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When Credit Market Concerns Arrive at the Marketplace Lenders

Rising loan rates raise the question.
Lending Club founder Renaud Laplanche, center, rings the opening bell at the New York Stock Exchange on Dec. 11, 2014.

Lending Club founder Renaud Laplanche, center, rings the opening bell at the New York Stock Exchange on Dec. 11, 2014.

Photographer: Don Emmert/AFP via Getty Images

A little-known fact of the marketplace lending industry is that borrowing rates on their online platforms are anything but marketplace-determined.

Instead, marketplace lenders set the interest rates that borrowers will pay in exchange for their loans, and in tandem, the returns that will be earned by lenders on the platforms.

On that note, spotted yesterday by sharp-eyed fintech watchers was this U.S. Securities and Exchange Commission filing from LendingClub, the biggest marketplace, or "peer-to-peer," lender in the U.S. In it the company changed rates assigned to its loans, which are graded according to quality.