Which States are Open to Lending Club & Prosper?

I was recently talking with my dad about peer to peer lending. He could not help but get excited about how the internet is allowing average Americans to borrow and lend money to each other without the banks. At the end of our conversation he asked if I would help him set up a p2p lending IRA. I told him that this is not possible, as he lives in a state that is closed to investors.

This is a very common problem people have around the United States. Thousands of people want to borrow and lend money through p2p lending platforms, but discover they are not eligible because their state does not allow it. However, not all the platforms are the same. Some states are open on one platform despite being closed on another.

Let’s look at which states are available, first for borrowers, then for investors.

Borrowers: 45 States Allow Lending Club Loans

As you can see in the map below, every state currently allows people to apply for a Lending Club loan except Iowa, Idaho, Maine, North Dakota, & Nebraska.


Live in a Lending Club state?
Check your rate
(won’t hurt your score)

What if you live in one of the six states that do not allow you to apply for a loan? If you live in Idaho or Nebraska, you are in luck. You can still apply for a loan through Prosper.

Borrowers: 47 States Allow Prosper Loans

As you can see below, almost every state in the US allows people to apply for a Prosper loan except Iowa, Maine, and North Dakota.


Live in a Prosper state?
Check your rate
(won’t hurt your score)

Investors: 28 States Open to Lending Club

As you can see in the map below, many states allow you to also lend money through Lending Club: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New York, Rhode Island, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.


Even if your state does not allow investing, eighteen states (like Texas, Pennsylvania, & Arizona) allow trading on the Lending Club secondary market through Foliofn. Open an investing or trading account here. Note: Kentucky residents have to be accredited.

What if you live in one of the 22 states that do not allow Lending Club investing? If you live in Alaska, Michigan, Missouri, Oregon, or South Carolina, you are in luck. You can still become a lender through Prosper.

Investors: 31 States Open to Prosper

Currently 31 states are open for people to become investors at Prosper: Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.


Click here to open a lending account through Prosper.

Lending Club or Prosper?

If you are one of the lucky states that is available to both Lending Club and Prosper, you get your pick. You can read a thorough comparison of the two platforms at my Lending Club versus Prosper post. Personally, I have lender accounts on both platforms (see my returns here), and believe this diversification helps spread my risk.

Why Doesn’t Texas or Ohio Allow P2P Lending?

As you can see in the maps above, around twenty states do not allow any peer to peer lending at all. Why not? The answer is very complicated, largely because peer to peer lending is brand new. Both the platforms have to get each individual state to approve access, and financial laws are different from state to state. Some states, like Rhode Island, have looser financial laws. Others (like Texas, Ohio, or Maryland) are quite strict. In many ways, their strictness is a bit ironic. Every state in the US allows people to invest their cash in risky penny stocks or junk bonds, yet stable and consistent avenues like peer to peer lending are not allowed. I have to believe that this will change as it becomes more mainstream.

Thankfully, most people in the United States can still trade peer to peer notes through Foliofn, Lending Club’s secondary market. While a large state like Texas forbids the average Texan from funding new loans, their citizens are free to buy and sell notes that have already been issued.

Lending Clubs IPO & the Blue Sky Exemption

scott sanborn

Scott Sanborn

When I sat down with Lending Club’s COO in May of 2013 (read the interview), Scott Sanborn described how Lending Club has a goal to become a public company sometime in 2014. When this would happen and Lending Club has an IPO (TechCrunch), the so-called blue sky exemption will be enacted, and all the states should eventually open to the public for investors.

Well, the IPO finally arrived (read: IPO: The Day the Nation Met Lending Club). As a result, I imagine we’ll start seeing more and more states open to the public in the coming months.

Lobbying the Regulators

If you want to help your state accept peer to peer lending, you can always contact your state representative. More effectively, you can contact your state securities regulator here. Ask them why Lending Club or Prosper is not allowed, making sure to voice your opinion that peer to peer lending is a safe and transparent way to invest and borrow cash.

The reality is that many states could allow peer to peer lending if they wanted to, they simply don’t understand what it is.

The Future of P2P Lending Eligibility

While many of us in the peer to peer lending community continue to be frustrated by the lack of states that allow it, we have great hope for the years to come. Anything innovative had to start somewhere. While almost everybody uses a cell phone these days, they originally only worked in the city of St. Louis (and weighed 80 pounds!). Lots of regulatory hurdles had to be crossed before the national network was formed that we all use today.

Sometime in the future, peer to peer lending will hold a similar place in society. People everywhere will be enabled by technology to lend and borrow money from one another with ease via the internet. Until then, we will have to work with what we have.

[image credit: Marty Hogan “1850 Political Map” CC-BY 2.0]
Fantastic blank US map courtesy of: SuperTeacherWorksheets.


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  1. Jim Burke says

    Simon, I live in Maine, and I would be investing and trading if Lending Club would let me. As it is, I can only trade. I know Lending Club’s website lists Maine as an investor state, but according to the folks who handle registrations at LC, the website is wrong.

    • says

      Fascinating! I’ll contact them and update the map if need be. Thanks Jim.

      Update: just got off the phone and you’re totally right. Maine is a trading-only state. I’ll update the map.

  2. Chris says

    Hi Simon,

    Is the state eligibility standard fr retail investors only or does it apply to institutional investors as well?


  3. Lynn says

    I live in Iowa and would like to apply for a P2P loan. Do I have any options for applying for a loan, a way around the regulation?

    An addendum to my question – I read in a 2011 post on another site that if I open an account with Foliofn I can lend money through Lending Club, but what about borrowing?

  4. Sean says

    To update, South Carolina is also a no-go for investing through LendingClub. I cannot confirm anything else with SC. I can’t wait until I can use LC, I was excited the first time I saw the map on another source.

  5. J says

    I am an Army officer stationed overseas. When I went to the Prosper website, it would allow me to enter my overseas address, but asked what state I am a resident of. Since I am a resident of Ohio, it told me my participation was not allowed. However, are you aware of any ramifications of me selecting another state? I do not live in Ohio, and have not for over 6 years, but I keep them as my state of residence for military purposes. I appreciate the help.

  6. Hunter Fitch says

    Nice article Simon. I reside in AZ, so I’m only allowed to use the FOLIOfn platform to purchase notes through LC. I’ve often wondered if Lending Club doesn’t mind having the “problem” of some of the states not allowing use of their platform for one reason… liquidity. In my opinion, if and when all states are allowed to use the regular platform, we’re going to see a massive drop-off in notes purchased on FOLIOfn. In turn, sellers are going to have to offer a much deeper discount than they currently are in order to entice buyers to the secondary market.

    • says

      This is a great point. While Lending Club would certainly benefit from every single state being allowed access, it is a solid guess that they appreciate the liquidity that restricted states offer the rest of their lenders. Nice point Hunter.

  7. David says

    Nice article. I think the peer to peer idea is fantastic. It seems to benefit both the lender and the borrower. Unfortuantely (at least for this purpose), I live in the State of Ohio and I am not able to be a lender. Do you know if there are any issues with creating an LLC in a state that does allow it with the sole purpose of lending? I appreciate your thoughts on this idea.

    • Hunter Fitch says

      I have direct experience with this. According to LC, you MUST use the address of the state in which you file your personal taxes. Your account is subject to immediate closure if you don’t comply.

  8. says

    Correct about Texas. I checked with my loan officer friend. I think in time the regulations will change. Like you said, it’s brand new and the law takes time to catch up — if it wants to. But, there is money involved, so I imagine that, like most things in life, the law will follow the money.

  9. Cory says

    Lenders beware. I speak from experience this is a good way to lose your money with almost no recourse. Invested in 12 loans rated A or B at proper.com and 8 defaulted. That is why states like Texas do not allow Prosper. It is not a scam but smells like a skunk!

  10. Daniela Russo says

    I have a Lending Club Account that was open two years ago while I was resident in Texas. Now I’m back in Europe where I have my citizenship, and I would like to continue investing and use Lending club. Can you please let me understand how and if this will still be allowed?

  11. CW Davis says

    Buying into the notion that North Carolina citizens could not invest in Lending Club and Prosper because it was disallowed by the State, I contacted Mr. David Massey, Director of NC Securities Division of the Secretary of State and asked that he review the policies. In a long email, he replied that in fact, neither Lending Club or Prosper have applied to do business in NC. Prosper initiated the process a few years ago, but never followed through; Lending Club has never applied.

    Hence, the implication that NC is blocking its citizens from investing in either company is erroneous; if these companies want to do business here, they need to do their homework.

  12. Holly Eaton says

    I live in Maryland, which is not open to either Lending Club or Prosper investors, but am a Trustee for a Trust registered in New York. Can I open an investment account with either Lending Club or Prosper in the name of the Trust?

    • Holly Eaton says

      Also, I have POA for my father who is retired and a resident of NY, and would like to invest a portion of his IRA funds with one or both of these businesses. Is it possible to set up a roll over IRA with Lending Club or Prosper?

      • says

        Hi Holly. I can help with the second question, but the Trust question is out of my depth. I suggest you contact LC’s investor service center and ask this yourself.

        As to your father in NY: if he is indeed a resident of this state, he can most certainly roll an IRA over to Lending Club or Prosper. I have done this myself and the process was quite painless (and quite rewarding too).


  13. says

    Hmmmm…I’ve been investing steadily in lending club and prosper for years, and I live in Maine. I don’t believe these charts are accurate. OR, I’ve been engaging in illegal activity for about 6 years….

  14. EC A says

    I am in the military stationed in Texas, but my state residence is Alaska, would I be in the wrong for using Alaska?

  15. Mike says

    My state PA does not allow investing in Lending club. I am thinking of opening a general partnership in Delaware and investing thru it. Any thoughts on this? Any risks?

  16. DP says

    Can you elaborate a bit more on why the IPO of a company will change state laws? That connection isn’t really explained in your post about Blue Sky?

    • says

      Hi DP. Read this:

      “Lending Club will go public next year in what will surely be one of the easiest IPOs in memory. The company’s financials and quarterly reports have been publicly available for years, in fully SEC-approved form. In fact, thanks to something called blue sky laws, going public will actually reduce Lending Club’s regulatory burden, by putting the whole company under the aegis of federal regulators. No longer will it need to laboriously work with regulators in 50 different states.”

      Source: Felix Salmon @ Reuters: http://blogs.reuters.com/felix-salmon/2013/09/30/the-evolution-of-lending-club/

  17. says

    Simon, in your map for Investors for LC, it shows Missouri in red which means its open to invest and trade. But then you mention that Missouri is one of the states that doesn’t allow investing yet.

    And I just signed up with LendingClub and it seems like they still do not have the investment option for us Missourians.

    I am confused now!

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