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Lending Club Breaks $50 Million in Loans in June

by Peter Renton on June 29, 2012

It was another milestone month for Lending Club. In June they became the first p2p lender to break $50 million in new loans issued in a month. I didn’t think this was going to happen until next month but they really accelerated their growth in June to easily surpass the $50 million mark. Prosper also put in another great month issuing $13.6 million in new loans.

Lending Club Doubles Their Loan Volume in Eight Months

It was back in October of last year that Lending Club surpassed $25 million in new loans for the first time. Now, here they are just eight months later crossing over $50 million. It seems like Lending Club went through some kind of transition in June. At the start of the month there was around 850 loans available for investors. This was pretty normal – the number of loans available had been fluctuating between 750 and 1,000 all year with occasionally the number going over 1,000 loans. We ended the month with over 2,200 loans on the platform – quite the increase.

The final numbers for Lending Club in June was $50.2 million issued over 3,817 loans. This means an average loan size of $13,155 which is pretty consistent with the last couple of months. All this increase came from more loan volume – over 400 more loans were issued in June than May. Below is their 18-month chart – the black line is the three month moving average.

Prosper Issues a Record $13.6 Million in New P2P Loans In June

While the numbers are lower than Lending Club, Prosper continues to show great numbers and June continued their steady path upwards. Their $13.6 million volume was up from $12.8 million last month and continues their 21-month growth streak that dates back to October 2010.

Prosper issued 1,830 loans in June with an average loan size of $7,407. Their average loan has remained very steady all year – falling between $7,300 and $7,700 every month this year. This number is up over 2011 where their average loan size was $6,677, which I think is a good thing. Prosper has been very conservative with loan size, keeping their maximum at $25,000 and for many of the higher risk borrowers (grades E & HR) the maximum loan size is just $4,000.

If we take a look inside the numbers by doing some digging in Lendstats we see that Worth-Blanket2 had a huge month. I think it was their biggest month ever with over $4 million in new money invested which is about double what they invested in May. Last month’s number one investor, Index_Plus, had a smaller month investing “just” $1.2 million. The other large investor, tolerant-responsibility051, invested slightly less than $300,000 and they are now entrenched as the number three investor on Prosper.  Someone else that I would like to point out is long time investor Aberdeen. They have been around since the Prosper 1.o days and have been quite active lately. They invested $240,000 in June in just 43 loans – when Aberdeen invests they usually take a very large position in the loan.

Below is the the 18-month chart for Prosper with their three month moving average.

 

{ 5 comments… read them below or add one }

Dennis June 29, 2012 at 11:36 pm

Peter,

Thanks for your continual updates on Prosper and Lending Club. I consider your web site the most valuable reading on P2P investing on the internet. I have learned a great deal from you and your followers (comments) and have become very excited about the future of P2P investing. I continue to grow with both platforms, it’s become a daily activity for me. I do have a serious question though (from student to teacher); is there anything you see on the horizon for P2P that might be a bump in the road? While I’ve become quite the believer in P2P, I’m still a little nervous (cautious) about what might/could derail this type of investing. I keep thinking that there’s a fight coming yet with the big banks the moment they consider P2P a threat to their livelihood (which is robbing/stealing America blind). Any thoughts on that?

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Dan B June 30, 2012 at 2:12 am

Dennis…….Well I’m not Peter, nor would I consider myself his “follower”, but I will give you my 2 cents. On its current trajectory p2p isn’t a competitor to banks in any way. As I mentioned in another thread, banks have essentially abandoned the non-secured personal loan market. Banks have no problem offering you a $100k credit limit if they find you worthy, but most aren’t interested in non revolving term loans. Go to your bank & ask for a personal 3 year loan, if you need confirmation. From the borrower perspective if you want a non secured bank loan for say $20k, your options are limited to putting it on a credit card if your credit limit allows. So p2p doesn’t compete with most banks directly for borrower business.

I have some theories as to why banks no longer seem to have much interest in non-revolving personal loans, but that’s for another post. I will say that I find it interesting that some banks have dipped their toes into the “payday” loan business though.

From an investor standpoint p2p competes with bonds, so until such time that CD rates go up sharply, p2p isn’t a competitor…………though I hate to make the comparison in any scenario. Besides, banks are awash in depositor money today & have been so for over 4 years now, with no end in sight. So again, not a competitor.

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Peter Renton June 30, 2012 at 2:54 am

@Dennis, Glad you are finding the site helpful. While no one can predict the future there are few things I can see that could derail p2p lending. Lending Club is in a very strong position and Prosper is also looking good. If there was going to be a legislative threat to p2p lending I think it would have surfaced already – the big upheaval came in 2008 when the SEC decided to regulate p2p lending. Many thought neither company would make it through that, but both have survived and thrived. The only thing that I think could derail the growth is for another recession as bad as the one we all experience in 2008-09. But even though investor returns would suffer I don’t think something like that would cause major damage at either company.

@Dan, Thanks for providing your 2c. I don’t think banks are interested in competing for the $20K unsecured loans any more. It just isn’t profitable enough for them – they have ceded that industry to the credit card companies and p2p.

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Roy S July 1, 2012 at 6:15 am

re: “I keep thinking that there’s a fight coming yet with the big banks the moment they consider P2P a threat to their livelihood (which is robbing/stealing America blind).”

@Dennis, I think you’re confusing big banks with big government. I have more concern about big government robbing America blind than I do with big banks. At least with banks, I can go to a different bank–for now, anyway. Unfortunately, it’s beginning to look like the idea of moving to a different state to escape laws you don’t want to live under is quicker becoming moot than the ability to switch to another bank whose fees and interest rates you don’t want to endure. I have had a bad experience with both BAC and WFC, and will take all my future business to other banks. Yes, it is becoming more difficult to switch to other banks, especially with the government bailouts that led to even more consolidations among the top banking institutions (thank you, big government!), but there are still a lot of smaller banks around–I currently have my savings and checking accounts at a smaller bank that I have had no problem with whatsoever.

There may be a “fight” coming, but I think the fight will be less over the tiny unsecured loan market than the p2p industry moving in on the banks “territory” by offering banking services. I don’t see that happening until both are more firmly established in the unsecured loan market and are able to compete with the big banks. I don’t see either Propser or LC going away in a fight, just like how there are still small banks out there that people can choose to utilize. The problem you might have may simply be that there are too many people who still like to use the large banks for whatever reason.

If there were more people like you and I, the big banks would lose a lot of business, and the smaller banks would start to thrive. It is the argument that people use with Walmart and other big businesses in general. Well, if people didn’t like to use them, they wouldn’t exist. The people complaining are either the small business that can’t compete or the people that want to patron the small businesses or hate big businesses. Either way, the problem is not the big businesses, the problem is that enough people like the big businesses that they survive/thrive. My only issues are the government regulations and policies that adversely affect small business disproportionately (i.e. it’s generally not a level playing field thanks to politics). Ultimately, I don’t see a fight as necessarily a bad thing.

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Peter Renton July 1, 2012 at 2:38 pm

@Roy, I have heard Renaud Laplanche, CEO of Lending Club, say on several occasions is that eventually they would like to offer more services than just loans of $35K or less. So, I imagine eventually LC and probably Prosper as well will offer a suite of services one day to compete with the big banks. But as you point out, millions of people still like (or at least tolerate) the big banks and with their marketing and political clout they are not going away any time soon. It is when LC and Prosper start to invade their territory directly that we may see a big fight but by then I think both companies will be big enough and strong enough to survive that.

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