Is Lending Club Going to Become a Balance Sheet Lender?July 29, 2016 | By: Sean Murray
An email that Lending Cub sent out to many of their investors yesterday was also published on their blog. In it, CEO Scott Sanborn addressed the following questions, ones they’ve been hearing more frequently these days:
“Are you going to become a balance sheet lender, just like a regular bank? Has Lending Club’s business model changed?”
“Let me be very clear,” Sanborn wrote in response, “Lending Club is committed to the marketplace model and we do not plan to become a balance sheet or ‘hybrid’ lender. Our mission of connecting borrowers and investors has not changed.”
The industry around them however, is changing. Goldman Sachs, for example, is expected to introduce a non-marketplace consumer lending division this Fall to compete against companies like Lending Club.
Sanborn also wrote that there may be times that they use their balance sheet. “One example would be to enable test programs. Another situation would be to bridge imbalances on the platform,” he wrote. “In plain English, this means that if there is a timing mismatch resulting in more borrower demand for loans than available investor capital, we’ll consider investing in and holding the loans with the plan to sell them to investors in short order.”
So the answer is no, Lending Club is not becoming a balance sheet lender.Last modified: July 29, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.