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Lending Club Crosses Over $1 Billion in Total Loans Issued

by Peter Renton on November 5, 2012

When I met with Renaud Laplanche, CEO of Lending Club, in June last year he told me that Lending Club would reach $1 billion in issued loans by the end of 2012.

At the time Lending Club’s total was under $300 million and that number was growing at less than $20 million a month. So, I thought to myself here is another overly optimistic CEO. I mean how could they average almost $40 million a month for the next 18 months when their best month ever was $18.5 million and their monthly volume was growing at barely $1 million a month.

But I am happy to report that I was wrong. This morning Lending Club crossed over the $1 billion mark several weeks before the end of 2012. While Lending Club never shares their projections Laplanche did say in a recent conversation that 2012 has been a better year than even he expected.

Below is a chart showing the growth in total loans issued at Lending Club since they launched in June 2007. Obviously, the current month, represented by the bar on the far right, is still in progress but you get the picture. Rapid growth.

Chart of Lending Club p2p loan volume since inception

Lending Club is Now Cash Flow Positive

The press release that came out this morning announcing the $1 billion milestone had some even bigger news. When Lending Club releases their 10-Q in the next couple of weeks they will show positive cash flow in the third quarter. While the $1 billion is a nice round number the fact that Lending Club is generating positive cash flow is far more important. I believe the significance of this news should not be understated.

I have heard from literally hundreds of investors over the past couple of years who have lamented that the p2p lending model was still unproven. Despite almost $200 million in venture capital money invested no company had shown they could make a profit. Clearly, that is about to change. While Lending Club didn’t say the quarter was profitable, just that cash flow from operations was positive, it is only a matter of time (probably this current quarter) before that will happen.

This kind of news will only fuel the growth at Lending Club and with the Holiday Season approaching I expect we will see monthly volume north of $100 million for the first time by the end of the year.

Winner of the Lend Academy Contest

Last month I held a contest to see who could guess the day when Lending Club would go over $1 billion. Four people guessed November 5th so I put each name in a spreadsheet and used a random number generator to determine the winner. And the winner is Casey C. who will win some nice Lending Club merchandise. Casey, please fill out the contact form and send me your mailing address.

Don’t Forget the Lending Club Contest

Today is the day to fund some loans at Lending Club. Everyone who makes an investment today goes into the draw to win a golf bag and $1,000 cash. The details are here. I know I will be making an investment in all of my accounts and you should too.

{ 11 comments… read them below or add one }

Jacob E November 5, 2012 at 7:02 am

And of course I only have $0.88 in my account to reinvest. No raffle entry for me. :)

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Bryce M. November 5, 2012 at 8:56 am

So they only issued 30000 in loans on Friday? I guess they wanted to wait until Monday to issue a press release?

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Peter Renton November 5, 2012 at 9:00 am

Yes, considering they had $19 million of loans issued already today it is clear they held back a ton of loans until today. Bryce, I agree with you, though, November 1st was my pick for them to cross the $1 billion mark.

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Dennis November 5, 2012 at 11:26 am

Between my 2 Lending Club accounts, last week I had 47 fully funded notes just sitting, waiting to originate. Maybe 3 or 4 were issued, all week. I was wondering why it was taking so long and thinking that LC must be really behind. Today 28 of those notes were issued. Obviously Lending Club was holding back for this big day.

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Lene November 6, 2012 at 10:59 am

Peter, what is better for new investors like me? Lending Club or Prosper What you recommend?

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Peter Renton November 6, 2012 at 12:15 pm

Lene, They are both good options and I usually tell people to open an account at both companies. I don’t officially recommend one company over another but if you had to choose one to start with it is hard to go past Lending Club these days. They are growing strongly, are making money now and have good loan selections.

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Lene November 6, 2012 at 12:50 pm

Thank you very much for answering my question.
Now, I have another question.
Since I live in Nebraska I just can use Folionfn Trade platform. I am new to investment and I heard that trading Platform is not good for investor like me. What do you think?

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Peter Renton November 6, 2012 at 1:17 pm

Well if you are in Nebraska then Lending Club is your only option right now. The trading platform can be a little cumbersome but there are plenty of investors on here who use it to invest. Read this to help you get started:
http://www.lendacademy.com/an-introduction-to-the-lending-club-trading-platform/

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SarahV November 6, 2012 at 3:03 pm

FolioFN is a bit of a clunky platform, and you will pay more in fees than people who don’t have to use it, but there are still good money-making opportunities there. I am in a state that can only do FolioFN as well and I am making a very good rate of return so far.

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Megan/faeriering November 27, 2012 at 7:17 am

Is there a difference between being cash flow positive and making a profit?

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Peter Renton November 27, 2012 at 12:41 pm

Yes, there is a difference. While both are important if a company cannot generate cash from operations they need outside sources of funding to stay afloat. Here is a short article that helps explain it:
http://www.investopedia.com/articles/01/110701.asp#axzz2DRxBePqI

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