When a lender gets an investment from someone besides the government, people take notice.  Today it was announced that LendingClub is getting $12 million in venture capital money to help it keep growing.  That’s big news when traditional financial institutions are taking billions just to stay in business.

I’ve posted before about LendingClub, the peer-to-peer lending network.  Unlike traditional banks, they help people loan money directly to one another via their network, and hope to get better rates to both lenders and borrowers in the proceess. 

They’ve grown in both members and as a company.  They’ve reportedly doubled in size over the past 5 months and have filed with the SEC, both very important steps.  But they also now have some major financial backing as they have closed a $12 million round of funding, which gives them a lot of strength as a lender and plenty of room to grow.

I really see places like LendingClub as the future of lending.  The recent news of bank colapses and near colapses (like Citibank’s stock falling below a dollar) has put traditional banking on notice.  But like a traditional bank, they offer a variety of loans, from debt consolidation loans to auto loans to home improvement loans. 

The rates paid to vary on a sliding scale according to the one’s credit score, with the best loan rates being well below the national average.  As of this writing, LendingClub reports rates starting at 7.88% with national averages for personal loans being at 11.43% and credit cards at 13.64%.  So why not check it out?

Already use LendingClub or another peer-to-peer lending service?  Tell us about it in the comments below…

Source: TechCrunch

The global credit crunch may mean an opportunity for new lending strategies, such as peer to peer lending.  Banks are facing huge losses and the lack of transparency has made it hard for banks to lend between each other, opening the door for a newer, more direct type of lending, known as peer to peer lending.

Peer-to-peer, (or person-to-person) lending is just what it’s name implies.  You loan money to another person, with a third party acting as the intermediary.  The key to doing it this way is the opportunity to get a better return on money you lend, or a better rate on the money you borrow.

There is a downside.  Just as with traditional lending, sometimes people will default on loans.  The intermediary should do some kind of background check on those seeking money.  For instance, Lending Club currently requires a FICO score of 660, among other criteria to loan people money.  You’ll have to check with the intermediary to see exactly what the details currently are.

There’s a even a global twist to this.  Kiva.com is a site that coordinates loans between lenders and businesses in developing countries.  What makes it interesting is that lenders can pick individuals they want to help.  I’m not sure on the returns, but one is likely knowing that you’re helping develop an economy in troubled times.

No matter what, peer to peer lending is expected to grow dramatically.  With that kind of growth and better returns possible, peer to peer lending just might be the future of how we loan and borrow money.

Have you tried peer to peer lending? Any good or bad experiences?  Let us know in the comments below.  You can check out Lending Club here.