Author Topic: Lending Club Launches Business Loans  (Read 5321 times)

ggnoob1337

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Lending Club Launches Business Loans
« on: March 20, 2014, 10:44:30 AM »
For those of you who haven't seen this yet:

http://blog.lendingclub.com/2014/03/20/lending-club-launches-business-loans/

Can all investors invest in these loans or will they be available to accredited investors only?

Emmanuel

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Re: Lending Club Launches Business Loans
« Reply #1 on: March 20, 2014, 10:52:20 AM »
As mentioned by Peter, right now the lenders are a few hand-picked institutions.
Individuals will have to wait a bit, which does make sense, IMHO, since the program is in its pilot phase.

ggnoob1337

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Re: Lending Club Launches Business Loans
« Reply #2 on: March 20, 2014, 01:03:20 PM »
As mentioned by Peter, right now the lenders are a few hand-picked institutions.
Individuals will have to wait a bit, which does make sense, IMHO, since the program is in its pilot phase.

Makes sense. I guess I thought maybe they had already completed the pilot program and this was the full release of business loans.

Keltset

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Re: Lending Club Launches Business Loans
« Reply #3 on: March 20, 2014, 01:32:11 PM »
It's kind of sad to consider that the same people whom invested into the industry in its infancy and basically pioneered the investment side of P2P lending are the same folks now being denied access to new loan programs being launched by that same industry "to protect them"... This frustrates me to some degree. Not that I'm all that interested in this particular set of loans as I feel they are not correctly priced for the much higher degree of risk involved in smaller business loans.

OptionsTraderFL

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Re: Lending Club Launches Business Loans
« Reply #4 on: March 20, 2014, 01:39:13 PM »
I don't see how they are going to be able to properly underwrite these loans. Are both the owner and the business going to be held liable? What if you have multiple partners or a silent investor?

Keltset

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Re: Lending Club Launches Business Loans
« Reply #5 on: March 20, 2014, 01:50:58 PM »
It looks to me like it's the business and a personal guarantee.... The person on the hook for it doesn't mean much... Sometimes they are enforceable and sometimes they aren't. I got out of several of them with one of my old businesses.

rawraw

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Re: Lending Club Launches Business Loans
« Reply #6 on: March 20, 2014, 05:27:30 PM »
It looks to me like it's the business and a personal guarantee.... The person on the hook for it doesn't mean much... Sometimes they are enforceable and sometimes they aren't. I got out of several of them with one of my old businesses.
Shifting assets to a third party or LLC is a good one, too.  Then file bankruptcy

Boatguy

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Re: Lending Club Launches Business Loans
« Reply #7 on: March 21, 2014, 01:22:41 PM »
Not to worry, Business loans won't be available to retail investors for a year or two.  They'll be bundled up and sold to institutional investors.

This is serious help for the economy as the big banks have turned away from lending to small business.

It's also going to be a serious boost to the LC IPO valuation!

OptionsTraderFL

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Re: Lending Club Launches Business Loans
« Reply #8 on: March 21, 2014, 03:35:24 PM »
It is starting to feel like 2008 all over again.....

rawraw

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Re: Lending Club Launches Business Loans
« Reply #9 on: March 21, 2014, 03:40:07 PM »
It is starting to feel like 2008 all over again.....
ha ha ha, what lending to businesses based on FICO isn't a good idea?

Fred

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Re: Lending Club Launches Business Loans
« Reply #10 on: March 21, 2014, 05:48:09 PM »
I shared about a recent study by the Fed on P2P Small Business Loans : http://www.lendacademy.com/forum/index.php?topic=2078.0, which concluded (among others):

Quote
"Logistic regression results that look at loan performance indicate that loans for small businesses were much more likely to be delinquent or charged off."

Because of this paper, I am actually shying away from P2P small business loans.

rawraw

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Re: Lending Club Launches Business Loans
« Reply #11 on: March 21, 2014, 07:44:56 PM »
Fred, don't I remember you saying that you have actual experience in the score card development/use in banks?  I'm sure you realize how hard that can be.

Peter

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Re: Lending Club Launches Business Loans
« Reply #12 on: March 22, 2014, 09:11:36 AM »
I shared about a recent study by the Fed on P2P Small Business Loans : http://www.lendacademy.com/forum/index.php?topic=2078.0, which concluded (among others):

Quote
"Logistic regression results that look at loan performance indicate that loans for small businesses were much more likely to be delinquent or charged off."

Because of this paper, I am actually shying away from P2P small business loans.

That paper looked at the "small business loans" issued by Lending Club that were really consumer loans in disguise. And it comes as no surprise to most people here that loans on Lending Club today with a stated purpose of small business have been some of the worst performing loans over the last several years.

The loans being issued now as part of this new announcement are real small business loans. I know many people here have chimed in that they are confident that Lending Club will fail here. While that is possible I happen to think it is more likely that they will succeed.
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Fred

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Re: Lending Club Launches Business Loans
« Reply #13 on: March 22, 2014, 12:24:01 PM »
Fred, don't I remember you saying that you have actual experience in the score card development/use in banks?  I'm sure you realize how hard that can be.

Yes, I have been developing models for trading & underwriting since 1999.  I used to work on the sell-side, but now on the buy-side.

Yes, this can be very hard.
« Last Edit: March 22, 2014, 12:42:41 PM by Fred »

rawraw

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Re: Lending Club Launches Business Loans
« Reply #14 on: March 22, 2014, 08:47:18 PM »

The loans being issued now as part of this new announcement are real small business loans. I know many people here have chimed in that they are confident that Lending Club will fail here. While that is possible I happen to think it is more likely that they will succeed.
You say that like we want LC to fail.  Do you have any credit background?  That may be why you are always optimistic about this stuff -- consumer credit is really mindless IMO.  Business lending is just an entire different beast and I think you underestimate the difficulties of that.  I'd love for them to succeed, but skepticism is always prudent when dealing with this kind of stuff.  I actually have a colleague with lots of credit background applying for LC's new relationship manager position.  He isn't quite sure it won't blow up, but thinks it would be fun to work for LC ha ha