As an investor, you are not loaning money directly to borrowers. Instead, you are investing in a Member Payment Dependent Note, or “Note,” which corresponds to a member loan made through the LendingClub platform.1 If you hold Notes in your LendingClub account, LendingClub will distribute to you your pro rata portion of the principal and interest payments, if any, LendingClub receives from borrowers on the corresponding loans, net of its 1.00% service charge.
LendingClub assigns a grade (A-D) to each Note, reflective of our credit risk assessment of the corresponding loan. The stated interest rate on each Note varies depending on the credit risk of the corresponding loan. Notes with greater credit risk are assigned higher interest rates. Investors may use loan grades and other criteria to build a portfolio of Notes that matches their risk tolerance and investment objectives.*
1 The Notes are described in a Prospectus filed with the Securities and Exchange Commission. You should read the Prospectus before investing. The information here is not intended to be investment advice, guidance, or a guarantee of the performance of any Note or portfolio. LendingClub Notes are not guaranteed or insured and investors may have negative returns.