Do you have some extra cash sitting around doing nothing or just earning minimal interests in you bank account? Why not lend it out to borrowers and earn some decent interest rates? LendingClub.com appears to be a new company that is modeling after Prosper.com’s P2P loan business. The average lender is averaging 12.23% per annum, while top lenders are making a healthy 17.53%.

This return on investment beats most banks and savings accounts by a big margin. Not only are you making a good return, you are helping out people who need access to funds at a lower rate than they can get at a traditional financial institution. It is a win-win-win situation for you the lender, the borrower and Lending Club.

The whole idea works much the same way as Prosper.com. A borrower submits a loan request, Lending Club matches the loans with lenders or lenders can choose the loans to service, and then the funds are sent to the borrower. The loan is then repaid back to the lender over time, and can be direct deposited.

“What Lending Club does is manage the money movement, loan repayment, and provides detailed reporting (as well as submission of relevant 1099 tax forms).”

Lending Club also does a few things that lowers the risk and can make it safer for the lender to loan money to borrowers. First of all, it is up to the lender to decide how much risk he is willing to take. Lending Club will turn down all borrowers with a credit score of less than 640 or borrower with too much debt and will categorize each borrower by a risk rating. Lenders can decide using this risk assessment as to who they make the loan to.

Just like most traditional financial services, borrowers will have to make good on their loans, otherwise, they are reported to the various credit agencies for late payments and defaulted loans. For late payments, a late fee is charged and credited to the lender. If a borrower defaults on the loan, it is turned over to a collection agency.

There is one thing that is unique about Lending Club as compared to Prosper.com. Here is what they have to say about it.

LendingMatch™ System

“Lending Club takes a portfolio approach to person-to-person lending. We use a system that combines the latest search technology with the power of social networking to make portfolio recommendations to lenders.

Our system uses a powerful algorithm called LendingMatch™, which finds relationships between borrowers and lenders based on geography, education, profession, or connectedness within a given social network and then presents lenders with diversified loan portfolios reflecting these relationships as well as the lenders’ individual risk preferences. Moreover, LendingMatch™ serves to show borrowers that their loans are not being funded by faceless nameless banks, but rather are coming from real people.”

Just like Prosper.com, I think Lending Club has a unique concept in the P2P lending space. There is always room for a little competition. So, if you are interested in making a good return on your money, visit their website at www.lendingclub.com for more details.

Note: Similar to Prosper.com, the services from Lending Club for both lenders and borrowers are only available to U.S. residents at this time.

Contact Info:

Corporate headquarters
Lending Club
440 North Wolfe Road
Sunnyvale, CA 94085

Main: (408) 524-1540
Fax: (408) 524-1527

For assistance, please send an email to contact@lendingclub.com.
For business development inquiries, please contact Peter Petras.
Toll-Free Member Support: (866) 754-4094
Hours: 8:00am–5:00pm PST, Monday–Friday