US leading marketplace lending platforms
Lending Deposit gives you an overview of the size and likely future returns of the leading peer-to-peer or marketplace lending platforms based in the United States.
Summary of leading US marketplace lending platforms
The following table gives an overview of the total volume of the loans funded by the major platforms of the US. The data is as of December 2015 and are of 12-months forward-looking returns, net of risk costs and platform fees.
|Name||Volume to date in USD million||Restrictions||Expected annual return||Riskiness||Active since||Type of loans|
|Lending Club||13403||Medium||8.5%||Low||2006||Mainly consumer loans|
|Prosper||5000||Medium||9.3%||Medium||2006||Mainly consumer loans|
|SoFi||4000||High||7.5%||Medium||2011||Mainly consumer loans|
|Funding Circle||1500||High||10.5%||Low||2011||Small business loans|
Lending Club is the Western world’s largest online lending marketplace, facilitating personal loans, business loans, and financing for elective medical procedures and K-12 education and tutoring. Launched in 2006 it is one of Forbes’ America’s Most Promising Companies three years in a row. Given the very wide variety of loan-picking options, portfolio returns will vary widely with gross returns between 4% and 15%. Our estimate is for average returns, of an ideally diversified portfolio after standard risk costs and platform fees. For investors outside the US the minimum investment amount is 100.000$.
Prosper Marketplace is a leading online marketplace for consumer credit. More than $5 billion in personal loans have been originated through the Prosper platform in total, mainly used for Credit debt consolidation and major consumer purchases.
Prospers profile is similar to Lending Clubs but with slightly higher risks and returns. Therefore, in the base-case scenario (not accounting for a major crisis), our average return estimate is somewhat higher than for Lending Club. To invest via Prosper Investors must have residency or a registered company in the US.
Funding Circle is a of leading online marketplace lender exclusively focused on funding small businesses. Funding Circle provides small businesses with access to fast and transparent finance. With loan sums of up to 1 million $ Funding Circle is a serious competitor for the traditiona credit institutions. But also for investors Funding Circle offering a 10% average return is a very reasonable option. To invest via Funding Circle individuals and institutions have to be accredited investors.
SoFi is a leader in marketplace lending and the largest provider of student loan refinancing, with over $2 Billion in loans issued. SoFi supports ambitious professionals accelerate their success with student loan refinancing, mortgages, mortgage refinancing, and personal loans. For lenders, SoFi can be complicated as only accredited investors are allowed to invest on SoFi.
Fundrise is the leading online real estate investment and crowdfunding platform. Starting in 2010, Fundrise was the first company to facilitate the investment in commercial real estate for private investors. Fundrise is very selective in the submission process, but in return finances all projects in advance and then lets investors invest in it. As with most American platforms, only accredited investors are accepted at Fundrise. With a minimum investment of 5000$ per project, building a diversified portfolio can be very costly.
The Volume data given in the tables are either directly taken from the respective website or estimates from us if there is no data.
Under “Restrictions” we evaluate the complications European investors face investing in the respective platform such as Currency risks, legal restrictions and the minimum investment size.
- Expected annual return
The given expected return is directly taken from the platforms websites; only in the case that there is not information provided do we estimate the number.
Under “Riskiness” we try to give the investor an idea how risky the investment is given historical default rates and the loan type. Different loan types carry different risks: Asset-backed loans are for example less risky than personal loans which are especially affected in times of economic instability.
- Type of loans
Indicates the biggest group of loan types the respective platform deals with.