Enjoy the Return and Watch for Unemployment
Those of us interested in marketplace lending have recently observed many pejorative headlines about P2P lending platforms. These headlines mostly reported on Lending Club’s recent difficulties, but also criticized other platforms and the P2P lending model more broadly. Very few people anticipated this kind of a problem less than a year ago as investors were competing for allocations on platforms.
More often than not, it has been very challenging to purchase loans, particularly on the more established platforms. Indeed, the limiting factor for the growth of volumes has been the lack of borrowers. Platforms have had to compete with each other and ramp up marketing expenditure in order to attract borrowers. Even the biggest skeptics of the marketplace lending sector would not have imagined the extent to which the situation would change in 2016. In Q1 2016, leading platforms significantly decreased originations (Prosper, 12 percent; Avant, 27 percent) — and this was only the beginning.
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