Online peer-to-peer (P2P) lending websites, often referred to as “Shadow Lenders”, have gained significant traction since the credit crunch resulting from the 2008 financial crisis. The purpose of these rapidly-growing websites is to facilitate loans of under $35,000 between borrowers and investors. The result is a transparent loan platform where individual investors can determine a borrower’s credit worthiness and partially or fully fund a loan at an attractive interest rate. This slide deck offers background on the P2P lending industry and takes a closer look at the borrower experience by profiling two leading firms in the space – Prosper and Lending Club. Five key takeaways and tips for P2P lenders are also highlighted.

1. COPYRIGHT 2013 CORPORATE INSIGHT, INC.
PEER-TO-PEER LENDING
EXAMINING THE INDUSTRY AND THE BORROWER EXPERIENCE
AUTHOR: JOHN GREENOUGH
PUBLISHED: OCTOBER 2013

2. TABLE OF CONTENTS
2
 Introduction to P2P Lending
 P2P Lender Profiles
o Prosper
o Lending Club
 Prosper vs. Lending Club
 Five Key Takeaways
 Corporate Insight Thought Leadership
 About Corporate Insight
 About the Author

3. INTRODUCTION TO P2P LENDING
3
INTRODUCTION

4. 4
INTRODUCTION P2P LENDING INDUSTRY OVERVIEW
Online peer-to-peer (P2P) lending websites, often
referred to as “Shadow Lenders”, have gained
significant traction since the credit crunch resulting
from the 2008 financial crisis. The purpose of these
rapidly-growing websites is to facilitate loans of
under $35,000 between borrowers and investors.
The result is a transparent loan platform where
individual investors can determine a borrower’s
credit worthiness and partially or fully fund a loan at
an attractive interest rate.
Investors and borrowers alike have found significant
value in these online platforms, as they allow them
to bypass banks when conducting business. Top P2P
lending platforms have been valued at over $1
billion and continue to grow.* Collectively, the top
two firms originated $871 million in loans last year.
Let’s take a closer look at the borrower experience,
by examining the enrollment and loan processes.
Source: Dugan, Ianthe. "Consumers Find Investors Eager to Make 'Peer-to-Peer' Loans - WSJ.com." The Wall Street Journal - Breaking
News, Business, Financial and Economic News, World News & Video - Wall Street Journal - Wsj.com. N.p., n.d. Web. 6 Aug. 2013.
<http://online.wsj.com/article/SB100014241278873237408045786017737

5. BORROWER ENROLLMENT PROCESS
Borrower signs up for the service by providing basic
information
P2P lending platform runs credit check to ensure borrower
meets basic borrowing requirements
Borrower is granted access to create a loan profile on P2P
website
Website verifies borrower’s identity by requesting the
borrower to mail copies of Social Security card, W-2 form,
and other forms of identification
5
INTRODUCTION
The borrower enrollment experience on a P2P lending site is
straightforward but firms perform their due diligence:

6. BORROWER LOAN PROCESS
6
INTRODUCTION
Borrower’s loan profile is published on the website for
investors to crowdfund, often in small increments
Once fully funded, a third party bank issues the loan
to the borrower and creates sliced securities for each
investor to collect returns from the borrower
Borrower makes payments back to P2P lending
platform, which re-issues funds to security holders
Once enrolled, borrowers may publish a loan to the firms’ online platforms:

7. P2P LENDER PROFILES
7
• Prosper
• Lending Club

8. PROSPER COMPANY PROFILE AND KEY STATISTICS
Prosper:
Founded in 2006 as First P2P Lending Platform
$ Amount Funded to Date $500,000,000*
# of Members 1.9 million*
APR** 6.73%-35.36%
Average ROI 9.09%
Loan Amount Minimum $2,000
Loan Amount Maximum $35,000
Loan Term 3-5 Years
Average Default Rate 5.8%
8
PROSPER
*As of September 2013
**APR is determined by Prosper based on credit worthiness. Please see a full list of APR’s based Prosper
Rating and average default rates of each rating on next slide.
Prosper Default Rates Based on
Prosper Rating**

9. RATES AND FEES
9
PROSPER
Borrower Rate and APR Based on Prosper Rating
 Prosper assigns
applicants an APR
based on credit
worthiness and
informs them of their
Prosper Rating.
 A closing fee for the
loan is determined by
the individual’s
Prosper Rating.
 The firm charges
lenders a 1% annual
loan servicing fee.

10. ENROLLMENT
 Prosper’s enrollment process is similar to applying for a credit card online:
o Applicant initially enters: amount of the loan, how they will use the loan and their
current credit quality.
o Application requires basic personal information: name, date of birth, mailing
address, employment information, etc.
o Prosper runs a credit check and instantly approves or rejects applicants.
10
PROSPER
Step 1 of Loan Application Step 2 of Loan Application

11. LOAN PROFILES
11
PROSPER
Provides detailed
information about
borrowers credit
history and current
employment
Description of loan
shows personal
statement of what the
loan will be used for
and why borrower
considers themselves
to be a good
candidate
Loan Profile as Posted on Prosper Loan Board
If loan is 70% funded,
borrower can choose
to partially fund the
loan at the end of the
listing period
The borrower fills out a loan profile which is posted to a loan board for investors to
examine and potentially fund:
Highlights of the main
features and terms of
the loan
States primary
borrower information;
Purpose of Loan, Rate,
Monthly Payment

12. ONLINE TOOLS
The Prosper Borrowing page allows users to view/edit their current loan listing,
make a payment, complete the Prosper verification process to receive the loan,
and create a new loan listing.
12
PROSPER
Borrower Rate and APR Based on Prosper Rating

13. LENDING CLUB COMPANY PROFILE
13
LENDINGCLUB
Lending Club
Founded in 2007
$ Amount Funded to Date $2,595,182,275
APR* 6.03%-28.69%
Average ROI 5.57%-9.16%
Loan Amount Minimum $1,000
Loan Amount Maximum $35,000
Loan Term 3-5 Years
Average Default Rate 4%
Most Common Reasons for Loan**
*As of August 2013
**Credit Card Refinance/Debt Consolidation accounts for 80.67% as reason for loan

14. RATES AND FEES
 Total loans issued by Lending
Club has skyrocketed since 2011
and continues to grow.
 1%-5% origination fee is charged
based on borrowers loan
grade/term.
 1% servicing fee is charged to
the investor.
14
LENDINGCLUB
Loans Issued by Lending Club since Foundation
Lending Club Ratings and Associated APRs

15. ENROLLMENT
 Enrollment is fast and easy:
o Borrower’s required to
provide basic personal
information
o Credit check is run on all
applicants.
o If approved, Lending Club
instantly shows the rate the
borrower qualifies for
15
LENDINGCLUB
Lending Club Application Approval Page

16. Lending Club Borrower Profile as Listed on Loan Board (Truncated)
LOAN PROFILE
16
P2PLENDERPROFILES:THELENDINGCLUB
Credit profile
provides detailed
credit information,
almost identical to
Prosper
Q&A adds a unique
feature, which Prosper
lacks, for investors to
ask borrowers about
the purpose of the
loan and their
financial history
Although aesthetically less pleasing than Prosper, the Lending Club profile provides
more digestible information, as well as an added Q&A section for investors to ask
borrowers questions.
Income is broken
down by month and is
specific, giving the
investor a
comprehensible view
of if borrower will be
able to pay off loan
monthly
Current funding is
broken down into a
dollar amount and
lists the number of
investors so far

17. VS.
17

18. RATES AND FEES
 Prosper and Lending Club offer nearly identical APR’s and servicing fees.
 Prosper’s closing fee is advertised as being slightly higher than The Lending
Club’s origination fee.
 Advantage: The Lending Club
18
PROSPERVS.LENDINGCLUB
Rates/Fees The Lending Club Prosper
APR 6.03%-28.69% 6.73%-35.36%
Origination/Closing Fee 1%-5% 2%-5%
Investor Fee 1% 1%

19. ONLINE USER EXPERIENCE
 Lending Club provides more transparent information to both the borrower
and lender about the loan process, borrower requirements and associated
fees on its public site.
 While Prosper’s site is more aesthetically pleasing, Lending Club provides a
more detailed and digestible loan profile which may attract more investors,
resulting in potentially better rates for borrowers.
 Advantage: Lending Club
19
PROSPERVS.LENDINGCLUB
Feature Lending Club Prosper
Profile Set Up ✔
Profile Management ✔
Loan Profile ✔
Public Site Information ✔
Navigation ✔

20. CORPORATE STRUCTURE
 Lending Club is currently valued at $1.55 billion.
 Prosper recently raised $25 million in a new round of investment with backers
that included BlackRock.
 Lending Club’s backers and Board of Directors include well-known individuals,
such as Larry Summers, John Mack, and Google, which may entice users based
on their leadership’s prior success in the financial markets.
 Advantage: Lending Club
20
PROSPERVS.LENDINGCLUB

21. FINAL VERDICT
 Lending Club provides a slightly better user experience and lower rates/fees
than Prosper. What really tips the scales in Lending Club’s favor is the firm’s
strong corporate structure and growth prospects as they are expected to go
public in the next year.
 Leader: Lending Club
21
PROSPERVS.LENDINGCLUB

22. KEY TAKEAWAYS
22

23. FIVE KEY TAKEAWAYS
23
KEYTAKEAWAYS
1. Lending Club and Prosper offer a viable option for qualified borrowers to
receive a personal loan away from the traditional brick-and-mortar
institutions.
2. Shadow lending websites provide a one-stop-shop for borrowers to receive
their loan, while providing the tools necessary to manage that loan.
3. From a borrower’s perspective, it’s very difficult to be approved to join
either website. Lending Club, for example, only accepts roughly 10% of all
applicants. While this is beneficial for investors and those who qualify for
these loans, by no means will these websites replace ‘pay-day loan’
boutiques.
4. It seems unlikely for shadow lenders to move beyond loans over $35,000
without becoming heavily regulated. With an influx of investors joining
because of the high ROI, P2P Lenders must ensure that borrower
requirements do not dip to meet the demand.
5. As many critics cite, the growth of these websites will help to alleviate any
predatory loan practices by offering fair rates and not imposing substantial
fees.

24. CORPORATE INSIGHT THOUGHT LEADERSHIP
24
Tablet-Friendly Web Design: Best Practices for Financial Services
The study examines the tablet-friendly website features provided by four leading firms across
financial services and provides recommendations for financial services firms building tablet-
optimized websites.
Next-Generation Investing: Financial Startups and the Future of Financial Advice
CI tracks over 100 startups that covers a wide range of new ideas across financial advice and
investing. This study will focus on each idea, analyze compares them to what established financial
institutions offer and examine the potential impact on the industry. Download the study preview!
Alternative Investments: How Asset Management Firms Frame Their Funds
This whitepaper examines the online content leading firms are using to educate investors and
financial advisors about alternative investments and takes a look ahead to what's next for these
products.
Facebook Marketing Campaigns - Social Media Initiatives in the Insurance Industry
This slide deck highlights some of the engaging Facebook marketing campaigns initiated by P&C
Insurance Monitor firms this year and offers a few Facebook marketing tips for insurers.
2013 Mobile Finance Trends and Innovations
This slide deck includes commentary on mobile developments, key takeaways for financial services
firms and thoughts on what’s next for mobile finance.

25. ABOUT CORPORATE INSIGHT
Connect With Us
Corporate Insight provides competitive intelligence and user experience research to the nation’s leading
financial institutions. For over 20 years, the firm has tracked technological developments in the financial
services industry, identifying best practices in online banking and investing, online insurance, mobile
finance, active trading platforms, social media and other emerging areas. There are no assumptions in
Corporate Insight’s work – we use live accounts at all of the firms we research, providing our clients with
unparalleled, unbiased intelligence on the competition.
Corporate Insight welcomes the opportunity to speak with the media. If you are interested in citing our
research or would like to schedule an interview with one of our analysts, please Joshua Grandy, Director
of Public Relations, at 646-876-7524 or pr@corporateinsight.com.
Media Inquiries
25
DOUG MILLER
Director of Research
Banking, Brokerage and Credit Cards
646-454-2664
dmiller@corporateinsight.com.
JOSHUA GRANDY
Director of Public Relations
646-876-7526
pr@corporateinsight.com

26. ABOUT THE AUTHORABOUTTHEAUTHOR
JOHN GREENOUGH
RESEARCH ASSOCIATE
BANK MONITOR AND CREDIT CARD MONITOR
John Greenough is a Research Associate for
Corporate Insight’s Bank Monitor and Credit Card
Monitor research services. John focuses on tracking
the online user experience, tools and products
offered by leading banks and credit card issuers. This
slide deck is the result of extensive research he
performed into the P2P lending industry and the
borrower experience leading firms in the space are
offering online.
Bank Monitor & Credit Card Monitor are service marks of Corporate Insight, Inc.; all rights reserved. 26