For a few weeks now I have been noticing this. I login and browse available loans at Lending Club and see many brand new loans that are about 75% funded.
Take a look at the graphic above. I took the screen shot this morning when this loan had been on the Lending Club platform for about 20 minutes. Already it was 75% funded by one investor.
There are Caps in Place for Large Investors
I spoke with Scott Sanborn, the Chief Marketing Officer at Lending Club, about this. He was aware that there are a small number of large investors using the retail platform. But he explained that these large investors must adhere to certain caps that limit how much they can invest per loan. This limit appears to be 75% because when I went through the new loans today there were a handful that were right at 75% funded with just one investor.
Sanborn made it clear that Lending Club wants a level playing field for small and large investors alike and they make sure that no one investor can fully invest in a loan that takes it off the platform immediately. So far it seems to be working. I have been watching these loans closely over the last 24 hours and all of the loans that this large investor has chosen (assuming they are all the same investor) are still less than 90% funded.
Even with the huge increase in investor funds recently almost all loans at Lending Club stay on the platform for at least 24 hours and the majority for at least a week. But once a loan is over seven days old the LC Advisor funds can take over and loans can be fully funded very quickly. This happens to a large extent in the first few days of every month.
Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.