"Many people who previously would have been able to borrow from banks months ago find themselves in a situation where they are being turned down. Some of those people are turning to social lending networks like Lending Club.
Renaud Laplanche, CEO of Lending Club based in Sunnyvale, Calif., said lenders in the online community are regular people who don't operate under the same restrictions banks do and are not affected by the credit crunch.
He said loan volume has been increasing 100 percent each month since the company opened in May. This month, about $4 million in loans were made through the Web site. The three-year unsecured loans are $5,000 to $7,000 at interest rates of between 10 percent and 12 percent.
'It's a good rate for the borrowers and an attractive rate for the lenders,' Mr. Laplanche said, adding that the default rate is less than 10 percent. 'I think the credit crunch is a contributing factor (in the increased volume.) There are other factors, but the credit crunch is a main factor.'"