Before I started writing this blog I had no idea what an accredited investor was. It sounded kind of official but what did it really mean? It is actually just a designation by the SEC that an investor has reached certain levels of income ($200,000 annually) or assets (more than $1 million excluding a home). Here is the full definition from the SEC.
Accredited investors have more options because they are considered more sophisticated investors (of course that may or may not be true) and presumably they can understand investment risks better than your average investor. They can invest in all kinds of different investment vehicles such as hedge funds or private equity that are not available to average investors. They can also invest differently when it comes to p2p lending.
Invest in Lending Club and Prosper From Any State
Accredited investors in Lending Club and Prosper do not need to open an account at either company in order to invest. They have access to private placement funds that are not available to the general public.
These private placement funds are allowed to take on accredited investors from any state, thereby circumventing the restrictive state requirements set forth by Lending Club and Prosper.
This Article is Purely Informational
In researching this article and I spoke with many senior managers at Lending Club and Prosper and I was warned that I can only share publicly available information. You see, these private placement funds have strict rules and part of these rules is there can be no public solicitation for investments.
So let me be clear. This post is for information purposes only and I am not recommending investment in these private funds.