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Lending Club

Lending Club - Lending Club is a person-to-person lending website that pairs borrowers and lenders through a matching system that combines a search algorithm, credit decisioning and social networking. Lending Club is headquartered in Sunnyvale, California. In August 2007 the company raised $10.26 Million in a Series A funding round led by Norwest Venture Partners and Canaan Partners.

Social Lending

Lending Club was founded on the philosophy that borrowers will be less likely to default to members of their own communities. Lending Club leverages existing communities and relationships to help minimize risk using a proprietary algorithm (LendingMatch). Lending Club can find relationships between anonymous borrowers and lenders based on factors including geographic location, educational and professional background, and connectedness within a given social network.

Loan Performance Statistics

Performance statistics on Lending Club loans are published and updated weekly. The top 100 Lender portfolios are also listed on the company website.

How It Works

Borrowers

Borrowers create loan listings by supplying details about themselves and the loans being requested. Lending Club obtains a credit report about the borrower in order to score the loan and assign the appropriate credit grade (A-G) and interest rate. Factors taken into consideration include the borrower’s credit score, credit history, the amount of the loan being requested and the borrower’s debt-to-income ratio.

Lenders

Lenders enter in personal information including their level of risk tolerance and then either search for loans themselves or use the LendingMatch algorithm to generate a recommended portfolio that takes their risk level and connections with borrowers into account. Lenders must supply at least $500 in loan money to take advantage of the LendingMatch algorithm.

SEC Registration

As of April 8th 2008, Lending Club has suspended new lender registration, canceled its affiliate program and entered a "quiet period" while it awaits approval to issue promissory notes to lenders.

On June 20, 2008, Lending Club filed an S-1 statement with the SEC seeking the registration of $600 million in "Member Payment Dependent Notes" to be issued on its Web site.

On August 1st, 2008, Lending Club filed an amendment to its Form S-1 outlining new interest rate formulas as well as more details on a "resale trading system