by Peter Renton

LendAcademy.com









www.lendacademy.com

















1hls e-book ls provlded for lnformaLlon purposes only. lL ls noL lnLended Lo be flnanclal advlce,
you should always seek a professlonal before maklng any flnanclal declslons.

CopyrlghL 2013. All rlghLs reserved.

!"#$%&'(#)%"
1hls free e-book lnLroduces Lhe concepL of peer Lo peer lendlng Lo everyone. lL provldes some
background and hlsLory as well as descrlbes how Lhe process works for boLh lnvesLors and
borrowers. Whlle peer Lo peer lendlng ls now a global phenomenon Lhls book wlll be focuslng
on Lhe u.S. markeL ln parLlcular and how lL works here.

lf you have been curlous abouL peer Lo peer lendlng buL don'L really know where Lo begln Lhen
Lhls e-book ls for you. 1hls e-book wlll descrlbe ln deLall how peer Lo peer lendlng works and
Lhe requlremenLs for borrowers and lnvesLors Lo parLlclpaLe ln peer Lo peer lendlng ln Lhe u.S.

eer Lo peer lendlng ls an ldea whose Llme has come. We llve ln a hlghly sophlsLlcaLed and
lnLerconnecLed world yeL Lhe banklng sysLem ls sLlll based on a cenLurles old model. 1here ls no
need for borrowers Lo obLaln loans from a bank any more when Lhey can Lurn Lo Lhelr peers,
ofLen wlLh a lower lnLeresL raLe. 8orrowers can save money by Laklng ouL peer Lo peer loans
and lnvesLors can earn greaL reLurns on Lhelr money.

All Lhe daLa ln Lhls e-book ls currenL as of AugusL 2013.

+,-# ). /00$ #% /00$ 10"&)"23

eer Lo peer lendlng goes by many names. lL ls also called soclal lendlng, person-Lo-person
lendlng or p2p lendlng. lL can be deflned ln Lhls slmple way: lndlvlduals lendlng money Lo oLher
lndlvlduals wlLhouL a banklng lnLermedlary.

1he offlclal deflnlLlon from Wlklpedla ls a cerLaln breed of flnanclal LransacLlon
(prlmarlly lendlng and borrowlng, Lhough oLher more compllcaLed LransacLlons can be
faclllLaLed) whlch occurs dlrecLly beLween lndlvlduals or 'peers' wlLhouL Lhe lnLermedlaLlon of a
LradlLlonal flnanclal lnsLlLuLlon." 8aslcally, lL lnvolves people wlLh money (lnvesLors) lendlng Lo
people who need money (borrowers). Cbvlously Lhls ls someLhlng LhaL has Laken place slnce
Lhe lnvenLlon of money Lhousands of years ago.

1oday, wlLh Lhe exploslve growLh of Lhe lnLerneL and onllne soclal neLworks, Lhls concepL has
been broughL onllne. So now, borrowers can borrow money from people Lhey have never meL
and lnvesLors can lend money Lo many anonymous borrowers [usL based on Lhelr credlL
lnformaLlon. 1here are dozens of companles all over Lhe world enabllng peer Lo peer lendlng,
and ln Lhe unlLed SLaLes Lhere are Lwo esLabllshed companles: Lendlng Club and rosper.

1here are also many companles LhaL do whaL l call dlrecL peer Lo peer lendlng (dlrecL p2p).
1hese are prlmarlly for people who wanL Lo formallze a loan arrangemenL beLween frlends and
famlly. Companles ln Lhe u.S. dolng Lhls Loday are ZlmpleMoney, Lendlngkarma, naLlonal
lamlly MorLgage and many more. 1hey help seLup loan agreemenLs and manage Lhe fundlng
process for you. Whlle Lhese companles provlde a valuable servlce Lhe focus of Lhls e-book wlll
be on Lhe mass-markeL p2p lendlng slLes, Lendlng Club and rosper.

l also wanL Lo make a dlsLlncLlon beLween peer Lo peer lendlng and mlcroflnance. Mlcroflnance
Lyplcally deals wlLh very small loans slzes (under $1,000) and are usually run by non-proflL
organlzaLlons. l am a blg fan of mlcroflnance organlzaLlons llke klva (l loan money on klva) buL
Lhey serve a dlfferenL purpose and have dlfferenL goals from peer Lo peer lendlng organlzaLlons
llke Lendlng Club and rosper.
4 5,%$# 6).#%$7 %8 9":)"0 /;/ 10"&)"2

lL wasn'L unLll well afLer Lhe new mlllennlum began LhaL for proflL p2p lendlng began Lo emerge
onllne. ln 2003, Zopa launched ln Lhe u.k. as Lhe world's flrsL onllne p2p lender, and Lhey are
sLlll golng sLrong Loday as Lhe number one company ln Lhe u.k. markeL.

ln Lhe u.S., rosper began operaLlons ln lebruary 2006 and wlLhln 9 monLhs Lhey had garnered
100,000 members and funded $20 mllllon ln loans. 1hey had Lhe markeL Lo Lhemselves ln Lhe
uS unLll Lendlng Club launched ln May 2007 as a lacebook appllcaLlon. WlLhln a few monLhs
Lhey emerged as a sLandalone webslLe Lo compeLe dlrecLly agalnsL rosper.

<')0# /0$)%&.

8oLh rosper and Lendlng Club spenL some Llme ln quleL perlods" ln 2008 and 2009. 8y a quleL
perlod we mean LhaL Lhe companles sLlll operaLed buL Lhey dldn'L allow new money Lo come ln
from lnvesLors. 1hls was necessary because Lhe SecurlLles and Lxchange Commlsslon (SLC)
demanded LhaL Lhey reglsLer all Lhe loans on Lhelr plaLform as promlssory noLes wlLh Lhe
governmenL. Lendlng Club spenL abouL slx monLhs ln Lhelr quleL perlod from Aprll Lo CcLober
2008 and rosper spenL a llLLle longer from CcLober 2008 Lhrough !uly 2009. now, all noLes are
reglsLered wlLh Lhe SLC and all flnanclal resulLs for boLh companles are publlcly avallable. 1he
noLes for boLh companles are now offered by a prospecLus flled wlLh Lhe SLC.

/00$ #% /00$ 10"&)"2 ;=>

WlLh Lhe emergence from Lhelr quleL perlods, boLh Lendlng Club and rosper became more
focused on rlsk managemenL. 1he early loans made on rosper ln 2006 and 2007 dldn'L perform
well for lnvesLors aL all. MosL lnvesLors losL money, caused by Lhe hlgh defaulL raLes. Accordlng
Lo rosper's own sLaLlsLlcs page, [usL under 40 of loans lssued ln 2006 and 2007 defaulLed.
WlLh Lendlng Club Lhe numbers are sllghLly beLLer, buL sLlll noL good. Cf loans lssued before
Lhelr quleL perlod, around 24 of Lhem have defaulLed.

now, lf you look aL loans made ln Lhe flrsL year afLer Lhelr quleL perlod, Lhe defaulL raLes and
Lhe reLurns for lnvesLors are much beLLer. As of Lhls wrlLlng (mosL of Lhese loans are sLlll
ouLsLandlng), Lhe defaulL raLe for rosper loans lssued from !uly 2009 Lhrough !une 2010 ls [usL
over 3. lor Lendlng Club durlng Lhe same perlod, Lhelr defaulL raLe ls around 4. 1hls ls much
beLLer Lhan Lhey dld before Lhelr quleL perlod.

8oLh companles have added Lo Lhe aLLracLlveness of p2p lendlng by addlng addlLlonal
producLs" recenLly. ?ou can now lnvesL ln boLh one year and flve year loans on rosper, along
wlLh Lhe orlglnal Lhree year loans. Lendlng Club glves you Lhe cholce of Lhree year and flve year
loans and wlLh loan amounLs now up Lo $33,000.
+,7 ). /00$ #% /00$ 10"&)"2 ?0(%@)"2 /%A':-$3

eer Lo peer lendlng ls a rapldly growlng lndusLry. ln Lhe 12 monLhs ended !une 30, 2013 Lhe
LoLal amounL of money loaned by Lendlng Club and rosper was [usL under $1.3 bllllon. 1haL ls
around 193 growLh over Lhe precedlng 12 monLhs. Clearly, lL ls becomlng more popular all Lhe
Llme.

1o undersLand why peer Lo peer lendlng ls growlng so fasL, we need Lo look aL Lhe advanLages lL
provldes for boLh borrowers and lnvesLors.
?%$$%B0$.

1he flnanclal crlsls ln 2008 had a huge lmpacL on banks and flnanclal lnsLlLuLlons LhaL ls sLlll
belng felL. Many lndlvlduals who had found lL easy Lo geL loans from banks before suddenly
found Lhemselves cuL off.

Many people had used Lhe equlLy ln Lhelr home Lo borrow money ln Lhe pasL couple of
decades, buL wlLh homes across Lhe counLry dropplng ln value, banks became much more
cauLlous wlLh Lhls klnd of lendlng. unsecured personal loans from banks became almosL non-
exlsLenL.

Many people who needed money found Lhemselves resorLlng Lo credlL cards wlLh hlgh lnLeresL
raLes. Clearly, Lhere was a vold ln consumer flnanclng and peer Lo peer lendlng helped flll LhaL
vold. 8orrowers found LhaL Lhelr 28 credlL card lnLeresL raLe could be cuL ln half wlLh a loan
Lhrough rosper or Lendlng Club. 1he flxed loan Lerm, Lyplcally Lhree or flve years, ls also
appeallng because borrowers can see how Lhey can pay off Lhelr debL compleLely ln a relaLlvely
shorL Llme perlod.
!"C0.#%$.

1here are several advanLages for lnvesLors. 1he blggesL and mosL lmporLanL one ls Lhe hlgher
raLe of reLurn. Many Lendlng Club and rosper lnvesLors are averaglng aL leasL a 10
annuallzed reLurn, and Lhe vasL ma[orlLy are earnlng more Lhan 7.

?ou can choose your level of rlsk wlLh p2p lendlng. ?ou can choose Lo lnvesL ln A grade loans
where every borrower has excellenL credlL, where Lhe llkellhood of defaulLs are low. Cr you can
lnvesL ln hlgher rlsk, hlgher lnLeresL loans. AlLernaLlvely, you could choose some comblnaLlon of
Lhese hlgh rlsk and low rlsk loans.

Many people are drawn Lo peer Lo peer lendlng because you are lnvesLlng ln real people, noL
some faceless bank or muLual fund.

eer Lo peer lendlng also adds dlverslflcaLlon Lo an lnvesLor's overall porLfollo. ?ou are lnvesLlng
ln consumer credlL, whlch ls a dlfferenL asseL class from oLher lnvesLmenLs.
D,0 E$%B#, %8 /00$ #% /00$ 10"&)"2 )" #,0 F=5=

1he Lwo charLs below demonsLraLe Lhe growLh of peer Lo peer lendlng ln Lhe lasL 18 monLhs.
Pere are charLs showlng Lhe LoLal dollar amounLs ln new loans from boLh Lendlng Club and
rosper. Lendlng Club has been Laklng off ln recenL monLhs and afLer a challenglng few monLhs
rosper has Lurned lL around recenLly. 1he black llne ls Lhe Lhree-monLh movlng average.




6%B /00$ #% /00$ 10"&)"2 +%$G.

1he baslc premlse of p2p lendlng ls Lhls: people slgn up on elLher Lendlng Club or rosper as a
borrower or an lnvesLor. A borrower submlLs an appllcaLlon for a loan, and lf approved Lhe loan
ls placed on Lhe webslLe for lnvesLors Lo fund. lnvesLors Lyplcally lnvesL ln a small porLlon of
many dlfferenL loans, Lhereby spreadlng Lhelr rlsk.
?%$$%B0$.

A borrower's loan wlll remaln on Lhe web slLe for a shorL amounL of Llme, up Lo Lwo weeks.
uurlng LhaL Llme lnvesLors can ask Lhe borrower quesLlons ln order Lo declde wheLher or noL Lo
lnvesL ln Lhe loan. Whlle no personal lnformaLlon ls dlsplayed, lnformaLlon from Lhe borrower's
credlL reporL ls provlded for Lhe lnvesLors, many of who screen Lhese loans based on dlfferenL
crlLerla.

A number of Lhlngs can happen whlle Lhe loan ls belng funded:
1. 1he loan can be pulled off Lhe plaLform because lL falls some parL of Lhe verlflcaLlon
process.
2. 1he loan can become fully funded, ln whlch case lL ls Laken off Lhe plaLform and Lhe
borrower wlll recelve Lhelr money less an orlglnaLlon fee (deLalled ln Lhe Lable on Lhe
nexL page).
3. 1he borrower may cancel Lhelr loan and deleLe lL from Lhe plaLform.
4. 1he loan falls Lo obLaln fundlng afLer 14 days. AlLhough lf lnvesLors fund only parL of Lhe
loan lL can sLlll be lssued lf lL funds above a cerLaln percenLage.
!"C0.#%$.

lrom an lnvesLor perspecLlve, peer Lo peer lendlng allows you Lo dlrecLly lnvesL ln oLher people,
Lhereby compleLely bypasslng Lhe banklng sysLem. lnvesLors slmply slgn-up aL Lendlng Club or
rosper, llnk Lo Lhelr bank accounL and Lhen Lransfer money ln.

1yplcally, Lhere wlll be hundreds of loans Lo choose from for lnvesLors. 8oLh Lendlng Club and
rosper allow lnvesLors an easy way Lo lnvesL by provldlng auLomaLed plans. rosper provldes
several dlfferenL auLomaLed plans based on credlL rlsk or you can bulld a cusLomlzed plan based
on your own selecLlon crlLerla. Lendlng Club provldes you wlLh Lhree auLomaLed opLlons (low,
medlum and hlgh rlsk), or you can use Lhelr sllder Lool Lo choose an average lnLeresL raLe. 1hen
you [usL choose Lhe LoLal amounL you wanL Lo lnvesL and your money wlll be allocaLed
auLomaLlcally among many dlfferenL loans.

1he oLher alLernaLlve for lnvesLors ls Lo choose loans lndlvldually. ?ou can use Lhe fllLers LhaL
Lendlng Club and rosper provlde, and Lhen browse Lhrough each loan one by one. Whlle Lhls
meLhod ls more Llme consumlng, many successful lnvesLors wlll only lnvesL Lhls way.

?%$$%B)"2 H%"07

+,% I-" ?%$$%B H%"073

1o borrow money on rosper or Lendlng Club you musL be a uS resldenL, aL leasL 18 years old,
have a bank accounL and soclal securlLy number. 8uL even lf you meeL LhaL crlLerla, noL all
sLaLes allow people Lo borrow money Lhrough peer Lo peer lendlng plaLforms. ?ou musL also
have a decenL credlL score and have a good credlL hlsLory. Lendlng Club and rosper have
sllghLly dlfferenL requlremenLs, whlch are deLalled ln Lhe Lable below.




?ou should check Lhe webslLes for Lendlng Club: hLLp://www.lendlngclub.com/ and rosper:
hLLp://www.prosper.com/ for Lhe mosL up Lo daLe requlremenLs.

!"#0$0.# J-#0.

8oLh Lendlng Club and rosper wlll asslgn each loan a grade or raLlng, and Lhe lnLeresL raLe wlll
depend on LhaL raLlng. 1hey base Lhls raLlng on a number of facLors such as Lhe borrower's llCC
score and oLher lnformaLlon obLalned from Lhe credlL reporL. 8oLh Lendlng Club and rosper
use Lhelr own formula ln deLermlnlng Lhe loan grade.

?%$$%B0$ K00.

All borrowers wlll pay an orlglnaLlon or closlng fee when Lhelr loan has been funded. lor boLh
Lendlng Club and rosper, Lhls fee varles dependlng on Lhe loan raLlng. Lendlng Club wlll charge
beLween a 1.11 and 3 loan orlglnaLlon fee (1.11 for Lhree year loans raLed A1). rosper's
fees range from 0.3 for AA raLed loans up Lo 4.93. 1he orlglnaLlon fee ls subLracLed from Lhe
loan proceeds, so lL ls lmporLanL Lo ask for sllghLly more money Lhan you need.

1here are no pre-paymenL penalLles, so borrowers can pay off Lhelr loan aL any Llme wlLhouL
penalLy. 1here are also no hldden fees. 1he only oLher fee a borrower may pay ls a laLe fee,
whlch ls assessed lf a loan paymenL ls more Lhan 13 days laLe.

!"#$%#& ()*+ ,-./0"-
Mlnlmum credlL score 660 640
SLaLes noL Avallable for 8orrowers lA, lu, ML, MS, nu, nL lA, ML, nu
Loan amounL range $1,000 - $33,000 $2,000 - $33,000
CrlglnaLlon fee range 1.11 - 3 varles by loan grade 0.3 - 4.93 varles by loan grade
Loan 1erms 3 and 3 year loans 3 and 3 year loans
lnLeresL 8aLe range 6.03 Lo 26.03 6.04 Lo 31.34
Average loan slze (C2 2013) $14,361 $10,233
!"C0.#)"2 H%"07

+,% I-" !"C0.# H%"073

lnvesLlng wlLh boLh Lendlng Club and rosper ls much more resLrlcLlve Lhan borrowlng. Cnly
abouL half Lhe sLaLes allow lnvesLors Lo open a peer Lo peer lendlng lnvesLmenL accounL.

rosper allows lnvesLors ln Lhe followlng 31 sLaLes: Alaska, Callfornla, Colorado, ConnecLlcuL,
uelaware, ulsLrlcL of Columbla, llorlda, Ceorgla, Pawall, ldaho, llllnols, Loulslana, Malne,
Mlchlgan, MlnnesoLa, Mlsslsslppl, Mlssourl, MonLana, nevada, new Pampshlre, new ?ork,
Cregon, 8hode lsland, SouLh Carollna, SouLh uakoLa, uLah, vlrglnla, WashlngLon, WesL vlrglnla,
Wlsconsln and Wyomlng. 1here are addlLlonal requlremenLs for resldenLs of Callfornla, ldaho,
new Pampshlre, Cregon, vlrglnla and WashlngLon deLalled on rosper's webslLe.

Lendlng Club allows lnvesLors ln Lhe followlng 28 sLaLes: Callfornla, Colorado, ConnecLlcuL,
uelaware, llorlda, Ceorgla, Pawall, ldaho, llllnols, kenLucky, Loulslana, Malne, MlnnesoLa,
Mlssourl, Mlsslsslppl, MonLana, new Pampshlre, nevada, new ?ork, 8hode lsland, SouLh
Carollna, SouLh uakoLa, uLah, vlrglnla, WashlngLon, Wlsconsln, WesL vlrglnla, and Wyomlng.

Powever, even lf you reslde ln Lhese sLaLes Lendlng Club lmposes addlLlonal crlLerla on all
lnvesLors. 1o be ellglble, an lnvesLor musL have an annual gross lncome of aL leasL $70,000 and
a neL worLh of aL leasL $70,000, or [usL a neL worLh of more Lhan $230,000. 1here are dlfferenL
requlremenLs for Callfornla and kenLucky resldenLs explalned on Lendlng Club's webslLe.

E0##)"2 5#-$#0& +)#, !"C0.#)"2

Assumlng you meeL Lhe above requlremenLs Lhen you can become an lnvesLor. CeLLlng sLarLed
wlLh peer Lo peer lendlng can be a blL daunLlng for new lnvesLors. Lendlng Club and rosper
offer hundreds of loans Lo choose from and a myrlad of ways for you Lo lnvesL your money.
Some people LhaL are eager Lo geL sLarLed [ump ouL of Lhe gaLe wlLhouL Lhlnklng Lhrough Lhelr
opLlons and end up dlsappolnLed wlLh Lhelr lnvesLmenL reLurns. 1he shrewd lnvesLor does some
lnlLlal plannlng and research ln order Lo geL off Lo a greaL sLarL.

Pere are a seven polnLs Lo conslder LhaL wlll help you do [usL LhaL.

L= I,0$$7 /)(G %$ 4'#% /:-".

1he flrsL declslon you need Lo make ls wheLher you are golng Lo lnvesL ln loans lndlvldually or
go wlLh one of Lhe auLomaLed plans offered by Lendlng Club and rosper. lf you have a large
amounL Lo lnvesL ($10,000 or more) l recommend you conslder sLarLlng wlLh an auLomaLlc plan
or you can look aL Lendlng Club 8lML (a speclal accounL wlLh Lendlng Club LhaL offers a
compleLely hands off approach). lf you choose Lo lnvesL ln loans lndlvldually, and Lhls ls really
Lhe only way Lo obLaln above average reLurns, Lhen you need Lo pay close aLLenLlon Lo Lhe
polnLs below.
;= M)C0$.)87

lf Lhere was only one word of advlce l could glve Lo all new p2p lnvesLors lL would be Lhls one:
dlverslfy. uon'L make Lhe mlsLake l made and spread your lnlLlal lnvesLmenL beLween Lwo loans.
WhaL you wanL Lo do ls dlverslfy your lnlLlal lnvesLmenL as wldely as posslble. 8oLh Lendlng Club
and rosper allow a $23 mlnlmum lnvesLmenL ln each loan. 1ake advanLage of lL. lf you are
sLarLlng off wlLh $1,000 Lhen fund 40 dlfferenL loans wlLh Lhls money. Cnly lf you are sLarLlng
wlLh more Lhan $2,300 do l recommend you golng over Lhe $23 mlnlmum. 1hen, l would sLlll
make sure LhaL no loan ls more Lhan 1 (and preferably less) of your LoLal p2p lnvesLlng
porLfollo.

N= M%"O# 5,%%# 8%$ #,0 H%%"

?ou have a cholce Lo lnvesL ln A grade loans LhaL earn ln Lhe mld slngle dlglLs ln lnLeresL Lo loans
of over 20. Sure, you mlghL Lhlnk, a 20 reLurn sounds much beLLer. 8uL keep ln mlnd Lhese
are hlgher rlsk borrowers LhaL hlsLorlcally have had a hlgher defaulL raLe. So a porLfollo of loans
LhaL are earnlng over 20 could easlly end up wlLh a real world reLurn under 10 once all Lhe
defaulLs have been Laken lnLo conslderaLlon. WhaLever your rlsk Lolerance, for new lnvesLors l
would recommend a broad porLfollo wlLh a range of dlfferenL loan grades. Pavlng sald LhaL, l
Lend Lo avold A grade loans, l Lhlnk Lhey are rlsky for a dlfferenL reason. We are ln a hlsLorlcally
very low lnLeresL raLe envlronmenL rlghL now and lL ls hlghly llkely LhaL ln Lwo or Lhree years
lnLeresL raLes wlll be much hlgher Lhan Lhey are now. lf you can geL 6 ln an lulC lnsured Cu, lL
makes 7 ln a p2p lendlng lnvesLmenL a poor cholce. l personally prefer Lo lnvesL ln loan grades
of 8 and below.

P= F.0 5%@0 5)@A:0 K):#0$.

So you have Lransferred your money ln and have declded you wanL Lo lnvesL ln lndlvldual loans.
?ou would logln Lo your Lendlng Club or rosper accounL and sLarL browslng Lhrough Lhe
dozens, or even hundreds of loans. ?ou suddenly reallze you are golng Lo be here all day unless
you can narrow down your selecLlons somehow. 1hls ls where fllLerlng comes ln. 8oLh rosper
and Lendlng Club allow you Lo fllLer loan selecLlons on Lhelr slLe. rosper's fllLerlng ls much
beLLer Lhan Lendlng Club, so whaL l do for Lendlng Club ls download Lhe CSv flle of all avallable
loans and fllLer Lhem ln Lxcel.

?ou can spend hours (or even days) playlng around wlLh fllLerlng on a p2p lendlng sLaLlsLlcs slLe.
lor Lendlng Club lnvesLors slLes such as nlckel SLeamroller: hLLp://www.nlckelsLeamroller.com/,
lnLeresL 8adar: hLLp://www.lnLeresLradar.com/ or LendsLaLs: hLLp://www.lendsLaLs.com/
provlde excellenL Lools for analysls. lor rosper lnvesLors Lhe go Lo slLe ls rosper SLaLs:
hLLp://www.prosper-sLaLs.com/.

?ou can sllce and dlce prevlous loan 8Cl daLa ln many dlfferenL ways, buL Lhere ls one fllLer l
always use: lnqulrles = 0. lnqulrles means number of credlL lnqulrles Lhls person has underLaken
ln Lhe lasL slx monLhs. lL ls recorded on a borrower's credlL reporL. l llke Lo lnvesL ln someone
who has noL been shopplng around ln many places for more credlL. l use oLher fllLers, such as
no recenL dellnquencles, buL Lhls one seems Lo have Lhe blggesL lmpacL on 8Cl based on
prevlous loans. We need Lo sLaLe here LhaL pasL performance ls no guaranLee of fuLure reLurns.
1hls fllLer may noL produce superlor reLurns ln Lhe fuLure, buL for pasL loans on boLh rosper
and Lendlng Club, lf you had chosen LhaL fllLer and noLhlng else you would have lncreased your
8Cl conslderably.

Q= J0-& #,0 M0#-):. %8 R-(, 1%-"

l belleve LhaL lL ls useful Lo spend some Llme readlng Lhe deLalls of each loan. lf noLhlng else,
Lhls wlll glve you a feel for Lhe dlfferenL klnds of borrowers on Lhe plaLform. l Lend Lo avold
someone who hasn'L boLhered Lo glve a good loan descrlpLlon (or any descrlpLlon) and lf Lhey
have falled Lo answer lnvesLor quesLlons Lhen LhaL ls a red flag, Loo. ?ou can always ask your
own quesLlons, keeplng ln mlnd of course, LhaL people may noL always Lell Lhe compleLe LruLh.

S= 5#-$# 5:%B:7

As a new lnvesLor, you are probably all exclLed Lo geL sLarLed and wanL Lo geL all your money Lo
work qulckly. 8uL lf you have done Lhe work of Lhe oLher sLeps above you wlll llkely only have a
relaLlvely small number of loans Lo choose from. lor example, you mlghL have $2,000 Lo lnvesL
and have narrowed your search down Lo 40 loans Lo lnvesL ln. So, you Lhlnk you should [usL
lnvesL $30 ln each loan. 1haL ls noL whaL l would recommend. SLlck wlLh my dlverslflcaLlon polnL
above and sLay wlLh $23 per loan. lnvesL half your money now and Lhen walL a week or Lwo.
1here wlll be an enLlrely new baLch of loans on Lhe plaLform by Lhen, and you can repeaL Lhe
process. l know some lnvesLors wlLh very sLrlcL lnvesLlng crlLerla who have repeaLed Lhls
process many Llmes before all Lhelr money was lnvesLed.

T= 4C%)& D-U0. )8 V%' I-"

lnLeresL earned on your lnvesLmenLs aL Lendlng Club and rosper are Laxed aL Lhe sLandard
lncome Lax raLe. 1hey do noL geL Lhe favorable Lax LreaLmenL of sLock dlvldends. So, lf you are
ln Lhe 28 federal Lax brackeL Lhen you wlll llkely pay 28 ln federal Laxes on all of your
lnLeresL lncome earned from p2p lendlng. ?ou can avold Lhls Lax burden compleLely by puLLlng
your lnvesLmenL ln an l8A. 8oLh Lendlng Club and rosper offer a no-fee l8A (wlLh a mlnlmum
$3,000 lnvesLmenL) where all your lnLeresL can accrue Lax-free. ?ou can open a new 1radlLlonal
l8A, 8oLh l8A or a SL-l8A or you can roll over an exlsLlng reLlremenL accounL.


+,0$0 #% 2% 8$%@ ,0$03

1hls e-book has only covered Lhe very baslcs of peer Lo peer lendlng. lL ls a young and very
dynamlc lndusLry LhaL ls changlng all Lhe Llme. Serlous borrowers and lnvesLors need Lo keep up
Lo daLe wlLh all Lhe changes. 1here are many resources onllne LhaL can help you wlLh Lhls.

Cf course, lf you haven'L already l recommend you subscrlbe Lo my blog, Lend Academy:
hLLp://www.lendacademy.com/.

1he blog ls updaLed several Llmes a week and any lmporLanL developmenLs are dlscussed ln
depLh Lhere. CLher slLes updaLed regularly wlLh useful conLenL for lnvesLors are LendlngMemo:
hLLp://www.lendlngmemo.com/ and nlckel SLeamroller: hLLp://nlckelsLeamroller.com/.

1he Lend Academy forum ls a gaLherlng place where lnvesLors and borrowers come Lo dlscuss
p2p lendlng. ?ou can reglsLer and [oln Lhe conversaLlon or [usL follow along as a guesL. 1here
are hundreds of acLlve members Lhere where your quesLlons can be answered very qulckly. ?ou
can go Lo Lhe forum here: hLLp://www.lendacademy.com/forum/lndex.php.

Also, Lend Academy ls Lhe co-hosL of Lhe only conference for Lhe p2p lendlng communlLy called
LendlL. ln 2013 LendlL was held ln new ?ork ClLy on !une 20
Lh
. ?ou can flnd ouL deLalls and slgn
up for fuLure conferences here: hLLp://www.lendlL.co/.

We have only [usL scraLched Lhe surface of Lhe world of peer Lo peer lendlng ln Lhls e-book. 8uL
hopefully now you wlll have a feel for whaL lL ls all abouL and why lL ls becomlng so popular. l
wlll be updaLlng Lhls free e-book every quarLer and provldlng Lhe new edlLlon Lo all my emall
subscrlbers. So, lf you have recelved a copy of Lhls book from a frlend Lhen l encourage you Lo
subscrlbe Lo Lhe Lend Academy emall llsL.

WheLher you are a borrower or lnvesLor, peer Lo peer lendlng ls Lhe wave of Lhe fuLure. lL ls [usL
geLLlng sLarLed. Cne day ln Lhe noL Loo dlsLanL fuLure, l expecL LhaL mosL people wlll lnvesL and
borrow money Lhls way. So come and [oln Lhe 21
sL
cenLury way of lendlng money.