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Lending & Profit Sharing
LendingClub is a publicly-listed peer-to-peer lending platform, providing opportunities in the consumer loans space.
Quality of Offerings
Quantity of Offerings
Liquidity & Cash Flow
Risk & Diversification
Alts for All Score
4 - Good

LendingClub (NYSE: LC, $350M market cap) is a peer-to-peer lending platform offering investors the opportunity to invest in consumer loans. The site lets investors diversify across a variety of loans, which can be broken down to partial shares in increments as low as $25. LendingClub also provides a bevy of features, most notably automated investing and different account options, that provide additional flexibility to all classes of investors.

For as little as $25, investors can buy a stake (each stake referred to as a “Note”) in 3-to-5-year loans falling within three levels of risk, with higher returns offered through levels with greater inherent risk. It should be noted, though, that before investing in any opportunities listed on the site there is a required initial deposit of $1,000. LendingClub's Note platform has delivered 4-7% historical returns with a low correlation to the stock market, and new consumer access to a fixed-income alternative where investors don’t need to wait until a maturity date to receive their principal. Investors can proactively choose the individual investments within their portfolio under the manual investing option or choose a general strategy whereby the platform automates a corresponding portfolio selection. With LendingClub, 99% of investors with more than 100 notes have earned positive returns.

Before giving any lending site consideration, it is essential that it is available in your state. LendingClub’s offerings are NOT available to residents in the following states: Alaska, Florida, New Mexico, New York, North Carolina, Ohio, and Pennsylvania. Competitors Prosper and Upstart follow state restrictions as well, but each prohibits a different list of states. For those in a prohibited state, LendingClub still lets investors access secondary stakes in Notes. In addition to verifying state access before looking at these sites, one should decide between investing directly in one of these sites or using an API such as LendingRobot and NSR Invest. The latter options charge a minimal fee for leveraging long-run lending data – paired with machine learning algorithms – to predict expected returns and diversify portfolios by fitting investors’ intended return profile and predicting default risk more accurately than the lending platforms themselves. 

For those looking to invest themselves, LendingClub’s platform includes comprehensive information regarding the loan’s interest rate, grade and sub-grade, loan amount, term, and loan purpose. LendingClub assigns a grade (A–C) and sub-grade (1-5) to each Note, reflecting LendingClub’s assessment of the credit risk of the corresponding loan. Once an account is funded, there is a $25 minimum investment per Note and a 1% fee on each investment. Both online and mobile platforms offer easy-to-use loan borrowing or investing options to apply within minutes with limited restrictions and options to connect with bank accounts to receive cash immediately after transactions. After each payment period, Lending Club stores your earned money instead of automatically reinvesting it; the user then gets the option to deposit the earnings or reinvest them. LendingClub offers regular investing accounts as well as a retirement option involving the traditional IRA, Roth IRA, SIMPLE, and SEP IRAs.

Investments on the site fall within two categories – automatic and manual – as outlined in the following graphic. 

Source: LendingClub

With the manual investing option, LendingClub offers investors an opportunity to potentially reap higher returns than many fixed income portfolios, though this does come with a strong caveat of significant due diligence as well as the difficulty presented by predicting that a loan will default.

Investors should also understand the borrower’s side of the platform, as those that borrow from LendingClub’s platform must have a minimum credit score of 600 and pay an APR of between 6.95% and 35% with a loan amount between $1,000 and $40,000. Borrowers are primarily small-business loans and the average income of a borrower is $84,000. Compared with its competitor Prosper, these numbers for LendingClub are slightly lower in terms of average income (84k vs 89k) and minimum credit score (600 vs 640). LendingClub’s origination fee of 1-6% is similar to the 2.41-5% cut taken by Prosper.

For those looking to invest personally, automatically, or with the help of an API, LendingClub provides a wide set of available opportunities along with an enduring brand name. It shares many similarities with Prosper, its leading competitor, serving as a quality option for diversification in the form of loans


  • LendingClub has a quality brand name and over a decade of experience executing peer-to-peer financings.
  • The site offers significant flexibility in terms of investment and account options. Investment options include personal, automatic, and API investments, while account options include individual accounts, retirement accounts, joint accounts, custodial accounts or trusts, and corporate accounts.
  • The site also offers flexibility on individual investments, using simple risk criteria to break down default risk by levels and making use of a low $25 minimum in order to let investors pick and choose small stakes in a variety of loans.
  • Unlike most fixed-income instruments, which provide a coupon at best, LendingClub lets investors start receiving parts of their principle before maturity.


  • Lending returns typically fall short relative to other options within the alternative investment ecosystem, while also representing default risk, which can have severe ramifications for those making large investments through the site. This risk is partially mitigated by the $25 minimum for Notes, which lets investors invest in a large number of loans, but does little to address the limited upside inherent to such offerings.
  • As with other lending sites, LendingRobot is restricted in certain states, so may not be available if you live in Alaska, Florida, New Mexico, New York, North Carolina, Ohio, or Pennsylvania.