The Monthly Loan Numbers Keep Growing for U.S. P2P Lenders

Lending Club had another outstanding month in July reaching $20.6 million in new loans, the seventh time in eight months they have reached a record milestone. Prosper continued on their rapid growth curve with $6.0 million in new loans which is their 11th month in a row with positive loan growth.

I really thought this month that the rapid growth seen so far this year might falter. With the July 4th holiday and the fact that a good portion of the country was on vacation I thought we might see a breather in the expansion at both Prosper and Lending Club. It even looked that way up until the last day of the month. But the famous last day surge in new money at Lending Club (from their institutional investors) in July was staggering: $5.7 million in new loans were funded this past Friday, the last day of the month, which amounts to 27.8% of their monthly total. Here is the 18-month chart for Lending Club.

P2P Loan Volume for Lending Club July 2011

Prosper also had a big last day surge. Almost $900,000 in new loans were funded on the last day of the month which was also a good chunk of their monthly total. Worth-blanket2, their largest institutional investor, continued their rapid influx of funds investing around $1.4 million in new loans last month, bringing their total since starting at Prosper in May to over $3.2 million. Below is the 18-month growth chart at Prosper.

P2P Loan volume through Prosper July 2011

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Dan B
Dan B
Aug. 1, 2011 6:17 pm

So without the new institutional investor Prosper actually saw a decline in growth correct? In fact not counting this investor, Prosper hasn’t seen any growth in over 4 months, correct?

Shawn
Shawn
Aug. 2, 2011 7:38 pm

Well growth is growth. That argument can be taken for any number of investors, including LC institutional investors to wave off numbers. More money will still attract new borrowers, and attract new lenders. I agree that it would be nicer to see more broad based lending/borrowing, but I don’t think you can make a “if you take out so-and-so” argument to say that Prosper is having fundamental issues.

~Shawn
Prosper Lender “Shawnw2”

CA-Lender
CA-Lender
Aug. 3, 2011 11:50 am

@Dan B:

Even though WB2 invested almost $1.4M of the $6M in loans that funded in July at Prosper, I don’t think it’s a correct assumption that without WB2, funding would have only been $4.6M. My rationale for this is the fact that WB2 almost single handedly funded many loans (some within 3 minutes of them going live). These same loans would probably have funded within the 2 weeks by other investors, who ended up holding on to their cash, or investing it in lower quality notes that may not have reached the 70% threshold. Point is, obviously, WB2 has a huge effect on total loans funded, but, I estimate that even without him, Prosper would have funded over $5M. (IMHO).

, You may have covered this is previous entry, but what do you estimate Prosper’s monthly new loan activity needs to be at for them to be “break-even”?

CA-Lender

Dan B
Dan B
Aug. 3, 2011 6:26 pm

Of course I agree that saying that there was no growth at Prosper not counting this or that person, is unfair. But I think it’s pretty clear that they’re having some problems growing their numbers……………..& I think that even they’d probably admit that it’s taking a lot longer than anticipated for them to get to their pre-quiet period numbers. Looks like it’ll be 2012 before that is going to happen.

ChasingBread
ChasingBread
Aug. 3, 2011 9:36 pm

Peter, I second CA-Lender’s question, what do you think Prosper’s monthly new loan activity needs to be at for them to be “break-even”?

CA-Lender
CA-Lender
Aug. 3, 2011 9:41 pm

,

I think that 300-400 number is a bit misleading.

Although I agree that volume does seem to be down, I think that fact that WB2 funds loans some quickly (3 minutes in a several cases), when you check on “open” loans, many loans that were “active” at 9:00AM and 5:00PM (PST) are no longer there an hour later.

Of course, WB2 doesn’t fully account for the huge drop from 600 down to 300-400.

If you check http://www.lendstats.com, you’ll see that July was a record month for the number of funded loans (post July 2009)—925.

Personally, I don’t agree with Prosper needing another WB2, I’d prefer to see another 100 small investors instead. I’m online when new loans post, and when WB2 is lending, he’s “pushing” out the “small” investors with his $7500 lend.

CA-Lender

Lynn Bittel
Lynn Bittel
Aug. 3, 2011 9:42 pm

Some interesting commentary Peter.
Congratulations.

CA-Lender
CA-Lender
Aug. 3, 2011 9:50 pm

@Peter/ChasingBread:

I thought BE was around $20M/mo, but $25-30M/mo sounds reasonable.

If Prosper can maintain 10% month over month growth for loan originations, they could be profitable beginning in early 2013, but 10% MoM might be easy when they are origination $6M in loans, and a bit tougher when they get above $10M/ month. This also assumes that WB2 continues investing $1.5M or more monthly (and hopefully none of his investors need to make a large withdrawal).

Realistically, sounds like they probably won’t be profitable until 2014 or later. 🙁

Charlie H
Charlie H
Aug. 4, 2011 5:30 pm

2014 to break even… They are going to need another round of venture capital funding before then eh?

Dan B
Dan B
Aug. 4, 2011 6:05 pm

Perhaps another 2. Talk about a money pit. What’s the expression? There are fools born every minute.

Brian P
Brian P
Aug. 7, 2011 8:31 am

, please do share the Python script, if you find it useful/reliable. I have considered creating something similar, but haven’t found the time yet to get started.

Mike
Mike
Aug. 9, 2011 8:00 am

Since I’ve got a listing on Prosper I’ve been paying a ton of attention lately. I’m not sure who WorthBlaket2 is, but I’m hoping its not someone that Prosper is banking on. Most of what I’m seeing them loan to over the last two weeks has stated income less than stated expenses or other huge scary flaws which, regardless of Prosper rating, seems like bad news (maybe they’re just way smarter than me, though, and know how to make that work). It certainly seems like they’re not crowding out much individual investment right now as they’re picking up everything it seems like everybody else is smart enough to stay away from. I’ve seen several fundings where they’ve funded about 60% the day of the listing and it still hasn’t closed fully funded.

If anything, I’d fear WB2 might be doing harm to Prosper, as listings that have no business being funded get funded and not surprisingly default, making the Prosper protfolio performance appear much worse than it otherwise would have.

Also, have the cash back specials lasted this long in the past? It certainly seems to be accelerating funding (at least to partial funding levels), which was awesome for me. However, it seems like they’re almost writing off this month. I can’t imagine they’re making much after handing back 2.75% for each listing.

CA-Lender
CA-Lender
Aug. 9, 2011 11:24 am

This is the same I made in a post about 2 weeks ago:

https://www.sociallending.net/investing-lending/p2p-lending-webinar-now-available-for-viewing/

Although, as KenL pointed out, the notes that WB2 has been funding lately (last 30 days) seem to be higher quality then the notes he invested in during his first 30 days on Prosper. As for the amount he’s investing, after kicking up his investment “per note” up to $7500 in July, I actually saw one note that he invested $11,600 ($15,000 note).

Anyone have any thoughts on what the upside or downside would be if Prosper limited the amount/percentage an individual can fund a single note, for example, no more then 50% from one investor. Obviously, this isn’t something that Prosper is going to do right now, but if in a year they see a higher then normal default rate from notes that WB2 is in, causing the overall ROI to drop, this option might be an idea which would limit the number of sub-par notes that fund, while causing huge lenders (ie WB2) to diversify more.