Published on April 5th, 2013 | by P2P Lending Advice0
Google announces a $125 million investment in Lending Club
The online lending sector, which was started by individual investors in 2006, has seen rapid growth over the last few years. Its popularity stems from healthy returns for small investors, low cost loans for borrowers and a drop in investment from traditional banking institutions because of the economic slowdown.
As a result Google announced in May 2013 that they will be investing $125 million in Lending Club, one of the world’s leading peer-to-peer (p2p) online companies, based in San Francisco. The value of Lending Club’s loans has been increasing at 9% each month. In May the company funded $148 million in loans and this is predicted to bring the total value of online loans in 2013 to $2 billion.
At the moment the company is mostly catering for private individuals who are swapping their more expensive debts in credit cards to a lower interest rate three- to five-year loan facilitated by Lending Club. With lower running costs Lending Club can offer borrowers a rate of 14%, well below the standard charge of 18%. Renaud Laplanche, Lending Club CEO, wants to expand beyond consumer loans into small businesses, and later, international loans.
Small investors are attracted by the interest rates of on average 8 to 9% and the fact they can minimise defaulting risks by spreading their investments over a number of borrowers. In fact investing this way is so popular that, on average, it only takes a new loan 16 hours before it is funded through Lending Club. For more information please visit the Lending Club website.