Lending Club: Better Investing Together!

Lending ClubIn today’s globally connected marketplace, smart businesses are finding unique and innovative ways to better connect borrowers and investors, and borrowers to each other. One such way is through the use of “peer-to-peer networking”. With peer-to-peer networking, each individual client is given access to the same wealth of information, data, services and privileges as every other client. This access creates a better-informed, more competitive whole that, in turn, leads to an up-to-date, more competent individual. Through the equal sharing of access to services, everyone benefits. One such company helping to bring clients together is Lending Club.

Lending Club is a publicly traded peer-to-peer lending business based in San Francisco, California. Founded in 2006, it was a pioneer in the peer-to-peer lending marketplace and the first personal finance institution to offer securities (any financial asset which may be traded) backed by the Securities and Exchange Commission. Even today, it is the world’s largest peer-to-peer lending business, and under the guidance of current CEO Renaud Laplanche it helped to facilitate over $7 billion dollars in loans since its inception; its current stock is valued at an impressive $17.22 and rising!

Unlike more traditional peer-to-peer networking, what is being shared is not only information and data, but risk. Lending Club is an online marketplace that allows borrowers to not only meet with investors, but also allows borrowers to join together. In this way, instead of having to go “all in”, a borrower can decide to only invest in a small percentage of a single loan (starting at an affordable $25), or spread out their investment across small portions of multiple loans. With several borrowers backing a single loan, they can maximize the benefits while mitigating the risks.

What’s unique about Lending Club, other than that it originally started out as just a Facebook application, is that it is neither a bank nor a personal lender. It is instead more akin to a virtual chaperone that accompanies possible borrowers and investors on their professional “dates”, providing a safe environment and making sure everything runs smoothly. Lending Club creates revenue by charging a small service fee for every loan created under its supervision. Because Lending Club is not a bank, this insures that interest rates will remain low. This, in turn, creates borrower confidence, due in no small part to increased potential earnings on investment returns, and encourages additional spending. This makes the lender happy, which makes Lending Club happy. With peer-to-peer lending, everyone benefits because everyone is working together!

Peer-to-peer lending is a new kind of banking system, and anything new has room to grow. Now, not only can individual investors browse loan listings and decide how best to invest their earnings, but Lending Club is also turning itself into a viable online marketplace for small businesses. Since the company first began nine years ago, it has since acquired Springstone Financial, has entered into a partnership with Union Bank, and is promising to expand into vehicle loans and commercial mortgages in the near future. Lending Club, a true leader in peer-to-peer lending.

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