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Business Operations Business Models

How Does LendingClub Make Money (Business and Revenue Model)

The LendingClub business model

How Does LendingClub Make Money?
Here’s what you should know:
  • What is LendingClub, and how does LendingClub work?
  • How does LendingClub make money?
  • Origination Fees (from Borrowers)
  • Service Fees (from Investors)
  • Interest Income
  • LendingClub’s Subsidiaries, Acquisitions, and Exits
  • LendingClub’s profit and revenue
  • What is the LendingClub business and revenue model?
  • LendingClub’s funding and market cap

How does LendingClub make money? Here is a full, in depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the LendingClub business model, their profit and revenue, and how LendingClub works.

What is LendingClub, and how does LendingClub work?

LendingClub is a peer to peer lending company that allows borrowers to access unsecured personal loans between $1,000 to $40,000.

Founded in 2006 by Renaud Laplanche, LendingClub began trading on the New York Stock Exchange (NYSE) on December 11, 2014, under the ticker symbol “LC”.

Since that time, LendingClub now has more than $12.4 billion in assets under management (AUM).

How LendingClub works is: To apply for a LendingClub loan, users can first start by heading over to their website, or by downloading their mobile app on Apple Store or Google Play.

Once there, users can quickly apply by telling LendingClub how much their looking to borrow, what the funds will be used for, and a bit of personal information about themselves. Once that’s done, users will then receive loan offers (if any) where they can choose the rate, terms, and repayment amount that best suits them. From there, they will receive the loan amount in their bank account within two (2) days.

Some of LendingClub’s competitors include Upstart, Prosper, LendingTree, Avant, and other personal loan marketplace lenders.

LendingClub App in Apple App Store | LendingClub Business Model | How Does LendingClub Make Money? | How Does LendingClub Work?
Source: Apple App Store | LendingClub

How does LendingClub make money?

According to LendingClub, LendingClub had over $10.3 billion in total loan originations in 2021 and more than $12.4 billion in assets under management (AUM) in total.

So how does LendingClub make money off of all these loans and assets under management (AUM)?

Below is a breakdown of how much money LendingClub makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 3 ways of how LendingClub makes money (in 2022):

LendingClub has a revenue model that makes money in three (3) ways – origination fees from borrowers, service fees from investors, and interest income.

#1. Origination Fees (from Borrowers)

LendingClub makes a little over half of its money from origination fees paid to from borrowers. In fact, $416.8 million, or 50.9% of LendingClub’s total revenue came from origination fees in 2021.

As noted above, LendingClub originated more than $10.3 billion in loans in 2021 alone. Of which, LendingClub collected between a 2% to 6% fee on all of it. As you can see below.

LendingClub Fees:

  • Origination Fee: 2% to 6% of borrowers’ loan amount (based on their credit rating)
LendingClub Fees and LendingClub Investor Fees | LendingClub Business Model | How Does LendingClub Make Money? | How Does LendingClub Work?
Source: LendingClub

Note: Origination fees, along with service fees and gains on sales of the loans revenue are all a part of LendingClub’s “marketplace revenue”. Which when combined, collectively generated $578.6 million of LendingClub’s $818.6 million in revenue.

#2. Service Fees (from Investors)

In addition to origination fees, another fee LendingClub makes money from is service fees paid by the investors. Which, in 2021, generated an additional $87.6 million in revenue for LendingClub.

LendingClub Investor Fees:

  • Service Fee: 1% of all borrower payment amounts

Note: On each loan, LendingClub makes money from both the borrowers and the lenders.

#3. Interest Income

Aside from selling loans to investors for a fee, LendingClub also makes money from directly keeping a portion of those loans for themselves. Resulting in $212.8 million in interest revenue for LendingClub in 2021.

Of the more than $12.4 billion in assets under management (AUM), $2.026 billion of that is Loans HFI (held for investment) by LendingClub Bank. Meaning, they kept these loans for themselves and didn’t sell them to investors.

LendingClub Interest Rates:

  • 6.34% to 35.89% APR
LendingClub Interest Rates | LendingClub Business Model | How Does LendingClub Make Money? | How Does LendingClub Work?
Source: LendingClub

Note: The factors which determine a borrowers APR is based on their credit history and rating, the amount they want to borrow, and their debt-to-income ratio. Which you can see above.

LendingClub’s Subsidiaries, Acquisitions, and Exits

To date, the LendingClub Corporation has made a total of 2 acquisitions, 1 investment, and 1 successful exit.

Mergers and acquisitions business model
Source: Crunchbase | LendingClub

LendingClub’s profit and revenue

In 2021, LendingClub reported $818.6 million in revenue.

Note: Because the LendingClub Corporation is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of LendingClub’s publicly released financial reports, including annual reports, through LendingClub’s investor section on their website.

What is the LendingClub business and revenue model?

LendingClub makes money through a few revenue models that they combine within their company, they are:

  • Two sided Marketplace business model
  • Fee for service (FFS) business model
  • Interest revenue model
  • Mergers & acquisitions (M&A) business model

LendingClub’s funding and market cap

According to LendingClub’s Crunchbase profile, LendingClub has raised $392.2 million over 15 rounds and has a market cap of $1.31 billion as of May 2022.