And here we are… Lending Club is finally available in California! Well, not just California. In fact we went National today, 6 months after the launch of our Facebook application and 3 months after the limited opening of our public website at www.lendingclub.com. In the last 6 months, Lending Club was not available to borrowers in California, Michigan, Illinois, Pennsylvania, Oregon and Nevada, and was only partially available in Texas and Ohio. We did the math: that’s about 108 million more Americans who can now borrow and lend directly among each other and get better rates.

So this is really good news…first, because my neighbor in the quaint town of Los Gatos, CA will finally stop asking “Dude, when can I use your site?” and second, arguably more importantly, because in the current climate of tightening lending practices from the banks, people in every community across America are looking for alternatives to help meet their financial needs, and being available nationwide will help us serve our community better.

As we pointed out last weekend, affinities and connections among Lending Club members get most of the credit for the remarkably low defaults recorded by Lending Club borrowers over the last 6 months. The ability for Facebook users and members of Lending Club’s partner alumni and professional associations to connect across all 50 states will make the Lending Club network even more efficient and help us deliver even more value to both lenders and borrowers.

Better Rates Nationwide. Together.

Renaud from Lending Club

With the relaunch of our Facebook application and more alumni associations and other communities joining the Lending Club network, the number of active loan listings on LendingClub.com has jumped from 60 a couple of weeks ago to 115 this morning, totaling more than $1.35 million. Lending Club borrowers with loan requests on the site enjoy an average FICO score of about 700 and a 12% debt-to-income (DTI) ratio, excluding mortgage.

Lending Club maintains very high standards to list a loan, with a minimum FICO of 640 and a maximum DTI of 30% required. This means that a large number of loan applications (over 80%) do not meet our criteria and are not able to be listed. To put this into a financial perspective, the $1.35 million of loan listings on the site is the result of about $6.5 million in loan applications over the last 13 days. The good news for approved borrowers is that over 90% of our loan listings are funded. And, to assist Lending Club members whose loan applications were declined, we now offer tools and tips to help them build up their credit.

The average return of all Lending Club lenders after 6 months now stands at 12.2% after fees and losses, while the lowest performing loan portfolio currently earns a respectable 6.8%. The average return will continue to fluctuate over time with interest rates, average credit grades assigned to the loan listings and the number of delinquent loans (currently well under 1%).

We made summary statistics available a few weeks ago, and we will continue to make good on our promise to keep exposing more data and providing more transparency. For starters, we will make all loan data (excluding personally identifiable information) since inception available on LendingClub.com later this week.

Better rates and better returns. Together.

When a group of major social networks - pretty much all those that matter other than Facebook - announces the adoption of open standards, that is effectively good news for all parties involved: good news for users, for developers and for the networks themselves.

We can debate how “open” the standard really is in this case, and how deeply the OpenSocial APIs will let application developers reach into the social graph, as compared to the Facebook API. Looking beyond the initial uncertainties, however, it is fair to say that open standards are generally good news, and the quasi-anonymous support for OpenSocial will help social networking sites and application developers offer applications that are not only easier to develop, but truly more useful for their members.

Take Lending Club for example: OpenSocial offers the ability to retrieve information about a user, and get distribution, across many social networks. What it means is that Lending Club borrowers will be able to leverage their network of connections more broadly, that lenders will be presented with better opportunities to invest in people they trust and feel more comfortable with (such as friends of friends), and that a broader distribution will help find better matches between lenders and borrowers.

(click graphic to enlarge)

The user profiles of both lenders and borrowers will also be more complete and accurate: there is a lot of information in my Linkedin profile for example (such as my work history) that is not in my MySpace profile.

We believe person-to-person lending will grow faster and become a credible alternative to banks more surely in an environment where people feel connected to each other. That was the main reason for launching Lending Club on Facebook last May, and another good reason to announce our extension to universities and alumni associations last week.

This morning we announced our commitment to build a person-to-person lending application that leverages the OpenSocial APIs. By doing so, we are hoping to contribute to making social networks more useful, by helping users leverage their existing social-network relationships at the time they need them the most: to cover medical expenses, finance a new business venture or take advantage of an investment opportunity.

Not as entertaining as sharing pictures, but possibly more useful.

Lending Club Members Speak Out Series

We continue to receive many comments from our members. This weekend, we would like to share a few more comments from Lending Club borrowers, who often focus their remarks on Lending Club’s better interest rates, convenience, and more responsible approach to credit.

“It was very easy and straightforward, and I received my loan within the same week that I applied for it. I used the money to consolidate my credit cards into one easy monthly payment, which makes them easier to pay off coming out of college.”
-- Brian, 22, from South Boston, MA

“I loved how quick and easy it was to get a loan, I really enjoyed that I got to track how many people were able to help me out up to minute since it is all done online. The site also sent me updates while everything was going on so I didn't have to worry. Being a just out of college adult and having student loans, I wasn't able to get such a great rate with anyone else. The rate I got was at least 5% less than my other options.”
-- Stephanie, 24, from Atlanta, GA

“I used Lending Club to get a better rate and pay off my credit cards. I had $5,000 on credit cards with an average APR of 20 %. I paid off the amount in full and I just have one Lending Club bill per month. I am saving 50 % on interest every month which I used to pay to my credit card companies.”
-- Sharad, 25, from Syracuse NY

"Lending Club made it possible for me to get the money I needed without a ridiculous rate. With credit cards, you'll bury yourself with service fees and cash advance fees. Glad I chose the better route. Thanks, Lending Club!”
-- Jim, 22, from Austin, TX

These and other testimonials will soon be available on our secure site at http://secure.lendingclub.com. If you are a lender or a borrower on Lending Club and have your own success story to share, we’d love to hear from you. Leave a comment on this blog or write directly to feedback@lendingclub.com.

We had a busy week here at Lending Club, so we’re going to enjoy the weekend, watch a few videos and relax until tomorrow’s upgrade at 8pm Pacific.

Renaud

Prior to Norwest, Jeff served as President, COO and board member of DoveBid, Inc., a privately held business auction firm, which expanded during his tenure via internal growth and acquisition from a $10M revenue run rate to a $120M revenue run rate with 400 employees. From 1990 to 1999, Jeff was co-founder, President, CEO and Board member of Edify Corporation, a venture backed enterprise software company focused on voice and internet e-commerce platforms and applications. Edify held its IPO in 1996 and was sold to S1 Corporation in 1999.

1. Jeff, how do you think p2p lending will change the face of consumer lending?

Person-to-person (p2p) lending will be an important driver of change in the world of consumer lending, because the economic model of p2p lending is significantly more efficient than the traditional business models of banks, credit card companies and other institutional lenders. That improved efficiency enables better interest rates for both individual borrowers and individual lenders when they participate in a p2p lending transaction. So as awareness grows among consumers that they can both borrow and lend at more attractive rates, we believe that demand to participate in a p2p lending platform such as Lending Club will explode. Today, the overall markets for consumer lending in the U.S. are enormous, so p2p lending has tremendous room to grow from its current small base before it will seriously impact the operations of large consumer lenders. But you can be sure that banks, credit card companies and other consumer finance companies will be paying very close attention to the growth of the p2p lending category -- they know that they will have to deal with p2p lending more and more as time goes by.

2. Are you a lender or a borrower in Lending Club?

I am a lender on Lending Club. It was a very straightforward and easy experience over the internet. I registered as a lender on Lending Club via Facebook, entered a total amount that I wanted to lend, and decided on an overall risk profile for my loans. Then Lending Club's software automatically generated a potential portfolio of roughly 20 loans and suggested amounts for me to fund for each loan. I had the opportunity to look at each borrower's profile, including their job, income, debt level, credit history and reason for borrowing. From the suggested loan portfolio, I picked out the loans that I wanted to fund, adjusted the amounts that I wanted to fund or stayed with the suggested funding levels, and hit the submit button. It was as simple as that. Lending Club then automatically deducted the funds from my account and set up my account to automatically receive the loan repayments from the borrowers. My current portfolio is yielding over 13% -- a lot better than money market funds.

3. Did the Lending Club deal ruin your summer vacation?

Norwest Venture Partners was very excited to invest in Lending Club, and we wanted to make sure that we kept the investment decision making and due diligence process moving forward in a timely fashion over the course of the summer. I had a long scheduled summer vacation that landed right in the middle of our investment process, but we had to keep going on closing the investment, vacation or not. This meant daily phone calls and emails from our vacation spot. I would not say that it quite ruined the vacation, but I can say that everyone in my extended family now knows Renaud!