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Questions and Answers: Lending Club Edition

by Peter Renton on August 20, 2012

It was a great trip out to San Francisco last week where I spent some time with Lending Club and Prosper. Before my trip I wrote this post asking for questions that you would like to pose to the management of both companies. Thanks to everyone who posted a question in the comments and for those who emailed me directly.

I ended up with a list of over 60 questions. Now, I didn’t have time to cover every single question but I tried to hit the most important ones.

Q. What efforts are being made to open up for investors in new states?

Lending Club indicated that they are expanding their legal team and will be putting more effort into this in future. They also said that some states have very challenging requirements and it will be nearly impossible to get approved in all states as things stand right now. However, while they made it clear this is not imminent, in the event of a Lending Club IPO there is a “blue sky exemption” that would allow Lending Club to open for investors in all 50 states when they are a public company.

Q. When I make an ACH transfer deposit at Prosper my money is available INSTANTLY for investment. At Lending Club I have to wait 4-5 days before I can invest. Why is that?

Lending Club is working on having some kind of instant transfer available. This is a high priority and one they realize they need to offer to be competitive.

Q. When will Lending Club introduce an API?

The Lending Club API is in beta mode right now and is currently being tested by several institutional as well as retail investors. There is no firm date for a release.

Q. Does Lending Club have any plans to introduce 1 year notes?


Q. When will Lending Club offer the ability to sign in to multiple accounts with one email address?

This is a major project that is in progress. It is a significant change to the architecture and it will be a major upgrade to the site when it is implemented. They would not give a timetable other than to say it is a high priority for the development team.

Q. I would like to know if there are any plans for a major FolioFN makeover – it really, really needs some better filtering and sorting tools… really badly. It’s terrible.

When I asked this exact same question about FolioFN over a year ago they did make some minor changes. But they agree the trading platform as it stands today is not very friendly to investors. Enhancements to FolioFN is a project that is also in the queue but again they would provide no timetable. They did say this, though. They have recently hired a new Chief Technology Officer (CTO) and one of his priorities is greatly expanding the development team – this should lead to changes happening faster in the future.

Q. I would say a major change that should be implemented is a net gain/loss metric either instead of the total interest paid or get right of the total interest paid on the main page completely. It’s very misleading to investors that have had a few defaults.

It is a good idea. When the change for linking multiple accounts is implemented there will also be a change to the main accounts page to provide more useful information for investors.

Q. I’d like to review available notes and mark some as Recheck later, or hide permanently, or whatever.

This is not high on the priority list.

Q. Why is the web user interface of LC so mediocre and so stagnant? Why isn’t it a work in progress with ever increasing Web 2.0 goodness?

The CTO agrees that the user interface could do with some updating. This will definitely be included in one of the next upgrades to the site.

Q. Does LC have any plans to increase maximum loan amounts for certain well qualified borrowers to a higher amount such as $50k?

Not for a first loan. But recently they allowed borrowers to take out a second loan so the total in loans can now be $50K.

Q. I Would like to see better transparency on what is happening with payments and collections.

I was not able to speak with the collections manager when I visited but this is a question I hear a lot. So I have organized to speak with someone there soon and will have a detailed post about Lending Club collections out in a couple of weeks.

There you have it. This probably doesn’t satisfy everyone but at least many of these issues are now in the forefront of the minds of Lending Club management. Now, we will see how long it takes to implement what was discussed.

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{ 18 comments… read them below or add one }

Marc August 20, 2012 at 3:08 pm

Thanks, Peter, for getting some answers to these questions.


Sarah August 20, 2012 at 4:38 pm

Some of the answers are a bit disappointing, but it’s helpful that you asked so we can make more informed decisions. Thanks!


Danny S August 20, 2012 at 6:12 pm

Overall, good questions, and “ok” answers. Seems like a number of items will be addressed “coming soon” … whenever that may be.

Disappointed in their lack of interest to offer 1year notes. I think this is a potentially large market that LC is missing out on.


Peter Renton August 20, 2012 at 9:03 pm

Danny, They said the APR’s just don’t work for borrowers. With the origination fees APR’s could end up being over 30% for some loans and that just doesn’t sit well with them.


Dan B August 21, 2012 at 4:12 am

And since there aren’t any early payment penalties, disciplined borrowers can shorten their payment time frame to pretty much anything they’d like. So…………..


Em August 20, 2012 at 7:21 pm

A lot of this stuff has been “high priority” for years.

To paraphrase Inigo Montoya, “They keep using that word. I do not think it means what they think it means.”


Dan B August 20, 2012 at 7:28 pm

At least they didn’t say that the suggestions were “under active consideration” or were “being thoroughly examined”. Or that changes would be made “at the appropriate juncture” or “when the moment was optimal”. :)


Dan B August 20, 2012 at 7:43 pm

Oh I’m sorry, perhaps I’ve said too much. Somebody over at LC might be copying these down for later use. :)


Peter Renton August 20, 2012 at 9:05 pm

I agree and I told that to them. The only thing I can say is that there is a renewed focus on engineering going forward. They realize they are behind and that Prosper has a lead on them in many areas as far as user interface and ease of use. I would be surprised if we don’t see movement on some of these things sooner rather than later. As in I don’t think we will be here next August still wondering when they are going to implement most of these things.


Em August 20, 2012 at 9:29 pm

The only job opening they have up on their site is for a “Senior Financial Analyst”. I guess that means their IT department is all staffed up and ready to go! HOORAY!


Peter Renton August 20, 2012 at 9:36 pm

I don’t think the IT jobs made it to the site. On Friday the CTO had to leave the meeting with me to go and interview a software engineer so I know they are hiring for more than a financial analyst.


Dan B August 20, 2012 at 7:22 pm

Thanks for asking my instant transfer & 1 email account questions.


Peter Renton August 20, 2012 at 9:06 pm

You’re welcome. The email account thing has been bugging me for years. I have four accounts that I would love to be linked.


Frankie August 20, 2012 at 10:44 pm

Long timer reader, first time commenter here, just saying this is a good stuff. Glad to see they would answer some questions. I don’t think the LC site is that bad actually, but I agree that FolioFn is a disaster. If I was a buyer on there instead of a seller I would pull my hair out. Was there any filtering questions? I’d love to be able to filter by income.


Peter Renton August 21, 2012 at 8:33 am

Welcome Frankie, thanks for chiming in. I asked that exact question because income is one of my top filters. Inclusion of an income filter is also “on the list” so I didn’t bother mentioning this separately from the other IT questions. It will be included at some point, but probably not for several months would be my guess.


Andrew August 21, 2012 at 11:33 am

Wow, I have never heard a more vague and indefinite response to questions in my life. The answer to everything was “This may or may not be in a future update”


Dan B August 21, 2012 at 5:00 pm

There’s a strong possibility that I’m likely to agree or disagree with your statement. :)


DT August 22, 2012 at 9:53 am

Thanks for the information. Very helpful.


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