For the first time ever monthly loan volume at the two big U.S. p2p lenders, Lending Club and Prosper, exceeded $50 million. Their combined $50.8 million This was $3.7 million more than last month and a staggering $29.7 million more than the same month just last year. Even as the numbers are getting larger both companies are easily maintaining better than a 100% annual growth rate.
Lending Club Ends March with $39.5 million in New Loans
I chatted with Lending Club’s chief marketing officer, Scott Sanborn, this week and we talked about the impressive growth that Lending Club has experienced lately. He said that they like the current pace they are on, and while they have enough opportunities on both the lender and borrower side to grow even faster, this current rate of growth is optimal. They can add headcount at a predictable pace while making sure their technology infrastructure is always ahead of the demands placed on it by the increased volume.
It seems to be working. Investors continue to flock to the platform on both the retail and institutional side of the business. And even with the 2,914 loans issued in March the number of loans available to investors on the platform at any one time continues to be strong – usually between 500 and 800 loans.
Below is their impressive monthly loan volume chart for the last 18 months. The black line is the three month moving average and as you can see it just keeps getting steeper.
Prosper Records Another Month of Steady Growth
While Prosper’s growth has slowed down a little in recent months they are still keeping their record growth streak alive. They have now posted positive loan volume growth for 18 consecutive months and they ended March with a record $11.2 million dollars is new loans issued. This compares to just $4.5 million in new loans in March 2011.
What was most impressive to me about this past month for Prosper was that there was a broad base of volume. In February, Prosper’s top two institutional investors were responsible for almost half the loan volume but this month it was a different story. Of course, Worth-blanket2 continued their steady investment with another $2.4 million in new loans according to Lendstats. But apart from WB2, there were only two other institutional investors who made sizable investments in March. Index_Plus invested $262K and P2P_Investor kicked in $132K. So, it looks like institutional investors were responsible for less than 30% of the loan volume this past month.
This means that there must have been strong support from a large number of smaller investors. Maybe some of the changes Prosper has made has had an impact for the smaller investor. Below is their 18-month loan volume chart.
Over the past few weeks I have applied for a loan on both Prosper and Lending Club. My investments so far have been exclusively through LC, but chose Prosper for my loan because the interest rate they offered was 1.5% less (6.49% vs. 8.99% for a 3 year 12k home improvement loan). Both showed my credit score accurately, which is 850+.
I will mention that Prosper seems to be having trouble keeping up with volume of borrowers hitting their site. I listed my loan about 17 days ago and I’m still at verification stage 2. I submitted all requested documentation in the first few days of my original listing. I called up there on the 14th day of my first listing and they said they were too behind and that I should withdraw my listing and put it back up. Good thing I can wait on the funding. Pretty amazing since they are being outpaced by LC and don’t appear to be able to keep up with what they are doing.
@Brady, Interesting info on Prosper. I know they had increased the volume of borrowers this past month to around 500 loans on the platform at one stage – the most I had ever seen. So maybe this is stressing their systems a little much. I can tell you when I applied for a Prosper loan in September last year, everything happened very quickly and I moved to Verification Stage 3 in four days and had the money in my account in five days. I wrote about my experiences here: http://www.sociallending.net/borrowing-2/what-to-expect-when-applying-for-a-personal-loan-on-prosper/
This was back when there was less loans on the platform so it sounds like they haven’t added the necessary headcount yet to cope with the increased loan volume. I hope they get this fixed soon.
I haven’t done the math, but the slope on the LC graph looks visibly steeper than the prosper graph. Glenn do you want to weigh in on how your ‘seasoned’ new loan originations are beating the pants off LC? ;P
Lou
Interesting… I just applied for $3000 a couple weeks ago and had the money in 3 days. I am a repeat borrower so maybe that’s why it went so quickly.
LC’s trajectory is incredible. If we had a better way to project their expenses, we could find the month of profitability pretty easily because revenues are simply a function of the quarterly originations plus the previous 3 years of originations. Getting exciting!
Peter, you left out the raw number of loans originated and average loan size.
@Lou, The Lending Club curve is certainly steeper than Prosper’s these days. They seem to be doing a better job than Prosper in getting the word out to both investors and borrowers. But I am afraid that Glenn has left Prosper so he won’t be able to chime in on your question. I have a phone call with his replacement, Brad Lensing, later today.
@Chris, I assume you meant on Prosper. Repeat borrowers there rarely have any trouble being funded quickly.
@Bryce, It is quite incredible. If you just plug their numbers into Excel and extend the series a year or two you can see they will be doing very large volumes before too long. But expenses are hard to predict because they (Lending Club) continue to invest in marketing and technology at a rate that is just as rapid as their growth in revenue.
@Charlie, An oversight on my part. Here are the numbers for March:
Lending Club: $39,536,300, 2,914 loans, average: $13,568
Prosper: $11,235,816, 1,489 loans, average: $7,546
That is good news Peter because that breaks the trend of higher average loan size. Last month it was ~$14,200. This month $13,568.
Hi. I’m curious…is there a reason Peerform is not included in the article? I thought there were three major P2P sites–LendingClub, Prosper and Peerform–but I don’t see Peerform mentioned anywhere. Just curious if it doesn’t fit in this category for some reason, and why not? Thanks.
@Charlie, Indeed. It is good that the average has gone down, I wouldn’t like to see that number grow steadily even if larger loans perform better than smaller loans.
@Monica, Good question. I have reached out to Peerform on a number of occasions and invited them to share their numbers with me for my monthly roundup. But they have decided not to participate as of yet. Peerform are very different from Lending Club and Prosper from an investor perspective. They only allow accredited investors and have very high minimums. They are really focused on the institutional investors. If they continue to do well I expect to include them in my monthly numbers some time soon.