From 2007 through the end of 2020, LendingClub offered a peer-to-peer lending service.[1][2] Customers who needed personal loans would undergo a screening process that involved a credit check, an evaluation of their credit history, and, in some cases, the vetting of their income or employment data.[1][3] If the borrower was approved, LendingClub's banking partner would issue the loan, which would transfer ownership to LendingClub.[4][5] LendingClub would then list the loan on its marketplace.[4][5] Interest rates on these loans ranged from 6.7 to 35 percent per year, and no loan was larger than $40,000.[3][6] The company made individuals loans available to its investors, who could choose to fund a portion or all of it, with the possibility to make a return on their investment as the loan was paid back with interest.[5][7] Almost the entirety of LendingClub's income was generated by origination and servicing fees.[3][8]
At the end of 2020, LendingClub shuttered its peer-to-peer lending service.[2]
Current business model
As of 2022, the company operates as a marketplace bank.[9][10] It generates income from origination and servicing fees from loans sold on its marketplace.[11][12] The company also makes money by holding a portion of loans on its balance sheet and earning interest as those loans are repaid.[11][12] It continues to offer personal loans to consumers, which are often used to pay off auto or credit card debt.[13][14]
When LendingClub acquired Radius Bank in February 2021, LendingClub acquired a banking charter and gained the ability to extend loans to customers by itself, without the need to partner with a bank.[9][15] Through its LCX platform, the company bundles loans and sells them to institutional investors.[16][17] In 2021, LendingClub sold $8.1 billion worth of loans to institutional investors and kept $1.8 billion of unsecured consumer loans on its balance sheet.[12]
LendingClub also functions as a digital bank, offering traditional banking services such as savings and checking accounts, and certificates of deposit.[18][19] The bank also offers commercial banking services.[20][21] As of March 2022, its balance sheet reflected $615 million worth of commercial loans and equipment leases.[21]