I’ve mentioned previously that I’d like to get in on the P2P (person to person) lending scene. After reading posts from avid P2P lenders like Lazy Man and Money, The Dough Roller, and Moolanomy, and carefully reviewing both the Prosper and Lending Club sites, I decided to join Lending Club and make four $25 loans (using a $90 Sharebuilder bonus plus an extra $10).
Except that I never really sat down and signed up. I intended to review the fine print one more time, but I never made time to do it. In this case, it turns out, procrastination was a very good thing.
Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.
The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.
Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.
It looks like if I’d already funded loans, they wouldn’t be affected, but this event simply shakes my confidence in Lending Club. I don’t know enough about lending laws to figure out what the problem is with Lending Club, but I do know that I’m happy I didn’t create that account with them. (LazyMan thinks Lending Club is dead.)
I’m still interested in lending with Prosper, but I think I will wait a few weeks to make sure there’s no reaction to Lending Club’s actions first.