Lending Club Blog

Lending Club: borrowers and lenders can work in harmony

Trust, relationship, and money are words that should go great together. Today’s banking system, especially as it relates to unsecured loans and credit cards, does not fully recognize trusted connections and relationships. Lending Club is changing that.

Facebook provides Lending Club with a solid platform of potential borrowers and lenders. These users are connected via alumni relationships, geographic relationships, and hundreds of others. While no one trusts every Facebook friend, what’s critical is that they are not completely anonymous. Borrowers can decide to keep their identity anonymous and disclose only the groups and networks they belong to. In this case, the privacy of the borrowers is protected but the lenders gain valuable information such as verified affiliations to university or companies. Borrowers can also decide to publicly link their Lending Club anonymous screen name to their Facebook profile, and invite friends and members of their groups to lend them a hand.

We use the best of the financial system and banking infrastructure to take care of the rest of the problem: we verify identity, credit score and bank account, and handle electronic payments through our partner Bankserv, a financial service processor that supports over 400 banks in 52 countries and operates a PCI-compliant data center.

The lender feels safe, as they know that Lending Club pre-screens all potential borrowers. We pull a credit report on each borrower. Facebook members that are interested in borrowing must have a 640 FICO score or greater to qualify for a loan. Therefore, we do not facilitate sub-prime borrowing.

All borrowers’ identities are verified. Their privacy is not compromised, but we must be confident the person is who they say they are. The lender can feel secure in knowing that the screening process is all handled just like a bank or credit card company. We have obtained all the necessary licenses to be a lender.

We do not share personal information, or sell it. We couldn’t be in a trust-based business if we did! The only entities that receive updates are credit agencies and, when needed, collection agencies.

We are presenting another, and new, financial option to Facebook users. This option leverages trusted relationships and connections. We present a more human option.

Tuesday, May 29th, 2007 at 10:11 am

Comments (3)

  1. Alex:

    I’m excited about your new service and I’ve just created an account
    to lend money. I’ve noticed that I’m required to lend at least
    $1,000. As I begin to receive payments on those loans, will it be
    possible to immediately loan out those payments? I.e. if I loan
    $1000 in June receive $100 back in July, plus $10 interest, can I
    then loan those $110 or will I once again be told that there is a
    $1000 minimum and be forced to either wait or transfer more money
    before being able to loan again? As you can imagine, being able to
    immediately re-loan payments (well, after the time to select loans
    and wait for them to close) could increase my profits and make
    Lending Club much more attractive.

    May 30th, 2007 at 4:28 am

  2. Alex, Thanks for your support. By the way, while the minimum to
    have a diversified portfolio is $1,000, you can lend in increments
    as small as $25. So, you could transfer as little as $25 into your
    Lending Club account and loan that to one person. See the FAQ
    https://secure.lendingclub.com/info/faq.action#l5 for more
    information. Regarding auto-funding loans, that is on our
    development schedule and will be released soon. Thanks, John

    May 30th, 2007 at 7:39 am

  3. Alex:

    Thanks! That clarifies things a lot. I can’t wait to get started!

    May 30th, 2007 at 3:15 pm

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