From the S-1:
Our Solution
We are the world’s largest online marketplace connecting borrowers and investors. Our technology platform supports this innovative marketplace model to efficiently connect the supply and demand of capital. Our marketplace also substantially reduces the need for physical infrastructure and improves convenience and automation, increasing efficiency, reducing manual processes and improving the overall borrower and investor experience.
Our borrowers consist of consumers and small businesses seeking to obtain loans for one of the many uses allowed under our product offerings. Our goal is to form long-term relationships with consumers and small businesses, facilitating their access to an array of financial products that meet their evolving needs over time.
Benefits to Borrowers
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| Access to Affordable Credit. Our innovative marketplace model, online delivery and process automation enable us to offer borrowers interest rates that are generally lower on average than the rates charged by traditional banks on credit cards or installment loans. Based on responses from 21,051 borrowers in a survey of 103,439 randomly selected borrowers conducted by us during the nine months ended September 30, 2014, borrowers who received a loan to consolidate existing debt or pay off their credit card balance reported that the interest rate on the loan they received through our marketplace was on average 680 basis points lower than the rate on their outstanding debt or credit card balances, representing a 32% savings.
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| Superior Borrower Experience. We offer a fast and easy-to-use online application process and provide borrowers with access to live support and online tools throughout the process and for the lifetime of the loan. Based on a review of the credit performance of borrowers who received a loan from January 2013 through May 2014 to consolidate existing debt or pay off their credit card balance, such borrowers experienced an average increase of 23 points in their FICO score within three months after obtaining their loan, which we believe is in part attributable to a reduction in interest rate and a reduction in the borrower’s total revolving balance. Our goal is to form long-term relationships with borrowers, facilitating their access to an array of financial products that meet their evolving needs over time.
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| Transparency and Fairness. All of the installment loans offered through our marketplace feature a fixed rate that is clearly disclosed to the borrower during the application process, with fixed monthly payments, no hidden fees and the ability to prepay the balance at any time without penalty. Our platform utilizes a computerized, rules-based engine for credit decisioning, which removes the human bias associated with reviewing applications. We also keep borrowers informed throughout the process.
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| Fast and Efficient Decisioning. We leverage online data and technology to quickly assess risk, determine a credit rating and assign appropriate interest rates. Qualified applicants receive offers in just minutes and can evaluate loan options without impacting their credit score.
| Benefits to Investors
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| Access to a New Asset Class. All investors can invest in personal loans originated through our standard program. Additionally, qualified investors can invest in loans originated through our custom program, including small business loans, in private transactions. These asset classes have historically been entirely funded and held by financial institutions or large institutional investors on a limited basis. We offer all investors equal access to standard program loans through our marketplace and offer qualified private investors access to custom program loans.
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| Attractive Risk-Adjusted Returns. We have historically offered investors attractive risk-adjusted returns across loans offered through our marketplace. We screen loan applicants based on proprietary credit decisioning and scoring models and also factor in historical borrower performance in setting interest rates. We also segment loans into $25 increments to enable diversification across different borrowers and investment criteria.
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| Transparency. We provide investors with transparency and choice in building their loan portfolios. For each standard program loan, investors can examine credit attributes from the borrower’s credit report and borrower-reported attributes prior to investing in a loan and can monitor ongoing loan performance. We also provide access to credit profile data on each approved loan as well as all of the historical performance data for every loan ever invested in through our marketplace. We specifically indicate the information that is verified on our website.
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| Easy-to-Use Tools. We provide investors with tools to easily build or modify customized and diversified portfolios by selecting loans tailored to their investment objectives and assess the returns on their portfolios. Additionally, investors can enroll in automated investing, a free service that automatically invests any available cash in loans according to investor-specified criteria and allocation targets.
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