of town. However, the loan was only for $800 with a monthly payment of just over $27, so I figured that they could handle the payment regardless of moving cities. If a person does not have intentions of paying a loan back, they would certainly ask for more than $800.

The loan details: Read the rest of this entry »

According to NetBanker, Lending Club has a $500,000 per month burn rate. That is lower than my earlier estimation my estimate of the monthly cash burn rate delta due to the quiet period. As some of the commentators on my site mentioned, it seems to have been reasonably easy for Lending Club to find other lending institutions to extend the loans to cover the gap during the quiet period. The error in my estimation was further compounded by the Lending Club loan volume significantly dropping during the Quiet Period despite the fact that Lending Club offered to keep funding all loans meeting the requirements.

Since I do not want to read through the entire filing, I will defer to NetBanker… Per NetBanker’s analysis of the S-1, the S-1 filed includes among other things the following interesting pieces of information:

$6.4 million of the loans made through the platform Read the rest of this entry »

In Lending Club’s S-1 filing in relation to the quiet period, Lending Club listed many risks. (See the S-1). The risks listed are similar, but not exactly like the financial risks Lending Club earlier posted on their website.

The following risk list Read the rest of this entry »

Lending Club just sent an update via email about their latest filing with the SEC. Unfortunately, they are still in a quiet period so they do not say much about the ongoing outlook, but it seems they may be one step closer to completing the requirements to return to P2P lending. So maybe Lending Club will survive.

The filing was posted to the SEC website at 5:30 PM eastern time toiday (Friday June 20th) and I am writing this less than an hour later.

Link to the Lending Club filings documents. I have not had the chance to read through the whole filing yet but I did Read the rest of this entry »

Congratulations to Lending Club for winning a Webby Award. Other recipients included David Byrne, will.i.am of the Blackeyed Peas, Stephen Colbert, Lorne Michaels, Michel Gondry, and Tim and Eric. Many, many other organizations won awards including the Peace Corps which won a Webby award for a government website.

Lending Cub gave a tongue-in-cheek acceptance speech for their 2008 Webby award, but it seems to have been the only words available to a company under the a SEC imposed quiet period. That is the speech was completely silent: Read the rest of this entry »