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[Mark12547]

Lending Club Originates $4.3 Million in Loans in August, Prosper.com Originates $905 Thousand

Prosper may have a difficult time attracting new lenders as many of them have been burned by a lack of collections efforts by Prosper in the past and have generally been disappointed with the high-levels of default that have become common on the site.

Someone seems to have done more than read Prosper's press releases.

[Xenon481]

It's about time that people started doing some digging.

Nominate for the Lobby.

[Tokyo Joe]

Second that.

[Investar]

Prosper may have a difficult time attracting new lenders as many of them have been burned by a lack of collections efforts by Prosper in the past and have generally been disappointed with the high-levels of default that have become common on the site.

Someone seems to have done more than read Prosper's press releases.

Yes indeed. And in addition to reading here a week ago they've been right HERE as well, I'd say.

[ira01]

Lending Club Originates $4.3 Million in Loans in August, Prosper.com Originates $905 Thousand

Prosper may have a difficult time attracting new lenders as many of them have been burned by a lack of collections efforts by Prosper in the past and have generally been disappointed with the high-levels of default that have become common on the site.

Someone seems to have done more than read Prosper's press releases.

It is certainly nice to get some more realistic press about Prosper.  But it is still rife with errors:

For a while, Prosper.com was the behemoth in the peer-to-peer lending industry, originating up to $2 million in loans per month

Prosper was averaging almost $7 million a month in originations, a far cry from "up to $2 million," as I charted here.

To Prosper’s credit, the loans that it has originated since it re-launched a couple of months ago have been performing much better.

Well duh -- almost all of Prosper 3.0's loans are too new to have gone late yet. 

The article also failed to note that lenders in half the states, including several of the largest, have been precluded from lending on Prosper 3.0.  While I think that Prosper will not be able to reach its former level of originations any time soon, even after opening up the rest of the states, it is misleading for the article to compare 50-state LC apples to 25 or so-state Prosper 3.0 oranges.

[DCS]

While I think that Prosper will not be able to reach its former level of originations any time soon, even after opening up the rest of the states, it is misleading for the article to compare 50-state LC apples to 25 or so-state Prosper 3.0 oranges.

Lendingclub is currently open for lending in 27 states, according to the list on this page: https://www.lendingclub.com/info/how-to-invest-money.action

However, Prosper opened in July with I think 14 or so states open to lenders, and has gradually reached the 25 number since then, so it is sorta apples to oranges.

[bamalucky]

However, Prosper opened in July with I think 14 or so states open to lenders, and has gradually reached the 25 number since then, so it is sorta apples to oranges.

Really? I seem to remember all 50 states & a 2 year head start.

[DCS]

err, make that "re-opened"

[112233]

However, Prosper opened in July with I think 14 or so states open to lenders, and has gradually reached the 25 number since then, so it is sorta apples to oranges.

Really? I seem to remember all 50 states & a 2 year head start.

they tripped over their arrogance

[ira01]

While I think that Prosper will not be able to reach its former level of originations any time soon, even after opening up the rest of the states, it is misleading for the article to compare 50-state LC apples to 25 or so-state Prosper 3.0 oranges.

Lendingclub is currently open for lending in 27 states, according to the list on this page: https://www.lendingclub.com/info/how-to-invest-money.action

However, Prosper opened in July with I think 14 or so states open to lenders, and has gradually reached the 25 number since then, so it is sorta apples to oranges.

Thanks -- I obviously remembered wrong about LC.  I see that their list of states includes Florida, a major lender state for Prosper 1.0, but not for Prosper 3.0 (I guess Florida just re-opened, but that was very recent).  I didn't compare the rest of the list, but it seems obvious that the original article's comparison is certainly apples to oranges.

[Investar]

... I guess Florida just re-opened, but that was very recent. I didn't compare the rest of the list ...

I have and keep a list. Exactly the same states are available on both platforms with a few variances. LendingClub doesn't have Oregon (yet) and Prosper doesn't have Mississippi or West Virginia yet -- probably because their sanction process of the 'old' Prosper isn't completed. Otherwise the 'dead dog' states are exactly the same. It's pretty cut and dry in my opinion. Prosper (and LendingClub) have all the states they are going to get for the foreseeable future.

[havastat]

Lending Club originations seem to have been really accellerating in the last couple of months. They exceeded $5M in September and are now past the $4M mark about halfway through October, on track to exceed $6M for the month. They're at about the level Prosper was in its heyday. Is it possible that Lending Club will start originating enough loans to become profitable and succeed?

[ira01]

Lending Club originations seem to have been really accellerating in the last couple of months. They exceeded $5M in September and are now past the $4M mark about halfway through October, on track to exceed $6M for the month. They're at about the level Prosper was in its heyday. Is it possible that Lending Club will start originating enough loans to become profitable and succeed?

If their expenses and fees are similar to Prosper's, they need to originate at least $20M a month (probably more) to break even -- that's a long way from $6M.

[havastat]

That $20M/month estimate came when origination fees were 1%. But Lending Club has raised its fees substantially, and origination fees are now 3.25% on grade B and higher loans (most of them). They've also raised their service fees. That extra revenue per origination has got to lower their breakeven origination rate considerably.

No doubt they have high marketing costs. The $25 free giveaway to every new investor and the 1% or 2% rebates they've been offering to large-scale lenders don't come cheap. On the other hand, Lending Club didn't make cash-draining mistakes like renting an entire floor of an office tower in the high-rent financial district of San Francisco, like Prosper did, so hopefully its day-to-day expenses are lower.

[ira01]

That $20M/month estimate came when origination fees were 1%. But Lending Club has raised its fees substantially, and origination fees are now 3.25% on grade B and higher loans (most of them). They've also raised their service fees. That extra revenue per origination has got to lower their breakeven origination rate considerably.

I'm not sure, but I think the origination fees were already higher than 1% by then.  Apparently Prosper got rid of its "changes" page (or at least I couldn't find it now), so I can't check to see for sure. 

Also, Larsen's statement was that origination needed to be 4-5 times what they were, which would actually be about $25M -- I reduced that to "at least $20M" to account for the higher fees.

Furthermore, Larsen's statement came before Prosper's use of WebBank (whereby all loans are now originated by WebBank and then assigned to Prosper).  I think it is safe to assume that WebBank isn't doing this for free.  My guess is that they take half of the origination fee as payment (does Prosper's prospectus say anything about this?).  And doesn't LC use WebBank too?

Thus, I bet the $20M a month estimate is still pretty much right on. 

On the other hand, Lending Club didn't make cash-draining mistakes like renting an entire floor of an office tower in the high-rent financial district of San Francisco, like Prosper did, so hopefully its day-to-day expenses are lower.

Supposedly Prosper got an extraordinary deal on that space, which the previous tenant bailed on.  So LC may not be saving any money there.