As Americans we often expect that laws be the same all over of the country but specific examples like Lending Club in Texas can prove that this is not always true. While residents of many states are perfectly free to trade as they wish with Lending Club, Texas residents are going to find that things are going to be a bit harder for them, although not entirely impossible.
In Texas, in order for the loan to happen the state wants to be sure that the borrower has the ability to repay the loan. The only way in which they can do this is to verify the financial information of each borrower individually. That is quite a large order when it comes to peer to peer trading. Texas allows a work around, which is if Lending Club could issue and guarantee payment of the loans then the state would consider approving their application. For obvious reasons, this is not going to happen.
Those wanting to take advantages of the services of Lending Club in Texas aren’t completely out in the dark quite yet though. They will still be able to trade loans on the secondary market which runs on the FolioFN platform. Those people from states that are approved for Lending Club will be able to sell their loans to people in states like Texas that are looking to invest. It may not be a perfect system but for people like the residents of Texas it is the best option for right now.
It might not be fair but Lending Club is trying their best to accommodate to all states and it is not their fault as a company that all of their services are not available to those looking to use Lending Club in Texas.