I never expected to be writing about swimming pools on this blog; certainly not twice in the same month. But there was an interesting announcement earlier this week regarding a new partnership between Lending Club and the world’s leading distributor of swimming pool supplies, POOLCORP.
Like the Viking Pools partnership I wrote about a couple of weeks ago, POOLCORP will be sending borrowers to Lending Club who are looking to finance their swimming pool. They own the domain name, swimmingpool.com and they have setup a page on their site for pool financing. This page in turn will take you to a landing page on Lending Club’s site for borrowers. POOLCORP will earn a referral fee for every borrower that obtains a loan through Lending Club and they will be refunding that fee back to the borrower.
Playing Both Sides of Peer to Peer Lending
The big difference between the Viking Pools partnership and POOLCORP is that POOLCORP will be playing both sides of the transaction. By this I mean they will be also investing in the loans. Yes, they have set aside up to $2 million to invest in the loans of people they refer to Lending Club. Now, according to Mark Joslin, CFO at POOLCORP, they won’t be funding a large portion of these loans, it will just be to the tune of $500 of so. But this is the first time that I have seen a company invest in loans for borrowers that they have referred.
When I chatted with Joslin earlier this week he said that he analyzed the Lending Club loan data from 2010 and he noted there were about 50 loans issued for swimming pools. By creating this program he hopes that number will increase many times. Although I don’t think he will need $2 million because it will be unlikely to jump from 50 to 4,000 loans in one year no matter how much they promote the service.
Good Marketing
This looks to be more of a marketing exercise than anything. It is unlikely that this partnership will drive a significant increase in pool financing, but at least POOLCORP can be seen as being proactive in their customers eyes. The pool and spa industry has picked up on this news, so their marketing is already paying dividends. The whole program is going to cost them very little and for the money they invest they will be earning some decent interest on that money.
Regardless of the success of this program I find it interesting that a company is partnering with a peer-to-peer lender both to drive new borrowers and to invest in loans. It brings up an interesting idea for a company whose customers are struggling to obtain financing. Maybe we will see more of this kind of thing going forward. Companies that aren’t large enough to have their own financing division could partner with a peer to peer lender and provide a hybrid company/peer to peer financed loan.
Hold on, I thought that Rob Garcia, LC’s Director of Propaganda, sorry I meant Director of Product Strategy said that SEC regulations prohibit the issuance of referral fees ? So how come Poolcorp can get a referral fee & we can’t ? I see a post on facebook from March 20th where he repeats the claim in response to a post asking about referrals.
My guess is that POOLCORP signed up as an affiliate (just like I have) and receive affiliate payments for these referrals which is definitely allowed by the SEC. I could be wrong. Rob, can you clarify that?
This is the part that is really interesing:
“Regardless of the success of this program I find it interesting that a company is partnering with a peer-to-peer lender both to drive new borrowers and to invest in loans.”
The potential here is great. Any savvy business (home remodeling, auto sales, etc.) should be telling customers about LendingClub. I suspect that we’ll see a lot more of this soon.
The biggest problem I see with LendingClub and Prosper (in my part of the world at least), is that no-one knows about them. I’ve yet to talk to someone who is familiar with or has heard of either.
@C. Ignorance is still the biggest struggle. Like you, most people I chat with have never heard of the peer to peer lending. I know Lending Club and Prosper are both very conscious of this fact. We need to keep spreading the word.
And the few that have heard of Lending Club really mean Lending Tree, or vice versa.
@Dan, Yes I see people on Mint mixing the two all the time.
Prosper comes out with a similar partnership, but for timeshares (argh): http://www.insidethegate.com/tag/prosper-com/
@C, Thanks for sharing, hadn’t seen that one.
This is too funny………….2 money pits (that are used 2 or 3 times a year) partnering with 2 companies who are supposedly trying to lessen the consumer debt burden. What’s next? Oh wait, I know, how about p2p financing for people who want golf club memberships. That’d be just perfect.
Thanks for sharing your article about swimming pool business. It would really help to my small business of swimming products.
Working in the pool industry for a little under 6 months…
I’ve learned
1. The industry wants people to get approved so they can do their job, building pools.
2. Lending Club’s rates for the typical amount a pool loan is… is dismal.
3. There are really only a handful of pool lending “private” institutions. HFS, Lyon, Lightstream. The only one of them that’s competitive is lightstream, but excludes a pool of customers below their magic 700 credit score.
4. We used a sample “pool” of customers (roughly a 100 over the past 3 years) . The typical Pool-interested client, because its a luxury product has:
a) disposable income
b) decent but not perfect credit
c) actually pays their loans off.
Why isn’t the finance industry all over this sh*t?
5. 2008 hurt the pool industry because of the finance industries inability to get once “potentially approved” customers approved. It let to a smaller “pool” of customers willing and able to get approved.
Why doesn’t P2P offer larger loans for industries that need it?
Lending Club has a hard cap of $35K and even then you have to have decent credit to get that high. These are unsecured loans so any amount larger than that is deemed as too risky.
The above article was written almost three years ago and since then Lending Club has increased their loan volume more than 10-fold. But they are not making a push into the pool industry – most of the loans are for debt consolidation.