Borrowers can now select between three year or five year term loans when borrowing, enabling them to further slash the monthly payments they make.  This should make the Company’s debt consolidation and small business loan products even more attractive to new borrowers.

Investors look to be well compensated for the increased risk that is inherent in longer term notes.  Notes from borrowers with mid-range credit will yield an incremental 74 basis points, while lower quality notes will have their yield enhanced by 1.86%.  Lending Club’s service charge on five year notes is reduced by 26 basis points as well.

Both 36 and 60 month notes can be sold in Lending Club’s secondary market partnership with FolioFN.  No word yet on whether close competitor Prosper.com intends to match the option to originate a longer term note.

Fast-Growing Industry
Peer lending is growing fast, especially in the last two years. Because individuals and small business owners do not have access to the cash or credit that was once widely available and the cash is available now comes at a much higher cost than in previous years. Social lending sites are offering better rates that are also fixed and the application process, while through, is conveniently done online literally at any time of the day. This alternative option is not only convenient for consumer because they don’t have to go through the hassles at a bank but it also helps to eliminate high fees. As the traditional lending companies are getting stricter and more stingy with their lines of credit and cash, social lending is opening new doors for individuals in need to venture through, provided they are qualified and willing to take a jump into unfamiliar territory.

With better rates during these trying financial times, the popularity of social lending will likely continue to grow. Lower, fixed rates give borrowers the advantage of always knowing exactly what their loan payment will be and precisely how long it will take to complete the life of the loan. There is so much concern and focus on personal budgeting and better money management, being in the know about how much you owe down to the last penny will also help to ensure that the social lending sites will thrive.

Benefits Beyond the Banks
Social lending also offers networking capabilities between borrower and lender, a benefit you don’t get with banks. Social lending allows lenders to really see how their money is being used and borrowers get the chance to tell their side of the story and their anticipations for the future. Since many social lending participates are of the same entrepreneurial mindset, relationships can develop further.  The loans involved with social lending are installment loans for all intents and purposes they are user-friendly. There is not an additional fear that hidden fees will pop up or that there will be penalty charges discovered too late. In turn for the lender, good return opportunities are plentiful and the community set up makes a big difference in the whole process.

Moving Forward
While experts believe that social lending will aid individuals during the current credit crunch, many also foresee a strong immediate future for the practice. New regulations raise the bar on gaining entry to the social lending community and provides more protection for the consumer, which is always a welcoming notion. As social lending becomes more mainstream and people continue adapting to the social lending environment, it is predicted that in the future, banking facilities will look to score partnerships with social lenders in order to get in on the ground floor of working within the strong customer acquisition arena. While social lending is still a very new concept to the masses, those who are already involved on see progress forward.