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Review Summary: This gated lending community is a reasonable choice for borrowers and lenders who boast better-than-average credentials. Pro: Better grade of borrower, attractive and easy-to-use site with full reporting tools Con: Total investment limited to 10% of lender’s worth Rating:  (4 out of 5 star)
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Lending Club does a lot less business than closest competitor Prosper ($19 million in loans versus over $100 million), but it’s pickier about who it lets in. Lenders who choose this social lending site can sleep better knowing borrowers have fewer fiscal skeletons in the closet.
Quick Stats
| Best social lending community for | : | Borrowers with good credit and most lenders |
| Loan size | : | $1,000 - $25,000 |
| Loan duration | : | 3 years |
| Interest rates | : | 7.37% - 19.36%, set by site |
| Borrower requirements | : | Minimum FICO score of 640, no bankruptcies or current delinquencies, debt-to-income ratio below 25% |
| Lender requirements | : | Annual gross income of $70,000 and a net worth of at least $70,000 or a net worth of at least $250,000. |
| Minimum investment | : | $25 |
Likes:
Facebook Platform. In addition to setting a higher bar for borrowers, Lending Club lets lenders choose based on geography, education, profession or connectedness within a given social network. This further works in the lenders’ favor based on the premise that borrowers who are like them are less likely to default.
Secondary loan market. Lending Club recently became the first social lending community to give lenders a place to offload loans they no longer want, providing much needed liquidity.
Partially funded loans. One of the few social lending communities where borrowers can claim a partially funded loan if the two-week period allowed for full funding elapses.
Dislikes:
A little too exclusive. Lending Club accepts only the top 14 percent of loan applications, leaving the vast majority of borrowers - people with less-than-enviable credit histories - out of the most economically challenging times since the Great Depression.
Less personal. Some social lending fans might miss having borrower photos and being able to bid their own interest rates. At the same time borrower profiles contain potentially useful carer and education tidbits.
Bottom Line. In the dicey world of social lending where borrowers often walk, Lending Club’s admission policies have helped cut lender risk to a 1.7% default rate.
