LendingClub, the peer-to-peer social lending site launched on Facebook three months ago has secured $10.26 million in a Series A funding round led by Canaan Partners and Norwest Venture Partners.
LendingClub says it has issued $750,000 in loans among Facebook users since launch, and claims a zero default rate as the service plays on the trusted community relationship inherent in the social network.
However the firm has been forced to decline 75% of applicants during credit screening as younger borrowers tend to have a lower FICO score.
The P2P social lending market was pioneered by Zopa in the UK, and Prosper in the US. But the market is becoming increasingly crowded, with new players such as CircleLending, CommunityLend, Wonga and GlobeFunder waiting in the wings.
LendingClub says it will use the funds to expand its service beyond the Facebook community, but declines to give further details of its plans.