LendingClub

LendingClub Corporation
Company type	Public
Industry	Financial services
Founded	2006; 20 years ago
Founder	Renaud Laplanche, Soul Htite
Headquarters	San Francisco, California, United States
Area served	United States
Key people	Valerie Kay (CEO as of 2019)
Products	Peer-to-peer lending, consumer loans, auto refinancing, small business loans, neobank services
Number of employees	Approximately 80 (2012), reduced by one-third in 2020
Website	www.lendingclub.com

LendingClub Corporation is a U.S.-based financial services firm with its headquarters located in San Francisco, California. It holds the distinction of being the first peer-to-peer lending company to register its loan offerings as securities with the SEC and to facilitate loan trading within a secondary marketplace. At its zenith, LendingClub was recognized as the largest peer-to-peer lending platform worldwide. By the end of 2015, the platform had facilitated the origination of loans totaling $15.98 billion.

The platform allowed borrowers to secure unsecured personal loans ranging from $1,000 up to $40,000, typically repaid over a period of three years. Investors had the ability to review loan listings and make investment decisions based on various borrower details such as loan amount, credit grade, and stated purpose, thereby earning returns generated from loan interest payments. LendingClub’s revenue model was built on charging borrowers origination fees alongside service fees levied on investors.

Furthermore, LendingClub provides direct consumer loans—including auto refinancing—through WebBank, an FDIC-insured industrial bank headquartered in Salt Lake City. These particular loans are not funded by individual investors but are instead assigned to other financial institutions.

In 2014, the company completed a $1 billion initial public offering, marking the largest technology IPO in the United States that year. Despite its pioneering status in fintech and significant market presence, LendingClub encountered investor difficulties and a scandal related to loan practices in early 2016, which triggered a sharp drop in share price and led to CEO Renaud Laplanche stepping down.

By 2020, LendingClub acquired Radius Bank and announced it would discontinue its peer-to-peer lending platform. While existing investors continue to receive interest payments on outstanding notes until full repayment or default, no new individual investments or secondary market transactions are currently permitted.

History

LendingClub originally launched as one of the initial applications on Facebook. Following a successful Series A funding round in August 2007 that raised $10.26 million from venture capital firms Norwest Venture Partners and Canaan Partners, the company evolved into a comprehensive peer-to-peer lending platform.

On April 8, 2008, LendingClub temporarily halted new lender registrations and discontinued its affiliate program as it awaited SEC approval for issuing promissory notes. The firm submitted an S-1 registration statement on June 20, 2008, aiming to register $600 million in "Member Payment Dependent Notes." By August 1, 2008, LendingClub updated this filing to reflect revised interest rate calculations and included provisions for a resale trading system. After obtaining SEC registration on October 14, 2008, LendingClub reopened lender registrations and began issuing tradable notes through the Foliofn platform. In March 2009, it secured $12 million in Series B financing led by Morgenthaler Ventures.

Pre-IPO growth

In April 2010, LendingClub secured $24.5 million in a Series C financing round, led by Foundation Capital, with continued support from existing backers such as Morgenthaler Ventures, Norwest Venture Partners, and Canaan Partners.

By August 2011, the company obtained an additional $25 million from Union Square Ventures and Thomvest, elevating its post-money valuation to $275 million—an $80 million increase compared to the previous year. Peter J. Thomson of Thomson-Reuters also made a personal capital contribution. Later that autumn, LendingClub moved its main office from Sunnyvale and Redwood City to downtown San Francisco. Co-founder Soul Htite left the company to launch Dianrong.com, a peer-to-peer lending platform based in Shanghai.

In 2012, LendingClub had grown to approximately 80 employees under CEO Renaud Laplanche’s leadership. The firm was originating loans averaging $1.5 million daily and had issued a total of $600 million since its inception. In April 2012, LendingClub renewed its SEC registration to offer up to $1 billion in Member Payment Dependent Notes. By June 2012, it raised $15 million from Kleiner Perkins Caufield & Byers alongside $2.5 million in personal investments from John J. Mack; Kleiner Perkins partner Mary Meeker joined the company's board at this time. This funding round valued LendingClub at roughly $570 million. By November 2012, the company surpassed $1 billion in loans issued and achieved positive cash flow.

In May 2013, Google Capital invested in LendingClub. The company also formed partnerships with community banks like Titan Bank (Texas) and Congressional Bank (Maryland) to optimize small loan programs that had previously been unprofitable for these institutions.

Initial public offering (IPO)

LendingClub broadened its offerings to include small business loans in March 2014. The following month, it acquired Springstone Financial. On August 27, 2014, LendingClub submitted its IPO registration with the SEC and completed the public offering in December 2014. The company raised close to $900 million in what became the largest U.S. technology IPO of that year, with shares increasing by 56% on opening day and valuing LendingClub at $8.5 billion.

Car loans and mortgages

In April 2015, CEO Laplanche revealed intentions to expand LendingClub’s services into automobile loans and mortgage products. The firm collaborated with Google to offer credit solutions tailored for small businesses utilizing Google’s platforms. Additional alliances included Alibaba.com, BancAlliance—a consortium of 200 community banks—and HomeAdvisor, which helped direct customers toward community lenders.

That same year, LendingClub partnered with Opportunity Fund, supported by former President Bill Clinton, to dedicate $10 million toward underserved small businesses in California. Additionally, LendingClub worked with Sam’s Club to provide its “business lending center” product to small business clients.

Scandal and struggle, 2016-2017

Similar to contemporaries Prosper, Sofi, and Khutzpa.com, LendingClub encountered investor skepticism early in 2016, which led to three successive interest rate increases for borrowers within a few months. Combined with worries about a slowing U.S. economy, this contributed to a steep decline in LendingClub’s stock price.

In April 2016, an employee alerted CEO Laplanche about discrepancies involving altered dates on approximately $3 million worth of loans. An external probe revealed further problems including $22 million in loans sold to Jefferies that did not meet their investment standards. LendingClub repurchased and subsequently resold these loans.

Investigations disclosed that Laplanche failed to reveal his ownership stake in an investment fund that LendingClub was considering acquiring and withheld comprehensive information about the problematic loans from the board. On May 6, the board expressed no confidence in Laplanche’s leadership, leading to his resignation on May 9. Three other executives also exited amid the scandal. Following these events, LendingClub’s shares fell an additional 34%, trading at just 70% of their initial public offering price. The Securities and Exchange Commission reportedly initiated an inquiry into the company's investor disclosures.

By December 2017, according to the Financial Times, LendingClub was still grappling with restoring investor confidence after the governance issues despite implementing internal reforms. The company increased its loss projections amid ongoing difficulties, which further pressured share prices. Many peer-to-peer lending platforms faced comparable challenges during this timeframe.

Conclusion of P2P Platform, 2019–2020

In a December 2019 discussion, executive Valerie Kay emphasized LendingClub's pivot toward institutional investors through the "Scale" initiative, which delivered representative loan samples via its "Select" offering. LendingClub achieved $10.8 billion in loan originations annually by 2018.

Anticipating the economic consequences of the COVID-19 pandemic, LendingClub reduced its workforce by approximately one-third in April 2020. By August of that year, the company shut down its secondary trading platform operated by Folio, limiting liquidity options for peer-to-peer investors. In October 2020, LendingClub halted new loan issuances on its website as part of a strategic transition into a neobank following its acquisition of Radius Bank. By December 2020, the company fully ended its peer-to-peer lending operations.

Acquisition of Radius Bancorp, 2020–

LendingClub announced in February 2020 its plan to acquire Radius Bank for $185 million in a combination of cash and stock, marking the first fintech acquisition of a regulated U.S. bank since 2008. The Radius brand was assimilated into LendingClub during 2021.

Originally established in 1987 as First Trade Union Bank by the Massachusetts carpenters union utilizing pension fund capital, Radius encountered difficulties during the subprime mortgage crisis due to its commercial real estate exposure. It adopted the Radius Bank name in 2014. Following regulatory changes under Dodd-Frank, private investors purchased approximately 95% of Radius Bancorp in June 2016.

In April 2025, LendingClub acquired the property at 88 Kearny Street in San Francisco’s Financial District for $74.5 million to serve as its corporate headquarters.

Overview

LendingClub allowed borrowers to apply for unsecured personal loans ranging from $1,000 up to $40,000 by submitting credit information. The platform evaluated creditworthiness based on factors such as credit score, credit history, requested loan amount, and debt-to-income ratio, assigning a credit grade that influenced applicable interest rates and fees. Standard loan durations were three years, with an option for five-year terms subject to higher rates and fees. Borrowers could repay loans early without incurring penalties.

Investors located in 39 U.S. states were able to purchase notes on LendingClub’s platform. They chose loans according to borrower data, loan size, credit grade, and stated purpose, with a minimum investment of $25 per note. Interest rates ranged between 6.03% and 26.06%, depending on credit grades from A (lowest risk) through G (highest risk), each further divided into sub-grades numbered one to five.

Revenue for LendingClub was generated by charging borrowers an origination fee between 1.1% and 5.0%, varying by credit grade, along with a 1% service fee on payments collected from investors. The platform provided competitive returns for both lenders and borrowers; investor returns averaged between 6% and 9% through 2013. Nonetheless, income earned by investors was taxed as ordinary income rather than at capital gains rates.

Loan Ownership

After loans were issued, LendingClub purchased them from the originating bank; consequently, notes became obligations owed by LendingClub rather than directly by borrowers. Investors held unsecured creditor status against LendingClub itself, which exposed them to potential losses if the company faced insolvency despite borrower repayments.

Until August 2020, investors had the option to trade notes on a secondary market facilitated through a partnership with FOLIOfn Investments that imposed a 1% transaction fee. LendingClub pioneered this secondary market among peer-to-peer platforms; however, it discontinued this service in August 2020.

By 2016, hedge funds had become major sources of LendingClub’s loan capital. That year, the company aimed to securitize loans into bonds as a strategy to overcome funding difficulties caused by declining investor interest.

Credit risk

LendingClub initially launched as a social networking service, utilizing an algorithm named LendingMatch to connect borrowers and lenders based on shared characteristics such as geographic location, educational background, and professional experience. This method was designed to lower default risk by leveraging social ties.

Following its registration with the SEC, the company moved away from highlighting social affinity as a means of risk reduction. Instead, the algorithm evolved into a tool enabling investors to choose Notes according to borrower and loan specifics, including loan duration, interest rate, credit score, length of employment, and homeownership status. To control default risk, LendingClub focuses on borrowers with strong credit profiles, rejecting approximately 90% of applications as of 2012 and applying higher interest rates to riskier applicants within its credit parameters. Approval is limited to those with a FICO score of 660 or above.

By December 31, 2016, 62.3% of LendingClub borrowers reported using their loans primarily for consolidating existing debt or paying off credit cards.

Loan performance statistics

As of June 30, 2015, the average LendingClub borrower had a FICO score of 699, maintained a debt-to-income ratio (excluding mortgage) of 17.7%, possessed an average credit history spanning 16.2 years, and earned a personal income averaging $73,945. The typical loan amount was $14,553, predominantly utilized for debt consolidation or credit card repayment. By mid-2015, investors had funded over $11.2 billion in loans, including nearly $1.9 billion disbursed in the second quarter alone. The average nominal interest rate stood at 14.08%, with a default rate of 3.39% and an average net annualized return—after accounting for defaults and fees—of 8.93%. LendingClub investors generally realize returns ranging from 5.47% to 10.22%, having sustained positive returns for 23 consecutive quarters through Q2 2013.

Banking services

LendingClub operates a community bank with a digital-first approach based in Lehi, Utah. It holds membership in the FDIC and complies as an Equal Housing Lender. Additionally, it participates in the NYCE SUM ATM network.

Consumer banking

Formerly known as Radius Bank, LendingClub maintained one physical branch located in Boston. Presently, customers primarily engage with banking services via online portals and mobile applications available on iOS and Android devices, benefiting from complimentary global ATM fee reimbursements.

Partnerships

The bank’s fintech initiatives began with a collaboration with LevelUp in 2013 and were followed by a partnership with Prosper in 2015 to provide personal loan products. In July 2015, Radius Bank teamed up with Aspiration to introduce a new personal checking account, broadening its digital banking services through strategic fintech partnerships.

Commercial banking

LendingClub Bank delivers deposit services and financing solutions tailored for small to mid-sized businesses. It has been designated as a Small Business Administration (SBA) Lender since 2009, primarily serving clients in the northeastern United States. In May 2016, the bank extended its SBA lending operations nationwide by establishing a dedicated government-guaranteed lending team. Later that year in December 2016, LendingClub Bank enhanced its equipment financing capabilities through the acquisition of NewStar Financial’s equipment financing division.

API Banking

On October 29, 2020, the institution enhanced its collaboration with Treasury Prime by introducing its Business API Banking Software alongside a developer sandbox testing environment, thereby bolstering its B2B banking capabilities.

Recognition

LendingClub was featured in the AlwaysOn Global 250 lists for both 2011 and 2012. The company received the Technology Pioneer Award from the World Economic Forum in 2012 and was highlighted by Forbes as one of the top 20 most promising U.S. companies during 2011 and 2012. Fast Company ranked it among the ten most innovative financial firms worldwide. CNBC included LendingClub in its Disruptor 50 rankings for 2013 and 2014, acknowledging its advancements in financial services. In 2014, Inc. placed LendingClub at number 248 on its list of America’s fastest-growing private enterprises. Additionally, Founder and CEO Renaud Laplanche was honored with The Economist Innovation Award in 2014 for achievements in consumer products.

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