The great recession reminded investors that putting money into the stock market and real estate isn’t as safe of an investment as they may have previously thought. As a result, investors are moving into “safe” assets such as precious metals and diversifying their investment portfolios into alternative investments. One new investment that has garnered some media attention is providing funding for personal loans through services such as Lending Club and Prosper.com.
Not everyone qualifies to be a Lending Club investor though. Because of state regulations, only potential investors in the following states can invest: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Missouri, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.
There are also “suitability” requirements that are imposed by state law. In most states, Lending Club investors must have a gross annual income of $70,000 or more and have a net worth of $70,000 or more. In the state of California, investors must have a gross annual income of $100,000 and a net worth of $100,000. If you have a total net worth of $250,000 or more, there is no annual income requirement. In the state of Kentucky, investors must qualify as an “accredited investor” under the securities act. Finally, Lending Club investors must not deposit more than 10% of their net worth in Lending Club notes.
If you are in a state that does not qualify to be a Lending Club lender, you can still purchase notes on Lending Club’s secondary market, Foliofn.
If you are interested in learning more about becoming a Lending Club lender or a Prosper.com lender, you can visit either of their websites.
