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Lending Club Offering a Record Number of New Loans

Lending Club Offering a Record Number of New Loans

Peter Renton·
News Roundup
··1 min read

Total available p2p loans at Lending Club

I have been investing in new Lending Club loans twice a week for quite some time. Usually the number of loans available on the platform vary from around 700 to 1,000 new loans. Sometimes the number falls slightly above or below that range.

But in the last week that has changed. As you can see in the graphic above as of this writing there are now 1,844 new loans available for investors. Lending Club has been cranking up the volume of loans for the last week. On June 3rd there were just 833 new loans available on the platform, so in eight days they have added well over 1,000 loans to the supply. In reality they have added far more than that because Lending Club has issued over 1,200 loans in that time period and those loans have been deleted from the platform.

Investors Can Put More Money to Work

I have pretty strict criteria for my Lending Club investments. When I download the Excel spreadsheet to run my filters I usually invest in 15-20 new loans at a time. Yesterday, that number was 62. For a few weeks cash had been accumulating in my largest account but I was able to put most of that money to work yesterday.

I have spoken to the head of marketing at Lending Club about this phenomenon before. While he doesn’t give away any secrets he has said that marketing levers can be pulled that greatly impact the number of available loans on the platform. In the last week he has certainly been pulling some of those levers. It will be interesting to see if every single one of these loans gets funded over the next two weeks. I am guessing they will.

Looks like another huge month is on tap for Lending Club. Maybe they are looking to break $50 million in June…

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Frankie C
Frankie C
Jun. 11, 2012 2:53 pm

Peter, could you please share with us the process you follow to apply filters to the data in Excel. I’m asking specifically about the steps you take, not what filters you use. Do you have a spreadsheet template with filters that you could share with us? Do you then copy/paste cells from the fresh download?
If this is too much info for a comment, do you think it would be worthy of its own post?
Thanks you as always.

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Dan B
Dan B
Jun. 11, 2012 3:58 pm

Will every one of these loans get funded?…………..Yes, but hardly earth shattering news.
Will every one of these loans get fully funded?…………..No
Will Lending Club break $50 million this month?………….No

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Steve Z
Steve Z
Jun. 11, 2012 9:34 pm

“I have spoken to the head of marketing at Lending Club about this phenomenon before. While he doesn’t give away any secrets he has said that marketing levers can be pulled that greatly impact the number of available loans on the platform. In the last week he has certainly been pulling some of those levers.”

Is “pulling market levers” a euphemism for lowering credit standards?

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Peter Renton
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Peter Renton (@peter)
Jun. 11, 2012 10:07 pm

@Frankie, I actually paid a programmer to create Excel macros for me that basically translated my filters into code that could be executed to filter the CSV file of the notes that you can download in the Browse notes screen. You could just use the filtering function inside Excel yourself – the URL for each loan is now included in the download.

@Dan, I agree with you on two out of three. I don’t think LC will reach $50 million this month but I do think that every single one of these loans will be fully funded. They are awash in investor money and I think it will be enough to fund all these loans at 100%. I will report back after the end of the month.

@Steve, Absolutely not. Credit standards are something they are very strict about. I imagine (and I am guessing here) is that it comes from increasing ad buys on places like Google and other marketing partners. My experience with both LC and Prosper is that the underwriting standards are not something they will mess with even it meant more loans on the platform.

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Lou lamoureux
Lou lamoureux
Jun. 12, 2012 8:34 am

Frankie C after you download the csv file and open it up, Select the data. You can do that by either using the mouse to highlight the cells (very time consuming with thousands of cells) or you can plug the numbers into a cell in the top left corner of your toolbar. Highlight a few cells and you’ll see something like a2:f16 alongside the cell where you enter the formulas. LC data goes from column a to column bh. Let’s say there are 1844 records. I usually plug in a2:bh1900 to start. Then you sort the data by a column (in open office I click DATA>SORT in the box that pops up I choose a column – G interest rate and choose ascending or descending. If you only want interest rates up to 15% delete the rows above 15%. Repeat as necessary. if you only have 200 notes though you can use a2:bh200.
In open office the command is =hyperlink(z2;a2) in excel I think it’s =hyperlink(z2:a2) fill that down and you can click on that cell to open the note (if you are logged into LC). you can fill down using the mouse, click on bottom right corner of the cell and drag down or by entering the cells you want to fill b2:b16 then on the menu bar EDIT>FILL>DOWN.

Lou
Peter’s got my email if you need more help.

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Peter Renton
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Peter Renton (@peter)
Jun. 12, 2012 11:22 pm
Reply to  Lou lamoureux

Thanks Lou. I appreciate the detailed feedback for Frankie.

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Danny S
Danny S
Jun. 12, 2012 12:20 pm

I’ve certainly increased my investments into LC from $500 new cash transferred per month last year to $500 every 2 weeks currently and probably soon to increase that to $500 new cash in per week. Like most others, I use very strict criteria for my loan selection process, and while I was having a hard time finding enough loans to place all $500 (plus reinvesting loan payments received) each month last year, right now, I’m finding an abundance of good loan opportunities and have more than enough loans choose from.

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Brady
Brady
Jun. 12, 2012 8:15 pm

“Pulling levers” could also be offering loans at lower rates to borrowers

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Joey
Joey
Jun. 12, 2012 11:08 pm

I was noticing that when I sort my main filter by newest to oldest, the newest loans all are around 32% funded, even just hours old. It seems some big investment money is pre-seeding these to one third funded.

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Peter Renton
Author
Peter Renton (@peter)
Jun. 12, 2012 11:33 pm

@Danny, If this keeps up it will be even easier to put new money to work at LC. I am finding 2-3 times the number of loans that meet my filters today as compared with a couple of weeks ago.

@Brady, For the last 12 months I have been recording the average interest rate on all loans at LC every week. Right now it is 14.18% which is at the higher end of this range. There is no evidence that LC has lowered interest rates to increase the volume, in fact the interest rate today is a little higher than it was a month ago.

@Joey, To my knowledge it is impossible to “pre-seed” the loans as you suggest. I think what happens is that some big investors come in very early. If you look at some of the loans they can be 30% or more complete very quickly with just two or three investors. But it is rare to see a loan be close to fully invested in the first day.

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Brady
Brady
Jun. 13, 2012 6:23 am

Using LendingClub’s statistics tool on their site, it appears FICO scores have gone down over the past year for all credit grades except A’s, while interest rates have inched up. So, a FICO score that used by be a C may get in as an B (Steve Z’s point) and the borrower in turn may get a better rate (my point). B and C FICO scores appear down 15-20 points over the past year.

That doesn’t mean LC is originating junk loans, just repricing loans. I guess they could be increasing ad spend, but I’m not sure there is “evidence” of that. I can’t think of any marketing levers at play here other than price and promotion, so I’m sure its a mix of all of these things.

https://www.lendingclub.com/info/demand-and-credit-profile.action – Play with the loan grade filter and watch average FICO score graph

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Peter Renton
Author
Peter Renton (@peter)
Jun. 13, 2012 8:49 pm

@Brady, That is a fair comment. It is clear that the FICO scores have been declining. My argument is mainly based on the fact that the sudden surge in borrowers isn’t explained by any significant underwriting change. Sure, they are are always tweaking it but not to the extent that would cause what we have seen in the past week and a half.

I actually chatted with my rep at Lending Club earlier today about this and he seemed to think there were multiple factors in play. One of which was the major coverage that LC received from their new VC funding – he said they often see a spike in borrowers whenever there is a big news story.

Anyway, we may never know the exact story but it is likely a number of factors and I will concede that changing underwriting may be one of those factors, just not the major one.

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