Lending Club taps into consumer ire

November 9, 2011

With consumers more angry than ever with credit card companies and big banks, and increasingly worried about another economic downturn, one upstart company has made this into an opportunity.

Lending Club has been going after consumers who have stellar credit histories but have a less than stellar view of credit card companies that don’t reward their good record.  The company also targets investors looking for a low-risk return on their capital. 

Since it opened for business in 2007  the company has attracted big backersincluding Union Square Ventures and Thomvest, the venture fund of Thomson Reuters director Peter Thomson,

 Lending Club recently reported that it passed $400 million in total loan originations.  Less than four months ago that figure stood at $300 million.  The San Francisco based company also reported that the platform has now paid investors more than $33 million in interest.

People turn to Lending Club for lower interest rates than the credit card companies (or any bank) typically offers. Roughly 2/3 of its loans are used by customers to pay off credit card balances. Its loans range from $1,000 to $35,000 with an average size of $10,000.

In turn, Lending Club goes out to investors and pools their money for loans that generally give them a 9 percent return each year, according to the company’s Chief Executive Renaud Laplanche. Lending Club declines about 90 percent of loan requests. The recent growth spurt has come as lending club has invested in its platform and hired new people including former hedge fund partner Brad Pattelli from Angelo, Gordon and Co. and Jeff McCarthy, a former Jefferies senior vice president.  

 (Photo: Reuters)

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