LendingClub cuts approval rates for high-risk borrowers as coronavirus spreads
FILE PHOTO: A LendingClub banner hangs on the facade of the the New York Stock Exchange in New York, New York, United States December 11, 2014. REUTERS/Brendan McDermid/File Photo
(Reuters) – LendingClub Corp on Monday cut loan approval rates for some high-risk borrowers and increased income and employment verification requirements, in a sign that alternative lenders could pull back from lending as the coronavirus crisis deepens.
The online lending pioneer also said it had increased interest rates from 2% to 4% for new borrowers, depending on the loan grade.
Jack Dorsey-led Square Inc said last week it had tightened eligibility for loans and expected slow origination growth in the second half of March.
The actions by lenders comes as Washington last week reached a deal for a $2.2 trillion stimulus package to help businesses and millions of Americans hit by the economic fallout of the coronavirus pandemic.
“Like other fintech and financial services companies, we are assessing the impact to our platform and the market, including the potential impact of aid on affected borrowers, but it is difficult to estimate with any precision,” LendingClub said.
Adding to uncertainty for borrowers, the number of Americans filing claims for unemployment benefits surged to a record of more than 3 million in the week ending March 21 as strict measures to contain the coronavirus pandemic brought the country to a sudden halt.
San Francisco-based LendingClub said it was waiving fee for late payments starting April 1 through May 31 to help its borrowers and has designed a hardship plan that allows eligible borrowers to easily skip up to two monthly payments.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Shinjini Ganguli