This document discusses how peer-to-peer lending platforms like Lending Club are transforming banking by allowing individuals to directly invest in loans to borrowers. It outlines benefits for both borrowers and investors, such as lower rates and returns. While concerns about safety exist, these platforms address problems with traditional loans like denials, high rates, fees and provide friendly service. The business model connects borrowers and investors through the platform, which earns fees. Major platforms like Lending Club have experienced rapid growth and traction but also face risks from defaults, interest rates, and lack of government protections.
3. Problem
is it safe?
5 problems borrowers face:
• Applications are denied
• Interest rates can be really high
• Loan payments can be expensive
• Hidden fees and penalties
• Calls to much
4. Benefit for borrowers
is a great option
5 decisions for borrowers:
• Easy online application
• Low fixed rates
• Fixed monthly payments and flexible terms
• No hidden fees and prepayment penalties
• Friendly service
5. Benefit for investors
and efficiency
5 decisions for investors:
• Returns to high
• Simple and straightforward
• Portfolio analysis
• Loan analysis
• Auto sell feature
6. How its work
peer-to-peer lending
Borrowers get funded
Investors build a portfolio
Borrowers apply for loans
Investors open an account
Borrowers repay automatically
Investors earn & reinvest
11. Business model
Lender Lender Lender
BorrowerWeb bank
Notes, providing for payments equal to
monthly payments received by Lending Club
from borrower, net of 1% service charge
Purchase price of Notes, designed
to fund a selected member loan
Monthly payments of
principal and interest on
corresponding member loan
Funding of selected
corresponding
member loan
Loan proceeds
Corresponding member loan
promissory note
Non-recourse assignment of
corresponding member loan
promissory note