Lenders who enroll with Lending Club browse borrower profiles and requests on Lending Club's Web site and choose loan requests they'd like to fund. The interest rates on those loans vary depending on the borrower's credit score; they range from 7.37% to 19.36%. Those interest payments go directly to lenders, who pay Lending Club a 1% service charge.
"Currently, 25% of loan requests are for financing small businesses," says CEO Renaud Laplanche. "There's a connection between the lenders and the borrowers, where they can anonymously ask each other questions and talk about where the money will go before they become partners. And because the process is online, it's quicker and more efficient than going through the banks."
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