LendingClub Blog http://blog.lendingclub.com The Official Lending Club Blog Fri, 16 Jun 2017 19:23:22 +0000 en-US hourly 1 https://wordpress.org/?v=4.8 Scott Sanborn Discusses the Future: On Demand Credit http://blog.lendingclub.com/scott-sanborn-discusses-future-on-demand-credit/ http://blog.lendingclub.com/scott-sanborn-discusses-future-on-demand-credit/#respond Fri, 16 Jun 2017 17:05:08 +0000 http://blog.lendingclub.com/?p=7013 A decade ago we set out to re-imagine the banking industry. We started by making credit more attractive for…

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A decade ago we set out to re-imagine the banking industry. We started by making credit more attractive for borrowers and investing more rewarding for investors. As we grew we transformed the banking system into a frictionless, transparent and effective online marketplace that helps people achieve their financial goals.
On our 10-year anniversary, we sat with our CEO to discuss the future of credit and online lending. Check out the full interview below!

Q: We’re going to dive right in, Scott. What is the world of credit going to look like in ten years?

I envision a future where we [consumers] manage our own credit. Credit will be on-demand, transparent, frictionless and mobile. We should own it, control it and know what drives it. If we are aware of what drives our credit score and understand our credit behavior and saving patterns, we can take steps to improve our own financial life. That’s a powerful thing.

Q: What will change ten years from now in the lending environment?

What we are moving towards in the consumer-experience space is, what’s the emotional reaction you want from the consumer and what’s that experience that delivers that? Which goes far beyond an affiliation or an association with a brand.
For example, when people go to get a mortgage, they’re not looking for financing; they’re looking to buy a home. But, if you really push that forward, it’s that excitement of home ownership which finance enables. That’s what we really want to get to. And, then, everything else around that – pricing and convenience – are features and the outcome we’re looking for is how that individual actually feels about that interaction or their experience.

We have made huge leaps and bounds forward in how credit is extended, but, it’s still a pretty basic way of thinking about how a person is likely to repay a debt. Today, we look at data from a credit bureau, which is a few weeks old. We then make decisions like, “I expect you to be able to pay this debt down over the next few years,” but your circumstances are likely going to change and I’ve already made my call a few years ago. We need to think about this in real time. So, for example, I would want to know, at any moment in time, how much credit I can extend to you, not just because of who you are, or what your credit history says, but also, because of what you are doing now. Now, we have the tool and the computing power to be able to capture that information and make use of it. That is exciting.

Q: What does this mean for the marketplace?

We are on the brink of unleashing the potential of the marketplace. We’ve broadened the range of investors – adding asset managers and banks – which gives us scale, resiliency and the ability to serve even more borrowers.
Right now, we have enough demand and supply from our investors and a clear borrower demand to create real value. We’ve started down the path of adding more products beyond personal and business loans for borrowers that help solve real problems. Last year, we added auto refinancing because it’s the second-largest purchase most people make and to date, we’ve saved people $1,500 on average1. Our ability to line up a diverse range of investors, who have different risk appetites, means we can say “yes” to more people.
In the future, those that are extending credit to you will be able to deliver the right risk tolerance based on your data and specific needs. We know you’re more than your credit score and that there might be certain life events that don’t reflect your ability or willingness to repay that could bring your score down. By evaluating the whole person, beyond numbers, we can extend credit at an attractive rate, that’s a powerful model.

Q: What consumer trends are you following and how does LendingClub fit in?

Well, there are a couple of trends that are emerging, that will shape how we think about engaging with our customers.
The first, people want experiences and what really matters is how they feel when they engage with an institution, a product, or a service. And, that really changes the way we think as a company.
The second, and this is much more profound, is the nature of work itself is changing as automation, robotics, the Internet of Things, artificial intelligence and machine learning become more mainstream. What we are finding is that new categories of work are emerging.

It sounds crazy, but, machines are doing much more of what we do, and that’s going to change things dramatically for companies engaging in this ecosystem. There are new jobs, which exist today, that didn’t exist ten years ago and I can’t even begin to imagine what that looks like 10 years from now.
Let’s look at taxi drivers in London, as an example. Taxi drivers were a very precious commodity because you needed to study for three years before you could drive a cab in London. Today, with GPS, every person with a driver’s license can drive an Uber. So, you suddenly change the nature of work. These people are making good money, they are credit worthy and financial institutions have no idea how to think about that. In that scenario, as we think about extending credit, we need to think differently when assessing an Uber driver’s credit worthiness. How do you think about extending credit to a GPS? As we think about continuing to innovate in the credit space, we have to keep a pulse on how work itself is changing.
The third trend is people want instant gratification, immediate access and a personalized experience. People are looking for more control; they’re looking for a better experience; they’re looking to feel good about themselves, not just in how they are treated, but, also, in how they’re able to help other people. The way we are thinking about addressing this and really harnessing it, is in how we deliver our product.

1Based on an average payment savings calculation of customers who refinanced their existing vehicle loan through LendingClub from January 1, 2017, through May 1, 2017. Claim does not include customers who choose to extend the number of remaining payments on their auto loan.

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LendingClub: A History of How it Works http://blog.lendingclub.com/lendingclub-history-how-it-works/ http://blog.lendingclub.com/lendingclub-history-how-it-works/#respond Wed, 14 Jun 2017 17:04:59 +0000 http://blog.lendingclub.com/?p=6963 As an online business in a relatively new industry called peer-to-peer lending (also known as marketplace lending), we receive…

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As an online business in a relatively new industry called peer-to-peer lending (also known as marketplace lending), we receive many questions, including this one:

Is LendingClub Legitimate?

The short answer is yes. Read on for more in plain English (sorry, fans of complicated legal jargon!).

Fast facts about LendingClub:

LendingClub accomplishments

How LendingClub works

LendingClub is an online peer-to-peer lending platform with state-of-the-art technology to deliver fast, safe service and funding. We’re called a peer-to-peer lending platform because we connect people who want to borrow with people who want to invest. Individual people (our peers) can back loans by investing in LendingClub Notes. And platform is just a fancy word for our website and the infrastructure behind it.

Being an online business leads to key benefits:

  • We don’t have the overhead of brick-and-mortar branch offices which lets us pass savings on to you.
  • We use cutting edge technology to deliver service—and funds.
  • Information (and our staff) is centralized, so we can help you quickly and efficiently. In fact, when you speak with a member of our support team, they’re in the same location as our software engineers, right here in California.

Your information is secure

Some people aren’t comfortable providing private information, such as a bank account, to an online business. We get it. Because we are an online lending platform dealing with sensitive information, we use cutting edge technology to keep it safe. (By the way, we do have real people at a real office in San Francisco’s financial district!). Because we do all our business online, ensuring your information is secure is core to our business:

  • Our site is secure, meaning information that you enter on our site won’t be intercepted by hackers.

Here’s what to look for when you’re transacting online:
secure connection example

  • We take great lengths to make sure your sensitive information is secure, including internally.

How we speed up the approval process

Some people are surprised by how quickly they can check their rate and get access to a loan. We can approve applications quickly because we use cutting edge technology and we’ve had 10 years to hone our process. Rather than taking a lengthy application at a branch with archaic or time-consuming hurdles, we use technology and best practices to make getting a loan quick and easy. That’s our value proposition.

In fact, if you check customer reviews on our site as well as partner sites, you’ll see a lot of folks saying it’s “hassle free.”

How we check your credit score without impacting it

Gone are the days when checking your rate on a potential loan has to impact your credit score! There are “soft credit checks,” here to save the day. A soft credit check is when a credit bureau provides sufficient information for a financial company like us to accurately predict potential loan terms. It’ll be visible to you on your credit report, but not to anyone else who pulls your credit history.

This lets you check your rate on a potential loan without risk or obligation. And it takes just a few minutes.

Rates and transparency

When you’re borrowing money, it’s coming from other people. Interest on the loan compensates them for taking a chance on you to pursue your goals. The interest rates are fixed, so your payment never increases, and you know exactly what to expect each month when you get a loan.

We want you to be an informed member of our club. Everything you need to know about how the financials work is available on our Rates & Fees page.

We hope this article helps you more confidently answer “yes” to the question if LendingClub is legit. For more specifics on protecting yourself from lending scams and fraud, see our tips below.

How to Protect Yourself from Scammers

Scammers are becoming more creative and sophisticated in their efforts to steal your identity and your money. Whether a scammer is posing as a Nigerian prince or a legitimate business like LendingClub, you play a crucial role in safeguarding your information.

Here are three ways to guard against scams, as well as what to expect when you’re communicating with us here at LendingClub.

Don’t pay money for the “promise” of a loan. Ignore any advertisement or just hang up on any cold caller who “guarantees” a loan in exchange for a fee paid in advance. This is known as an advance fee scam.

    • LendingClub will never offer access to a loan or payment plan in exchange for paying a fee in advance. Any fees associated with your loan won’t be due until your loan is issued.
    • Be on alert if someone asks you to buy a gift card in exchange for a loan. This is how scammers get around bank issues.

Don’t respond to emails that request personal or financial information. Pick up the phone to verify the legitimacy of the sender.

    • LendingClub will never email you to collect your bank account number, credit card information, Social Security number, or date of birth.
    • LendingClub will never ask you to download software in an email.

Do exercise caution when providing personal information over the phone.

    • LendingClub will never call you and ask for your credit card or debit card information to gain access to a loan.
    • If you apply for loan, we may call you to verify certain information such as your date of birth or employment.

We’re your partners in reaching financial goals, and in safeguarding your information. If you have concerns about whether an email or phone call that seems like it’s from LendingClub is legitimate, you can always contact us to make sure.

*Based on reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at https://reviews.lendingclub.com/.

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A Celebration of 10 Years http://blog.lendingclub.com/10-year-celebration/ Thu, 25 May 2017 18:00:16 +0000 http://blog.lendingclub.com/?p=6954 LendingClub was founded in 2007 as an online marketplace powered by technology, transforming how people access affordable credit and…

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LendingClub was founded in 2007 as an online marketplace powered by technology, transforming how people access affordable credit and invest in their future. Today, LendingClub celebrates a decade of excellence and innovation – 10 years! 10 years of better rates for borrowers and solid returns of investors. 10 years of helping millions of customers get a better deal and improve their financial future. 10 years of providing an experience that’s rewarding, fair, easy, and transparent. We stand here today as America’s largest online credit marketplace, but we’re just getting started.  

The next decade has amazing potential, and we want to help even more people build better financial lives. We’ve created an intuitive online experience to commemorate what we’ve accomplished, and a visionary look ahead from our very own thought leaders.

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New Minimum Initial Deposit for Retail Investor Accounts http://blog.lendingclub.com/new-minimum-initial-deposit-for-retail-investor-accounts/ Wed, 17 May 2017 17:32:02 +0000 http://blog.lendingclub.com/?p=6949 To help investors towards a positive experience on the platform, we have implemented a minimum initial deposit of $1,000…

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To help investors towards a positive experience on the platform, we have implemented a minimum initial deposit of $1,000 for all new retail investors making their first investment through Lending Club.

Our main goal is to deliver a better investing experience. Data shows that Lending Club investors who are able to diversify their accounts have generally experienced less volatility than investors with more concentrated holdings. This is in part because investors are able to purchase multiple Notes, reducing their exposure to any single Note.

We’ve written previously about the impact of diversification on a Lending Club portfolio. Our data and insights show that LendingClub investors who hold multiple Notes have generally experienced less volatility than investors with more concentrated holdings. In fact, 98% of accounts with over 100 Notes of similar size have seen positive returns.1

LendingClub is dedicated to constantly improving on – and delivering – the best investor experience possible.

To learn more, click here or contact our Investor Services team at investing@lendingclub.com.

1As of March 31, 2017. Based on adjusted net annualized return (Adjusted NAR) of current retail investors with a portfolio containing 100+ Notes, none of which have been purchased or sold on the Folio Investing Note Trading Platform*, where the portfolio concentration is one percent or less (i.e. no Note constitutes greater than one percent of the total portfolio value) and the portfolio has a weighted average age of at least 12 months (weighted based on the dollar value of each Note relative to the total dollar value of the portfolio, where the age of each Note is measured as of the purchase date of such Note). Adjusted NAR is calculated using the formula described here. This information is not intended to be investment advice. Historical performance is not a guarantee of future results. Actual results may differ materially from historical data. Lending Club Notes are not guaranteed or insured, and investors may lose some or all of the principal invested. Individual portfolio results may be impacted by, among other things, the size and diversity of the portfolio, exposure to any single Note, Borrower, or group of Notes or Borrowers, as well as macroeconomic conditions. *Folio Investments, Inc. (“Folio Investing”) is a registered broker-dealer and member of FINRA and SIPC and operates the Note Trading Platform. Folio Investing is based in McLean, VA and is not affiliated with Lending Club. Folio Investing has no role in the original issuance of the Notes and is not responsible for and does not approve, endorse, review, recommend or guarantee the Notes or the accuracy, reliability, or completeness of any data or information about the Notes. See the Important Disclosures page for additional important information. More information about Folio Investing is available at www.folioinvesting.com.

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How Can I Pay for Fertility Treatment? http://blog.lendingclub.com/how-to-pay-fertility-treatment/ Mon, 15 May 2017 18:42:19 +0000 http://blog.lendingclub.com/?p=6934 We understand figuring out what things cost and how to pay can be overwhelming. Don’t let that confusion or…

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We understand figuring out what things cost and how to pay can be overwhelming. Don’t let that confusion or uncertainty get in the way of moving forward with fertility treatment. We’ve helped countless individuals take the first step towards parenthood. Our caring and supportive team is here to help you.

To begin, you’ll want to determine how you’re going to pay for fertility treatment and related care such as medications, genetic testing and egg freezing services.

The good news is that fertility financing is available so that cost does not have to be a barrier to treatment and your dream of becoming a parent. For a simple way to make IVF financing more affordable, explore Lending Club Patient Solutions. The flexible payment plans include:

  • One loan for comprehensive fertility care for up to three services: IVF treatment, medication, genetic testing or egg freezing
  • No upfront payments
  • Fixed rates starting as low as 3.99% APR1
  • Manageable monthly payments for a range of budgets
  • Payment sent directly to your providers in one to three business days, so you can start treatment without delay or pressure to distribute funds correctly

With Lending Club Patient Solutions, you can concentrate on building a family knowing you have a way to finance comprehensive fertility care. We work with nationally recognized and regionally based pharmacies and labs to cover your comprehensive fertility care.

Try our online payment calculator — see your monthly payment in advance.


Lending Club Patient Solutions realizes you have enough on your mind as you go through IVF treatment — that’s why we make it easy to understand how much you can borrow and what your monthly payment options are. Just click the button below to try our user-friendly online payment calculator and see what’s available.

Apply for IVF financing that fits your monthly budget

Once you’re ready to apply, follow these three steps to help you choose the monthly payment option from Lending Club Patient Solutions that best fits your budget:

  1. Work with your clinic to total all the costs not covered by insurance, including fertility treatment, medications, genetic testing, or egg freezing. This will help you determine how much you need to finance.
  2. Decide how much you can afford to pay monthly. Our application process allows you to make an initial review of the monthly payment options you qualify for with no impact to your credit score.
  3. Select the payment term that fits your monthly budget. The rule of thumb is the longer the payment term, the lower your monthly payment. You’ll see that payment plans offered through Lending Club Patient Solutions have terms from 24 to 84 months1 based on your loan amount and credit history.

Our online application process is quick and easy. Plus, you’ll receive an instant decision. Once you’re approved and loan documents are submitted, your fertility care providers will receive funding directly from Lending Club Patient Solutions in just one to three business days.

With fertility financing this easy, you can focus on what matters most and begin treatment without delay. To find out more, visit our fertility financing page.

1Rates range from 3.99% to 24.99% APR. For example, a loan for $14,000 with an 8.99% APR for 48 months will have a monthly payment of $350. Terms available based on amount financed and credit history. All Extended Plan loans made by NBT Bank, N.A., member FDIC. Please visit https://www.lendingclub.com/fertility for current rate information.

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3 Easy Steps to Start a Successful Home Improvement http://blog.lendingclub.com/3-easy-steps-for-successful-home-improvement/ Thu, 11 May 2017 16:08:00 +0000 http://blog.lendingclub.com/?p=6897 Whether you want to update your kitchen or build a new deck, now is the time for home improvement…

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Whether you want to update your kitchen or build a new deck, now is the time for home improvement projects.

While keeping safety and necessity at the forefront, it’s smart to consider your home improvement’s potential impact on resale value. Talking to a local real estate agent can give you a sense of home improvement projects with the highest return on investment in your area.

Here’s how to kick off a successful home improvement project in three steps:

  1. Think through it
  2. The first step is to think through what you love to do at home and what you’d love to be able to do more of. What will have the best overall impact for you and your family?

  3. Determine your budget
  4. Step two is to determine your budget and financing plan. Financing home improvements can be intimidating, but paying your project doesn’t have to be a pain. Personal loans offer a flexible solution to costs that have variable expenses. Plus, paying up front can save you. Many contractors will give you a discount if you pay a lump sum rather than installments.

    Here’s how to plan your budget:

    • Estimate what home improvement projects on your list could cost.
    • It’s a good rule of thumb to plan for some bumps in the road, especially if you’re considering a big project.

    • Check your rates on potential loans.
    • This doesn’t impact your credit score and there is no obligation. This step is about weighing your financing options.

    • Apply for the loan that best fits your home improvement and financial goals.

     

  5. Get inspired

(Click here to see how LendingClub helped a customer with their home improvement.)

To help you get inspired, to make the most of this summer, here are the top indoor and outdoor home improvements to get done while the weather is on your side.


Indoor Projects:

  • Air conditioning and heating – Start now and to stay cool later this summer and warm this winter.
  • Kitchen and bathroom updates – Transform daily routines into rituals.
  • Plumbing and electrical – Avoid potential costs and dangers with a timely upgrade.
  • Flooring and interior decorating – Transform the overall look and feel of your home to reflect your style.
  • Home gym – Let’s face it. For some of us, if we don’t have one, we’re not going!

Outdoor Projects:

  • Swimming pool and spa – If you’ve always been thinking about it, summer is the time to take the plunge. And you don’t have to dip into your savings to finance it.
  • Landscaping – Backyard, front yard, drought tolerance, tree planting… green. Whether it’s your front yard or the backyard, green spaces are a breath of fresh air, and help us peel away from our screens.
  • Roofing – Did you know it’s recommended to replace your roof every 20 years? Take advantage of the dry weather to make important updates.
  • Deck or porch – Extend the social space of your home with a deck or porch. They’re perfect for warm evenings and indoor/outdoor entertaining, especially with a new grill.
  • Outdoor furniture, lighting, and heat – This is a quick project! You’ll be much more likely to use the space you already have with furniture that you like (and that hasn’t been sitting in the rain for one too many seasons).make the most of your outdoor space by making it welcoming.
  • Green improvements – Investing in solar energy can offset your carbon emissions – and your energy bill. Be sure to check on federal and local incentives for these type of projects. You could save even more!

Thinking about the cost per use over time—and the pure joy it will bring you and your loved ones—can help you figure out the best investment for your budget.

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Small Business Customer Success Stories http://blog.lendingclub.com/small-business-customer-success-stories/ Fri, 05 May 2017 18:35:56 +0000 http://blog.lendingclub.com/?p=6869 At Lending Club, we love to support our small business customers and are proud to see them succeed. In…

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At Lending Club, we love to support our small business customers and are proud to see them succeed. In that spirit, we want to share three customer success stories that make us smile.

Bitpusher

Daniel Lieberman BitPusherDaniel Lieberman founded BitPusher in 1999 after feeling limited by what he could do as an employee within a corporation. His San Francisco-based small business provides IT operations consulting to companies that offer web-facing or mobile services. BitPusher’s growth had been impressive over the years but Daniel knew that if he wanted to expand further he was going to have to make some large investments – and would need financing to do it. That’s when Daniel turned to LendingClub. Daniel applied online for a small business loan through LendingClub and was quickly approved for the funding he would need to take BitPusher to the next level.

Daniel plans to use a portion of the small business loan to build out the company’s content strategy. The other portion of the loan will be used as working capital. Having the funds to better manage their cash flow will allow BitPusher to pursue larger clients that typically require 30 or 60 day net terms. While these larger clients are extremely valuable, BitPusher may not have been able to pursue them without the small business loan through LendingClub.

Originally, Daniel had considered going to a bank branch for financing but despite his business having excellent credit, he wasn’t approved for the full amount that he needed. He also knew there were other potential sources, “There’s credit cards but that’s not the right way to do financing,” referring to the typically high APRs charged by credit card companies. “With interest rates low, there’s this whole industry of what I think of as the consumer credit of the small business world where the rates are just crazy expensive…there isn’t a whole lot in the middle.” LendingClub helped fill this gap for Daniel and has for millions of other people.
As an experienced small business owner, Daniel has some advice for those just starting out.

“Avoid making expensive mistakes…and you will make expensive mistakes.” It’s good for all the entrepreneurs out there to know that you’re not alone, everyone makes mistakes!

Additionally, “At the end of the day, companies die when they run out of money. On the one hand, you want to be bold, you want to be out there doing great things…but if you don’t have someone you can go to to write a check when you need more money…a big piece of what you need to do is risk management about cash flow.” On the other hand, you’re always going to have to take risks in order to grow but “one of the biggest risks is dying by attrition.” Don’t let a lack of cash keep you from innovating and finding the next big opportunity for your company.
Daniel recommends each small business owner understand the unique risks specific to their company’s cash flow. How dependent is your small business on checks coming in on time? How dependent are you on just one or two customers? To help manage risk, no one customer should make up a large portion of your revenue. By diversifying your customer base, you also lessen the chance that your company warps around the needs of just one or two customers.

“You really need to understand what your cash situation is,” Daniel also suggests that companies have a way to bail themselves out – companies can die by not having enough cash on hand, even if it’s just for a day. To help stay prepared for the unexpected, BitPusher also has a line of credit through LendingClub in addition to the small business loan.

At LendingClub, we’re proud to support small business owners like Daniel and his company, BitPusher, LLC. If you’re a small business owner looking to take that next step, find out what loan offers you qualify for.

The BBQ Boys

Robert Peterson discovered his gift for creating new flavors in the 1980s when he worked in sales and product development for a national spice company. As his talent blossomed he decided to take the plunge and start his own catering business in 1989, The BBQ Boys. The company has since become a staple in the Bay Area, serving their unique version of California barbecue that incorporates the region’s seasonal ingredients.

While The BBQ Boys have enjoyed phenomenal success, every small business has to be prepared for the unexpected. Between October 2016 and April 2017, California averaged almost 30 inches of precipitation, the highest since 1895 – far from optimal weather for a BBQ company that caters a lot of outdoor events. Robert realized his business would need working capital to get through the wettest season in 122 years.

Robert had quite the harrowing quest for capital before he discovered LendingClub. He started his search at a bank branch but the bank did not provide the full financing he needed. He changed tactics and turned to an online loan aggregation site but his initial contact was with alternative lenders with high-pressure sales teams. Instead of listening to his needs, Robert felt that “they treated him like they were selling stocks and bonds” and just trying to get him to take any type of financing – regardless of what his company needed. Robert even likened the experience to the “Boiler Room,” a crime drama that features hyper-aggressive salesmen peddling risky stocks to unsuspecting buyers.

All that changed when Robert found LendingClub. The Client Advisor team at LendingClub really listened to Robert and patiently helped him through the process – ultimately getting The BBQ Boys the right financing for the business. Robert felt that everyone he spoke to at LendingClub had “all been really great and very professional…more professional than 90% of the other people“ he dealt with when searching for other financing options. And coincidentally Robert’s main client advisor Kevin could personally attest to the quality of The BBQ Boys food having attended a Bay Area event catered by the small business. With the loan through LendingClub, Robert is feeling very optimistic about the future of his business. The BBQ Boys plan to launch a new website, revamp their menu, and introduce their products in new channels in the coming months.

Robert’s learned a lot on his small business journey and has some advice for other entrepreneurs, particularly those that are just starting out.

“Take the time to plan what you’re doing…really develop where your first year is going to be financially and make sure you’re prepared for that.”

Robert also recommends all small businesses make a major commitment to their “online thumbprint” as too often local businesses don’t invest enough in their online presence. Finally, he emphasizes producing a quality product or service – one bad experience can turn away a customer for life.

Omaha Magazine, LTD

When Todd Lemke founded Omaha Magazine, LTD 34 years ago, he couldn’t have foreseen all the changes the print industry would face but through strong leadership and smart decisions, Omaha Magazine has flourished as Omaha’s premier lifestyle magazine. Recently, Omaha Magazine, LTD was looking to expand their business into providing ticketing for local events. Todd obtained a small business loan through LendingClub to help fund this expansion and keep his company growing.

Originally Todd had looked to obtain a small business loan but the process was taking too long even though Omaha Magazine, LTD had a solid business case. Todd knew that if he waited the months it would take to get the funds, the opportunity would pass him by and a competitor could swoop in. He knew it could take just as long for a regular bank loan, particularly if he didn’t want to provide real estate as collateral. And he was somewhat hesitant to apply for a loan online after having a not so great experience with an alternative lender who charged sky-high interest rates.

Then serendipity struck. Todd was having a conversation with his brother who had recently received a personal loan through LendingClub. Happy to learn that LendingClub also offered access to Small Business Loans, Todd filled out the online application. Within minutes, he had a loan offer through LendingClub and within days he had the funds in his bank account.

Todd was thrilled with how automated the loan application process was, “I was amazed how you use technology to shorten the process time.” At LendingClub, we know small business owners are busy so we keep the process fast, simple, and transparent. As Todd put it, “All I want is an answer…Yes or No…a quick answer that’s a ‘No’ is better than a long ‘Maybe’.” When all was said and done, the loan through LendingClub saved Todd a substantial amount on interest expense when compared to a competitor’s loan offer.

After getting a loan through LendingClub, Todd is even more optimistic about Omaha Magazine, LTD growing significantly – predicting that the new revenue stream from local event ticketing will be a major contributing factor. While other print publications have faltered, and failed to adapt to the digital revolution, Omaha Magazine, LTD has embraced new technology and at the same time remained a leading print publication.

So, what’s the secret to success? As Todd says, “The number one rule in business: Never run out of cash.” There’s always the unexpected in business, you can’t always predict cash flow, and you don’t want to lose out on an opportunity to a competitor.

Stay tuned for more customer stories and feel free to navigate over to our Small Business loan section to see how LendingClub can help.

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Quarterly Investor Update from Our CIO http://blog.lendingclub.com/quarterly-investor-update-may-cio/ Thu, 04 May 2017 21:04:46 +0000 http://blog.lendingclub.com/?p=6837 A core strength of LendingClub’s marketplace model is the ability to incorporate data insights to quickly and responsibly adapt…

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Siddartha JajodiaA core strength of LendingClub’s marketplace model is the ability to incorporate data insights to quickly and responsibly adapt for the benefit of borrowers and investors.

We update our investors regularly on what’s happening on the platform to give them a sense of what they can expect. Today LendingClub’s Chief Investment Officer Sid Jajodia sent his quarterly update to investors, which included observations on platform performance and the economy, and updates on forecasts and projected investor returns. Since our last quarterly update, delinquency rates across most grades and terms in the existing loan portfolio have continued to stabilize and projected returns remain solid, ranging from 4-9%. Please see the full text of his letter below, and feel free to reach out to investing@lendingclub.com with any questions.

Dear Investor:

A key aspect of LendingClub’s mission is delivering solid, risk-adjusted returns to investors. As our investors know, we provide quarterly updates on platform performance and any changes to credit criteria.

Over the past quarter, delinquency rates across most grades and terms in the existing loan portfolio continued to stabilize. Projected returns on the platform overall1 are largely unchanged relative to our last update in January 2017. Projected returns remain solid, ranging from 4% to 9% across the platform.

We adjust our forecasts regularly to keep investors up-to-date. This quarter we have refined our loss projections to reflect the latest data on seasoned loan performance. As per our regular process, we have also optimized interest rates within subgrades this quarter.

Observations on Platform Performance

Our approach to risk management is a continuous, proactive process. We test and monitor borrower results and, when necessary, adjust using a disciplined, deliberate and data-driven approach.

We made several changes in 2016 and early 2017 designed to reduce risk on the platform. (Changes included higher interest rates as well as credit policy tightening designed to remove borrower populations with an increased propensity to accumulate debt. We also invested in additional tools to drive collections effectiveness.)

As mentioned above, delinquency rates across most grades and terms in the existing loan portfolio continued to stabilize during the past quarter.

Q2 2017 Update

A range of factors influence returns on the LendingClub platform, including the overall U.S. economy, borrower performance, and prevailing interest rates. We have provided an update on a few factors that influence returns on the platform below:2

  • Economic Backdrop. The American economy remains robust but growth remains slow. Unemployment remains at historically low levels, measuring at 4.5% as of March 2017. On the other hand, GDP grew at an annual pace of just 0.7% in the first quarter of 2017, its slowest quarterly growth rate since the first quarter of 2014.
  • Borrower Performance. Recent vintage performance is coming in broadly in line with our expectations. We see delinquency rates stabilizing across most grades and terms which we attribute to changes made in 2016.
  • Interest Rates. The overall interest rate environment remains low, though the Federal Reserve raised its target rate by 25 bps in March. Effective May 4, 2017, interest rates on the LendingClub platform are being optimized within subgrades. In total, interest rates for the platform are increasing slightly (by a weighted average of 30 basis points).3

Updated Forecasts

We continuously refine our methodology and update loss forecasts quarterly to give investors a sense of what they can expect. This quarter, we recalibrated our forecast to reflect the latest data on seasoned loan performance.

Projected investor returns (IRRs) for loans issued after today are substantially unchanged relative to last quarter. Please see the summary table below, which includes the impact of interest rates effective May 4, 2017 and the new forecast. LendingClub Platform Summary and Performance

Our continuous enhancement cycle and quarterly loss forecast process help us anticipate and adapt faster on behalf of borrowers and investors alike. The difference between LendingClub and other financial institutions is the degree of transparency we provide to investors so they can make quick and informed decisions on their portfolios.

As always, we will continue to keep our investors apprised of changes on the platform. Please feel free to reach out to our team with any questions. We look forward to continuing to have you as an investor for years to come.

Sincerely,

Siddhartha Jajodia
LendingClub Chief Investment Officer

Safe Harbor Statement
Some of the statements above are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “will,” “would” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual performance of the overall platform has differed from projected performance in the past, and could differ in the future. Factors that could cause actual results to differ materially from those contemplated by these forward statements include: increases to unemployment rates, particularly if such increases are concentrated in populations with a greater propensity to take loans facilitated by our platform; changes to consumer credit behaviors; stagnation or reduction in the growth of the nation’s gross domestic product or uncertainties created by political changes associated with a change in presidential administrations, the Company’s ability to continue to attract and retain new and existing retail and institutional investors; competition; and demand for the types of loans facilitated by the Company and those factors set forth in the section titled “Risk Factors” in the Annual Report on Form 10-K, filed with the SEC. Lending Club may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. Lending Club does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
 
1Platform overall means the weighted average projected return for loans or Notes issued after May 4, 2017.
 
2Investor returns are also impacted by other factors, such as prepayment rates, the size and diversity of a portfolio, the exposure to any single Note or loan, borrower or group of Notes, loans, or borrowers, as well as other externalities and macroeconomic conditions.
 
3Calculated using the grade and maturity mix for issued loans for the six weeks ending March 15, 2017, adjusted to reflect interest rate changes and credit policy changes effective May 4, 2017.
 
4“Average Interest Rate” is based on weighted average interest rates using the grade and maturity mix for issued loans for the six weeks ending March 15, 2017, adjusted to reflect interest rate changes and credit policy changes effective May 4, 2017.
 
5“Projected Annualized Net Credit Loss (w/ Prepayment)” (also known as Expected Charge-Off Rate) is Lending Club’s projection of the aggregate dollar amount of loan principal charged-off, net of any amounts recovered and accounting for the impact of amounts prepaid, as an annualized percentage of the aggregate dollar amount of loan principal for all loans issued under the Prime Program after May 4, 2017. Projected Annualized Net Credit Loss (w/ Prepayment) is not a promise of future results and may not accurately reflect actual charge-off or prepayment rates. Actual charge-off and prepayment rates experienced by any individual portfolio may be impacted by, among other things, the size and diversity of the portfolio, the exposure to any single loan, borrower or group of loans or borrowers, as well as macroeconomic conditions.
 
6“Projected Return”is a measure of the estimated annualized return rate on invested principal (meaning for all funds then invested in Notes or loans) using an internal rate of return (IRR) methodology using a monthly term. Monthly cash flow projections are calculated as follows: the scheduled principal and interest payments based on the Interest Rate minus the amount of such principal and interest payments lost due to the Expected Charge-Off Rate minus Expected Fees. Monthly IRR figures are annualized by multiplying the monthly IRR figure by 12. Projected Returns are calculated based on grade and maturity mix for issued loans for the six weeks ending March 15, 2017, adjusted to reflect interest rate changes and credit policy changes effective May 4, 2017. Projected Return is not a promise of future results and may not accurately reflect actual returns. Actual returns experienced by any individual portfolio may be impacted by, among other things, the size and diversity of the portfolio, the exposure to any single Note or loan, borrower or group of Notes, loans or borrowers, as well as macroeconomic conditions. Individual results may vary and projections are subject to change. Individual results may vary and projections are subject to change. The information presented is not intended to be investment advice, guidance, or a guarantee of the performance of any Note or loan. Notes are offered by prospectus filed with the SEC and investors should review the risks and uncertainties described in the prospectus prior to investing. Actual results may vary. “Interest Rate” is equal to the weighted average stated borrower interest rate for the loan grade or mix of loan grades (whichever is applicable) using the grade and maturity mix for issued loans for the six weeks ending March 15, 2017, adjusted to reflect interest rate changes and credit policy changes effective May 4, 2017. “Expected Charge-Off Rate” is defined above as “Projected Annualized Net Credit Loss (w/Prepayment).” “Expected Fees” for loan purchasers means the aggregate estimated impact of Lending Club’s servicing fee (1%), collection fee (18%), recovery fee (18%), and an administrative fee (0.10%). “Expected Fees” for Note investors means the estimated impact of all applicable fees as well as the impact of interest not earned during the administrative holding period in the first month (2 business days). Applicable fees are Lending Club’s service fee and collections fee. Lending Club charges an investor service fee of 1% of the amount of payments received within 15 days of the payment due date. The service fee is not an annual fee and may therefore reduce annual investor returns by more or less than 1%. We estimate the collection fee based on expected charge-off rates and the expected number of late payments that will be collected on past due loans with a given grade and term. For more detail on Lending Club fees for Note investors, please click here. Individual results may vary and projections can change. Past performance is no guarantee of future results.

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How to Get a Small Business Loan http://blog.lendingclub.com/how-to-get-a-small-business-loan/ Mon, 01 May 2017 17:31:20 +0000 http://blog.lendingclub.com/?p=6828 Preparing Your Company to Apply for a Business Loan You’ve got plans to take your business to the next…

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Preparing Your Company to Apply for a Business Loan

You’ve got plans to take your business to the next level and shore up company financials, and to do that you need an infusion of cash. How well you prepare to seek this funding — and how carefully you evaluate potential lenders — will have a major impact on your chances for success.

Review this information to help you make a strong case to potential lenders and to decide if a loan offer is right for you.

Define your plan

Lenders will want a clear sense of how you intend to use the funds and how you will pay them back. Before applying for a business loan, be sure you know the following:

  • Your purpose for seeking financing. Having a specific plan helps communicate to lenders that you will put the money to good use. Be prepared to explain what the funds will be used for — for instance, to upgrade equipment, to shore up working capital or to refinance existing debt — along with how much money you need.
  • How the money will earn you money. Some lenders may want to know how the borrowed funds will strengthen your business as well as your ability to repay. Perhaps replacing a key piece of equipment would allow you to double your output, or maybe refinancing debt would help significantly improve your cash flow. Providing realistic financial projections can help you better understand and communicate to lenders how financing will benefit your company.
  • How you will repay. Lenders will ask for information that demonstrates your ability to repay a loan or line of credit, such as your yearly sales, monthly expenses and personal financial details. Providing this can help assure lenders that your business generates the cash flow required to make payments.

How to qualify for a small business loan

It’s important to review a copy of your personal and business credit reports before you apply for a loan, as many lenders consider both of these credit profiles. Experian®, Equifax® and TransUnion® provide personal reports; the first two bureaus also maintain business reports. Business credit reports include information from vendors and suppliers that shows a company’s payment history; they also include court filings and other public records that show whether a business has ever failed to repay a debt. Personal reports are important because lenders often require business owners to guarantee a loan in case the business is unable to repay.

Once you review your reports, correct any errors or outdated information by contacting the reporting agency. Look to improve your score by asking vendors or suppliers that aren’t listed to report your payments — though some companies provide this information automatically, many others do not. Aim to pay down existing debt and keep revolving balances low, as high balances can hurt your score. If there are blemishes on your credit report — such as a delinquent payment — be sure you can explain them to the lender. View our article for “How to Build Business Credit” for more information.

Gather financial documents

Lenders’ requirements may vary as to what documentation they need from borrowers. Banks will typically ask for business and personal tax returns; they might also review balance sheets, income statements, cash flow projections and other financial statements. Marketplace lenders, which typically have a more streamlined application process, may require less documentation. To use your time efficiently, ask your lender which documents it will need to review. If you’re applying for Small Business Administration (SBA) financing, you can find a list of required documents on the SBA website.

Depending on the type of financing you’re seeking, you may need to consider putting up collateral. Traditional bank and SBA loans typically require borrowers to pledge property or other assets that could be sold to repay the loan if the loan cannot be repaid with cash. Other credit sources, such as marketplace lenders, typically require a personal guarantee — a written promise of repayment from the business owner if the business does not pay. Personal guarantees are not tied to a specific asset, but they do make a business owner personally responsible for meeting a loan obligation.

Understand the cost of capital

As you evaluate lenders and loan offers, it’s important to consider what your total costs will be, including interest and any fees. This is important for ensuring that payments will be manageable. Factors to consider include:

  • Origination fee. This is akin to an activation fee for a loan. It may range from around 0.5 percent to 7 percent, depending on the type of loan and the borrower’s creditworthiness.
  • Prepayment penalty. Some lending contracts may specify a fee that will be charged for paying ahead of schedule. In other cases, borrowers may be charged interest for the entire loan amount, even if they pay off early.
  • Late payment fees. Along with knowing when these penalties are assessed and how much they cost, it’s important to understand the conditions under which a loan may be considered to be in default.

Calculating a loan’s annual percentage rate (APR) can help you determine your total costs for financing. The APR includes the interest rate, origination fee and other costs. Many lenders will disclose their APR; there are also free online calculators than can help you to compute it.

Know when you will need the money

If you plan to approach a bank for financing such as a traditional loan or an SBA loan, you will need to apply far in advance, as the application and approval process can take weeks or even months. It can also be advantageous to have a relationship in place with a bank before seeking financing, and this can take time to develop. If you have an objective with a longer timeline (e.g., buying a building or long-term equipment), the lengthier time frame may be workable.

Online credit sources, such as marketplace lenders, typically offer a much faster application and approval process. Funds may be delivered within days or weeks. This can be advantageous if you need funds quickly to take advantage of a strategic opportunity, meet working capital needs or refinance debt before an expensive increase in interest rates. Though the amount you are able to borrow may not be as high as with traditional bank or SBA financing, the flexibility can offer a significant advantage to some borrowers.

Consider service

Your relationship with a lender may last several years, so it’s important to choose who you work with carefully. Does the lender have a track record of working with small businesses? Are they personally receptive to your needs? Are they able to answer your questions and clearly explain the terms of their financing up front? If you feel rushed or confused — or feel that you aren’t getting proper attention and advice — it’s probably best to consider other options.

It’s also important to understand what will follow after you’re approved for financing. Will you be able to directly contact an adviser who’s knowledgeable about the specifics of your loan or credit line? How readily will you be able to access information and documentation on your account? Will you be able to make adjustments such as changing your payment date or paying off your balance early? Keep in mind that even if a deal looks good on paper, it may prove to be a headache if you don’t have the support you need.

Applying for credit may be one of the most important steps you take as a business owner. Thorough preparation can help you secure the funds you need to grow and compete. Choosing a lender that understands your needs and offers a transparent APR and clear payback guidelines can help you maximize the benefits of the funding.

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Smart Ways to Handle your Tax Return (or Lack Thereof) http://blog.lendingclub.com/smart-ways-handle-your-tax-return/ Wed, 19 Apr 2017 01:19:09 +0000 http://blog.lendingclub.com/?p=6801 It’s tax season. For some of us, that means a little extra cash is coming in. For others, it…

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It’s tax season. For some of us, that means a little extra cash is coming in. For others, it can mean owing money. Whether you’re in the black or in the red in tax terms, take some time now to be strategic with your money.

Owe more than you expected? Here are some tips to tackle tax debt.

  1. Consider a personal loan and stay on track
  2. It happens. Sometimes we tick off the wrong box or plans and jobs change. Rather than use a high-interest credit card to pay off your taxes, consider a personal loan. With a fixed term, fixed rate, and fixed monthly payments, you know exactly what you owe each month.

    Personal loans are a great alternative to putting your tax bill on your card. Why? Credit cards are a type of revolving credit, with monthly payment minimums that may provide a false sense of security. Minimum payment options may even encourage procrastinators to do what they do best—not what’s best for their finances.

    Check your rate with no impact to your credit score.

  3. Plan for next year
  4. If you owe more taxes than you expected, use this knowledge to plan for next year. Paying a little bit over time hurts less than a lot at once (think of all the subscription services you have). You could increase the amount that’s withheld from your paycheck. Or, divide what you owe this year by 12 and start setting aside that amount at the first of the month in an account you don’t touch. That way you can be ready for a hit when next year rolls around. And if you owe less next year, you’ll have a nice bit of cash to put toward something more exciting than taxes—for example, anything!

    Getting a tax refund? Here are smart some smart ways to use extra funds.

  5. Pay down your debt and boost your credit score
  6. Paying down debt seems like a clear choice when you have an inflow of cash, but it’s not always top of mind. Whether you’re financing a car or have several credit card balances that never seem to go down, now is the time to use your refund strategically. Paying down debt sets you up for a better credit score, which opens more doors (and savings) for the future.

    Tips:

    • Pay off your credit cards with the highest interest rates first.
    • Check if there are pre-payment fees on your auto loan. If not, consider paying down your loan.

    All of this helps reduce your overall debt, which affects your credit score.

  7. Save for a rainy day… or 6 months
  8. Job loss happens. Healthcare costs happen. And most often when you don’t expect them. Only 4 in 10 Americans have an emergency fund that they can rely on when unexpected expenses come up.1 Kick start or grow your rainy-day fund with your tax refund and avoid added financial stress when things don’t go according to plan.

    Tips:

    • Look for a high-interest savings account. Rates aren’t what they used to be, so shop around.
    • Plan to set aside income each month to grow this fund, based on your expenses. Creating a budget is a great first step.

     

  9. Invest in yourself, your most important capital
  10. In today’s job economy, skill sets are changing all the time. Use your tax refund toward a professional development or skills course, a better computing device, or a subscription that will help set you apart. The rewards of being more competitive and confident in the job market can go far beyond earnings.

  11. Invest in your kids’ education by opening a 529 college savings account
  12. Even for a state school, college tuition fees are high. Use your tax refund toward their education fund. While contributions aren’t deducted from income for tax purposes, there is no distribution tax when funds from a 529 savings account are put toward higher education. The more you know, you know?

  13. Alright, splurge a little

Everyone deserves to recharge. It’s important to maintain a balanced life. Whether it’s a beach vacation or a trendy cooking class, use part of your tax refund for something fun. That way you can enjoy yourself and still stay on target financially.

Whether you’re about to write a big check to the IRS or you have some unexpected money in your pocket, you can be strategic with these tips.

Sources:

1January 2017 Bankrate survey. http://www.bankrate.com/finance/consumer-index/money-pulse-0117.aspx

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