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U.S. P2P Lenders Issue Over $200 Million in New Loans in July

by Peter Renton on July 31, 2013

There is no summer break for Lending Club and Prosper. Both had a busy month with more record numbers. The total of new loans issued at both companies was $203.8 million in July up from $185.6 million in June. They helped more borrowers find funding than ever before – a record 15,154 loans were funded in July.

Lending Club Issues $173.5 Million in July

July was another truly outstanding month for the world leader in p2p lending. The big news at Lending Club this month came early, on July 2nd, when they passed $2 billion in total loans issued since they began operations in 2007. This happened less than eight months after crossing $1 billion for the first time on November 5th last year. As they shared on Twitter at the time, the first billion is always the hardest…

Digging in to the numbers a little we see that the $173.5 million was made up of 12,220 new loans for an average loan size of $14,194 which is actually their lowest average loan size of the year. They are certainly not focused on increasing the dollar amount of new loans right now. But as I wrote about earlier this month despite this huge volume of new loans there are many more investors looking for loans than loans available. Lending Club could easily issue double the loan volume in August and come nowhere close to satisfying investor demand. The investing world is starting to realize what many of us have known here for years: p2p lending is a great investment.

Below is Lending Club’s always impressive 18-month chart. The black line is the three-month moving average.

Lending Club 18-month p2p loan chart July 2013

Prosper Crosses $30 Million in New Loans Issued

Anyway you slice it July was a great month at Prosper. They continued on their impressive growth run, issuing $30.3 million in new loans up from $27.5 million in June. They issued 2,934 loans meaning the average loan size was $10,332 which is roughly where it is has been the last four months. Since March the new management at Prosper have been on a tear. They have gone from $20 million in new loans issued to $30 million in just three months. To put that in perspective, Lending Club took six months to grow that same amount back in 2011.

In my now regular end of month call with Prosper president Aaron Vermut he said he is obviously very pleased with the way everything has been going. He always talks about the team and how there is great morale at the company as they keep hitting their monthly goals. That is great for Prosper but what really interests investors right now  is borrower inventory. Investors, particularly retail investors, are struggling to get the supply of loans they want. He addressed this issue head on and said Prosper is working on attacking loan inventory on three fronts:

  1. More marketing to attract a higher number of quality borrowers to Prosper’s site.
  2. Working on lowering the cost of acquisition of these borrowers.
  3. Increasing the conversion rate of borrowers visiting the site.

He said they are revamping their entire borrower experience on their site so it will be easier for new borrowers to apply for a loan. This should lead to much greater inventory of loans for investors in coming months.

Below is Prosper’s 18-month chart that demonstrates their rapid growth the last five months.

Prosper July 2013

{ 9 comments… read them below or add one }

Simon Cunningham July 31, 2013 at 6:29 pm

“They have gone from $20 million in new loans issued to $30 million in just three months. To put that in perspective, Lending Club took six months to grow that same amount back in 2011.”

Well said. Prosper’s new team deserve accolades for this accomplishment. Granted, the model they are promoting has, to some degree, already been proven, which may have made their work easier. Yet the 2012-Q4 divot followed by a sudden explosion of growth makes for a very compelling narrative about this team’s capability, especially going into the long term.

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Dan B July 31, 2013 at 7:41 pm

And yet another few points to really put things in perspective:

!. It is one thing to go from $20 to $30 million in 3 months when visibility is increasing rapidly & the entire monthly volume is $203 million a month……………….& a rather different challenge to go from $20 to $30 million back in 2011 when the total market was only $25-35 million.

2. Or perhaps a simple comparison of the 2 companies based on number of employees or perhaps payroll, vis a vis productivity. I don’t have the numbers in front of me but I doubt that LC has 7 times Prospers payroll or 7 times its staff. But I do know that it now does almost 7 times the business.

3. Or my personal favorite……In the next 72 business hours (or less), Lending Club will almost certainly do more business than Prosper will for the whole month of August. :)

4. I have more but I can sense Peter getting agitated with me so I’ll stop. :)

Prosper has come a long way in the last few months & perhaps these “perspective” comparisons weren’t entirely fair to them………………..but then the $20-30 million comparison of 2011 wasn’t entirely fair to LC either. Hey, as always just being “fair & balanced”.

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Peter Renton July 31, 2013 at 8:46 pm

Dan, These are fair points. It was far more challenging for Lending Club to go from $20 million to $30 million given the environment of the time back in 2011, so I appreciate you pointing that out. But six months ago many people on this very blog were writing off Prosper and convinced they were not going to make it. So, it wasn’t exactly easy for Prosper to build up confidence and trust.

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Dan B July 31, 2013 at 10:32 pm

That is very true. Of course I’m happy to say that I wasn’t part of the group that was predicting their demise during the dark winter of 2012. In fact I mentioned a number of times during the last year that Prosper was doing some real positive things, especially in the area of reconnecting with its retail investors.

Anyway, now that things have dramatically improved, I do hope that Prosper doesn’t soon forget that it was the retail investors that essentially kept their pilot light burning even when things were somewhat unsettled.

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Dennis July 31, 2013 at 11:29 pm

Dan:

It’s nice to see you again on these bogs – where were you for awhile?? That said, in the past I remember being a little p****d off at times with some of your comments, but, you were always true to what you believe, much of that backed up with facts, and I can’t disrespect a man for that. Your diplomacy however, well, another story….. Anyway, as much as I congratulate the still new Prosper management team for their relentless improvement at Prosper, you do have a way of putting a damper on the celebration.

I’m excited to hear though that bringing more borrowers to the platform has become a priority at Prosper. As prosper continues to focus on what’s important/essential to their success, my confidence increases with each passing month. I believe this team will eventually bring Prosper to profitability, and P2P will become a staple in the investment community. My greatest fear still though is retail investors getting squeezed out by institutions, which seems to be already happening. But, I’ll continue to enjoy the ride for as long as I can……….

Dan B August 3, 2013 at 2:34 am

Talking about increase in volume………….I saw somewhere that month to month as well as year to year increases in the UK trio of Ratesetter, Funding Circle & Zopa are far outpacing ours here. So much so that Zopa is doing basically the same volume as Prosper……….. in a far far smaller country. Perhaps Peter can recall where I might have read all this?

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Peter Renton August 3, 2013 at 6:43 am

I think you probably saw this post from Claus at Wiseclerk: http://www.wiseclerk.com/group-news/countries/germany-p2p-lending-volumes-in-july-2013/

And yes, you could say the growth in the UK is outpacing the growth here, at least in recent months. For comparison in July the year over year growth at Lending Club was 189% and at Prosper was 103%. The big three in the UK were all over 200%.

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reddy August 10, 2013 at 6:02 pm

Prosper experience was horrible.
Lending Club is simply awesome.
If LC went public tomorrow at a reasonable price, I would buy about 500K worth of stock

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Peter Renton August 10, 2013 at 8:35 pm

Well that is a very aggressive stance to take. The Lending Club IPO is going to draw a great deal of hype I expect but I, for one, have no idea whether the common stock will be a great investment or not. Although I do intend to buy a few shares as well.

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