If you follow the peer-to-peer lending arena, you might recall that back in April, Lending Club closed to new lenders as they began the SEC registration process. There was a lot of discussion and speculation regarding this move, but as of now, Lending Club has completed the registration process and is now open for lending once again.
This is all good news, but what does this SEC registration mean for you? According to their announcement:
- Under the registered offering, Lending Club lenders will now invest in notes that correspond to portions of loans made to borrower members. The notes have stated interest rates ranging from 6.69 percent to 18.63 percent, after a 1 percent service charge is applied.
- By partnering with FOLIOfn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where lenders have the option of a trading platform. On the trading platform, lenders who become customers of FOLIOfn will be able to put notes up for sale in the event they need liquidity before the completed term of a note.
- We believe this will accelerate the mainstream adoption of social lending, which will help more borrowers get funded faster.
I have to say, I haven’t had a chance to use any of these peer-to-peer lending services, but the ability to trade notes in a secondary market is fantastic. That was one thing I was always a little uneasy with, as I didn’t want to be stuck with a particular loan for any great length of time. So, the ability to get in and out of different notes is attractive. But we’ll have to see how well this works out. It will depend on how big and active the market is for this trading to really determine how useful it will be. Either way, this is a great step in the right direction in this growing form of lending.
Of course, with any registered investment product, you should read the prospectus before investing your money. Thankfully, Lending Club has a very easy to read and navigate prospectus that can be found here.
I still have some money in my Lending Club account that I never got around to investing before they closed for the registration, so this might be a good time to take a look at how it works in more detail. If I do, I’ll be sure to provide a detailed review.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
