The company announced in a regulatory filing Tuesday that it is laying off 460 employees -- roughly 30% of its workforce -- in order to support its borrowers, protect investor returns, and preserve capital and liquidity.
One of those employees being laid off is LendingClub President Steve Alloca, a former Paypal executive who had been with the company for about three years, according to his LinkedIn profile.
Additionally, CEO Scott Sanborn is taking a 30% pay cut, and the other executive officers' salaries will be reduced by 25%.
"With these actions, we believe we are well positioned to achieve our long-term strategic goals and better serve our members, who will need us more than ever, once the economy stabilizes," Sanborn said.
LendingClub said in its filing that the COVID-19 pandemic has had an "unprecedented effect" on consumers, small businesses, and the broader economy. It added that the impact of the crisis on credit markets has resulted in a decrease in investor demand for personal loans.
Unlike a traditional bank, LendingClub does not create loans. Instead, it pays a bank to originate the loan, which it buys, and then resells to investors who reap the interest payments on the loan. This makes investor demand a critical component of its business model.
LendingClub recently purchased the online-only Radius Bank to secure a bank charter, but the transaction is still months away from receiving approval from regulators.