Unfortunately, not all states allow investors to participate in p2p lending. I have written about this situation before but the bottom line is that every state has its own securities laws and some are more strict than others.
New potential investors want to know this: Is my state approved for investing with Lending Club and/or Prosper? To answer that question definitively I decided to create an easy to read map that will show everyone their different options.
The Definitive Map for Investors in Lending Club and Prosper
We have scoured through the most up to date information at Lending Club and Prosper to create this map below. We have color coded the map to make it easy for you to see where your state stands. And you can zoom in and out easily as well as drag the map to see where the different states stand. You can also click on each state for a quick summary of what is approved. And if you want see a slightly larger map just click here.
- Lending Club & Prosper
- Lending Club only
- Prosper only
- LC Foliofn only
- Not approved
Explanation of the P2P Lending State Availability Map
Lending Club and Prosper (red) – these states have no restrictions. Investors can choose between Lending Club and Prosper.
Lending Club only (yellow) – available only to investors in Lending Club. Keep in mind that Kentucky is restricted to accredited investors only.
Prosper only (green) – available only to investors in Prosper.
LC Foliofn only (light blue) – Lending Club has a secondary classification. These are states where investors are not allowed to invest in new loans but can buy loans on the trading platform run by Foliofn.
Not approved (dark blue) – unfortunately investors in these states are out of luck and cannot participate at this time.
Before you go and sign up at these platforms you should know that there are financial suitability requirements for investors regardless of which state you live in. Here are links to the requirements in the help sections at Lending Club and Prosper.
Good News is Coming for Ineligible Investors
There are many people who live in places like Ohio and Maryland that have been unable to participate in Lending Club or Prosper. There is some good news coming for these people. Lending Club is planning to do an IPO some time later this year that will change the landscape considerably.
Once the IPO has been completed Lending Club will be able to take advantage of something called a blue sky exemption. This exemption will allow residents of every state to invest in loans originated by Lending Club. This won’t happen overnight but they will be able to file with each state and eventually should be open to investors in all 50 states.
I believe Minnesota and Idaho should be red, Prosper’s map has them both listed as eligible. https://www.prosper.com/help/investing/
I think you have misread the map. Both states are in red.
Yes, my apologies I see that now; when I originally posted they were appearing in yellow, I also thought I had deleted the comment within the time after a refresh had them in red.
Just to be clear, Peter, will the LC IPO blue sky all states for both “origination/primary” listings as well as the Foliofn secondary platform?
That is correct. Every state that is available for the primary platform is also available for the secondary platform as well.
Peter,
Very interesting chart.
Please note that there is absolutely no investor state restriction @ Peerform since we are under the Reg D Rule 506(c) of the SEC.
Best,
Mikael
Hi Mikael, Yes, that is true there is no state limitation on investors in Peerform but to invest in platforms like yours all investors need to be accredited. In this post I am focusing on the opportunity for regular investors and there are still only two options when it comes to p2p lending.
Foliofn only states might explain why there is so much activity in Foliofn notes.
I have listed some loans on Foliofn that were issued within last 2-3 days. I offered no discount. Almost all of them get snapped up within 24 hours.
Thanks for explaining that.
Yes JJ, there is a very willing pool of investors at Folio-only states for Lending Club.
Out of curiosity, what is the policy for Puerto Rico and the USVI, since both are US soil?
Neither Puerto Rico or US Virgin Islands resident are eligible to invest on LC or Prosper.
I wish LC or Prosper would be available in P.R., if any investor knows about a solid platform available for us, please reply…
Robert, Once Lending Club completes their IPO all US residents will be able to invest in Lending Club notes. So, be patient – this process could well be complete by the end of the year.
Thanks for your fast response Peter!! I was not aware of the IPO announcement if it wasn’t for your reply, now I’ll be following the news for more updates on that, again, thank you very much!! Really excited about it!
Can you clarify — your one response indicated that once the IPO is completed, investors from all states can invest with Lending Club loans, is that what you said? How would an IPO impact what states allow investing with Lending Club?
Thanks!
There is something called a Blue Sky Exemption that should allow Lending Club to apply for acceptance in all 50 states. It is not a certainty, though, and I probably should not have implied as much in my above statement.
I actually sought a legal expert to write about this on Lend Academy earlier this month:
https://www.lendacademy.com/lending-club-ipo-legal-drama/
Could i invest in the club living in Maryland using an Virginia po box?
According to Lending Club’s terms of service you need to use the address of your primary residence.
So, in follow up, if I were looking for an investment loan for a property in Puerto Rico, would LC or Prosper investors be able to offer a loan for such a property? The option doesnt exist to choose PR when applying. Thanks!
No. Neither Lending Club or Prosper are available to borrowers in PR.
What does the new Reg A+ rule for mean for P2P lending? Debt securities are included in the list of eligible securities.
Couldn’t LC issue series of $50 MM Reg A+ notes and open the platform to everyone everywhere using the very clear pre-emption laid out?
They seem to have been scared to use the blue sky exemption as it would probably lead to litigation.
I’m new to P2P. I’m just curious, will Prosper ever be available for Texas?
Never is a very long time but I don’t expect Prosper to be available in Texas any time soon.