Lending Club, Prosper Marketplace and Funding Circle are locking arms to create a new trade group that will represent the marketplace lending industry in Washington.
The formation of the Marketplace Lending Association comes in response to stepped-up regulatory scrutiny of the nascent industry.
The group's charter members are three of the largest online lenders operating in the U.S. today. All three firms operate digital platforms where investors can purchase specific loans.
Several large online lenders that fund their businesses through more traditional means – notably, Social Finance, Avant, Kabbage and OnDeck Capital – are not on the trade group's roster of initial members.
"This is not meant to be for all digital lenders," said Sam Hodges, Funding Circle's U.S. managing director.
Hodges said that it makes sense for the trade group to focus specifically on marketplace lending, an industry formerly known as peer-to-peer lending, because the sector faces unique challenges, risks and opportunities.
The organization's membership criteria were not available late Wednesday, but Prosper Chief Executive Aaron Vermut said: "We expect to have more members. We want to broaden this."
The trade group will require its members to adhere to a set of operating standards that are designed to foster what backers call the industry's responsible growth.
Those standards are expected to be released soon. In general terms, they relate to borrower protection, investor protection and the prevention of systemic risk, according to Hodges.
The Marketplace Lending Association will be headquartered in Washington, where agencies like the Treasury Department and the Consumer Financial Protection Bureau have begun to ask questions about an industry that calls Silicon Valley home.
The trade group has yet to hire an executive director, and details of its advocacy agenda still need to be fleshed out. "Our initial focus is really around education more than anything else," Hodges said.
But eventually, the Marketplace Lending Association seems likely to lobby on issues related to both consumer lending and small-business lending. Prosper is a consumer lender, while Funding Circle focuses on business loans, and Lending Club operates in both markets.
The trade group is governed by a three-member board of directors: Richard Neiman, the head of regulatory and government affairs at Lending Club; Sachin Adarkar, general counsel at Prosper; and Conor French, U.S. general counsel at Funding Circle.