Loans Payable

3 Months Ended

Jun. 30, 2011

Loans Payable [Abstract]

Loans Payable

6. Loans Payable

Loans payable consist of the following:

	June 30, 2011			March 31, 2011
Growth capital term loan	$	904,174		$	1,166,268
Unamortized discount on growth capital term loan		(28,682	)		(38,189	)
Financing term loan		914,688			1,214,482
Unamortized discount on financing term loan		(29,523	)		(39,792	)
Private placement notes		210,777			590,432
Unamortized discount on notes payable		(6,408	)		(20,615	)
Total loans payable, net of debt discount	$	1,965,026		$	2,872,586

At June 30, 2011, future maturities due on all loans payable were as follows:

Year ending June 30,
2012	$	1,660,144
2013		369,495
		2,029,639
Less amount representing debt discount		(64,613	)
Total loans payable	$	1,965,026

Growth capital term loan

In October 2007, we entered into a loan and security agreement with Silicon Valley Bank, or SVB, that allowed for borrowings of up to $3,000,000 for working capital needs. In October 2008, we amended the agreement to increase available borrowings to $4,000,000 at a fixed interest rate of 8.5% per annum. Effective August 3, 2009, we amended and restated the growth capital term loan as further described in this footnote below.

Financing term loan — February 2008

In February 2008, we entered into a loan and security agreement with Gold Hill Venture Lending 03, LP, or Gold Hill, that provided for financing of up to $5,000,000 to be lent out to borrower members funded by us. The interest rate is fixed at 10.0% per annum. Effective August 3, 2009, we amended and restated the financing term loan as further described in this footnote below.

Term loan — May 2009

On May 18, 2009, we entered into another loan and security agreement, the May 2009 term loan, with SVB and Gold Hill as co-lenders, and amended the growth capital term loan and financing term loan to accommodate the new borrowing with a fixed interest rate of 10.0% per annum. Effective August 3, 2009, we amended and restated the financing term loan as further described in this footnote below.

Amended and restated term loan — August 2009

Effective August 3, 2009, we consolidated the May 2009 term loan, the growth capital term loan and the financing term loan into two loan agreements by executing an amended and restated growth capital term loan and an amended and restated financing term loan. As a result of the consolidation, borrowings under the May 2009 term loan were split equally between and consolidated under the amended and restated growth capital term loan and the amended and restated financing term loan. The terms of these two amended and restated agreements are substantially the same as those of the three prior agreements, including that the borrowings continue to be secured by a blanket lien on substantially all of our assets, except for our intellectual property rights, certain deposit accounts, and payments we receive on the CM Loans. Additionally, the amended and restated agreements continue to require that Lending Club maintain combined certificates of deposit in the amount of $700,000 as collateral until repayment. Further, under the amended and restated agreements, we agreed to maintain the same minimum collateral ratio as established in the May 2009 term loan. At June 30, 2011, we do not have any remaining capacity under these agreements as we have fully drawn down the entire $13,000,000 of combined availability under the amended and restated growth capital term loan and an amended and restated financing term loan. As of June 30, 2011, our outstanding principal balance under these agreements totaled $1,818,862.

Amortization of debt discounts

The amortization of debt discounts for the above loans is as follows:

In connection with the growth capital term loan and its subsequent amendments, we issued fully exercisable warrants to purchase 164,320 shares of Series A convertible preferred stock at an exercise price of $1.065 per share, for which we recorded debt discounts of $105,913. Amortization of the debt discounts recorded for this loan, as amended, was $9,507 and $16,529 for the three months ended June 30, 2011 and 2010, respectively, and were recorded as interest expense.

In connection with the financing term loan agreement, we issued fully exercisable warrants to purchase an aggregate of 328,637 shares of Series A convertible preferred stock at a price of $1.065 per share and recorded total debt discounts of $277,962. Amortization of the debt discounts recorded for this loan were $10,269 and $30,866 for the three months ended June 30, 2011 and 2010, respectively, and was recorded as interest expense.

In connection with the May 2009 term loan facility, we issued fully exercisable warrant to purchase 187,090 shares of Series B convertible preferred stock with an exercise price of $0.7483 per share and recorded total debt discounts of $184,860. Amortization of these debt discounts is included in the amortization of debt discounts presented above for the growth capital term loan and the financing term loan.

Private placement notes

During the year ended March 31, 2009, we entered into a series of loan and security agreements with accredited investors providing for loans evidenced by notes payable totaling $4,707,964. Each private placement note is repayable over three years and bears interest at the rate of 12% per annum. In June and July 2009, we issued an additional $200,000 of private placement notes which bear interest at the rate of 8% per annum. The balance of the private placement notes at June 30, 2011 and March 31, 2011 is $210,777 and $590,432, respectively. We are using the proceeds of these private placement notes to fund member loans. In connection with origination of these private placement notes, we issued fully exercisable warrants to purchase an aggregate of 514,817 shares of Series A convertible preferred stock (see Note 8 — Preferred Stock). Upon issuance of the warrants, we recorded a debt discount of $329,271, and amortization of the debt discount was recorded as interest expense of $14,207 and $27,439 for the three months ended June 30, 2011 and 2010, respectively.