The person-to-person loan facilitator Lending Club Corp. has stopped letting people make loans through its Web site.
"Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future," the Sunnyvale, Calif., company said in a notice posted Monday on its site. "Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders."
Borrowers can continue to request loans directly from the company, rather than from users, and Lending Club will continue to service existing loans.
Executives at Lending Club said Wednesday that they could not discuss the situation.
Edward Woods, a senior analyst for Celent LLC, a Boston market arm of Marsh & McLennan Cos., said Lending Club's plan to offer promissory notes sounds very similar to the ways its main rival in person-to-person lending, Prosper Marketplace Inc., has described itself.
In an October filing with the Securities and Exchange Commission, Prosper said that people who lend through its site "are not lenders in the literal sense, as they do not actually lend their money directly to borrowers; instead, lenders make purchase commitments and purchase notes representing loans from Prosper to the borrower."
Though Mr. Woods said he did not know exactly how Lending Club structures its loans, "I know, according to their statement, that they are changing their operations, and they are changing them to a model that Prosper seems to use, making me conclude that what they were doing before must not have passed regulatory scrutiny."
There are important differences between the two companies, he said. Prosper connects lenders and borrowers through listings posted on its site that resemble classified ads. Borrowers pitch themselves to complete strangers as they try to get their loan requests funded.
Lending Club groups borrowers and lenders by things they have in common, such as where they attended college, and it encourages people to lend to members of their affinity groups. The company has said that people are less likely to default if they feel a personal connection to their lender.
(Prosper also lets users form affinity groups, but it does not stress them to the degree that Lending Club does.)
Mr. Woods speculated that the emphasis on matching people by affinity group could be interpreted as an effort by Lending Club to offer advice — a service for which it might not have the proper license. "If I suggest to you that you loan this guy money, match you up, that looks like advice."
