Lending Club has come into our radar after raising their net annualized returns to their investors by 0.60% APY. A few months ago Lending Club had provided average returns of 9.05% APY, now this number has increased to 9.65% APY.

What is Lending Club?

Essentially Lending Club has set out to eliminate the complexity of the banking system by allowing borrowers and lenders to directly invest from each other through a moderated online platform. Investors open an account and build a portfolio of loans. Investors can select the loans they would like to fund based on how aggressive their investment style is. The investor may also spread their deposit over hundreds of different loans to diversify their savings. Since Lending Club’s inception in 2007 they have provided investors with an annual return of 9.65% APY and were recently given the “Breakthough idea of 2009″ award by Harvard Business Review.
Lending Club Facts:

• As of February 28, 2010, Lending Club has funded over $89,000,000 in loans and provided $6,200,000 in interest to it’s individual investors.
• Lending Club’s approval rate for loan applications sit at roughly 14% (only prime borrows approved), reducing risk for investors.
• Extremely low default rate on loans – less than 3% after 18 months
• Eliminates the high cost of traditional banks to provide you with better rates

Lending Club’s Recognition in the Press:

• “Breakthrough idea for 2009.”
  Harvard Business Review
• “As major financial institutions stumble or fail completely, online lending sites like Lending Club are on the rise.”
  CBS News
• “…the increased efficiency of cutting out the banks…”
  The New York Times

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