By Peter Rudegair 

The lending club is getting awfully crowded.

On Tuesday, LendingClub Corp. posted earnings above expectations, reporting a surge in new loans, even as it cited growing congestion in the industry.

Like OnDeck Capital, another online lender that reported earnings this week, LendingClub said it was spending large sums to advertise to new customers and stand out in an increasingly packed marketplace.

Neither company recorded a profit--LendingClub posted a loss of $6.4 million in the first quarter while OnDeck said it lost $5.3 million--but the rapid loan growth the lenders reported illustrates why others are rushing to the sector.

On Monday, Goldman Sachs Group Inc. became the latest company to join the party. The investment bank said it had hired a former executive at Discover Financial Services to lead a new project that will use technology to lend over the Internet to consumers and small businesses.

The Wall Street powerhouse's push into retail lending will likely only intensify the competition for borrowers among companies that are using data-driven algorithms and other technology to facilitate loans.

Doug Lebda, chief executive of LendingTree Inc., which connects borrowers with multiple lenders online, said on an earnings call last week that "what we hear from our personal loan lenders is that they have seven to 10 times more money to lend than they can actually lend."

Mr. Lebda added that "lenders are literally begging to get on our network across all products."

At San Francisco-based LendingClub, which mostly offers unsecured personal loans to consumers, first-quarter lending more than doubled from the same period a year ago to $1.64 billion, while sales-and-marketing expenses rose 69% to $34.9 million.

The first-quarter results led Lending Club to increase its outlook for 2015 revenues by around 4.1%.

On a Tuesday conference call with analysts, LendingClub CEO Renaud Laplanche said the company has a stronger brand and a "broader, deeper investor base" than other marketplace lenders, which provides an advantage in terms of both credibility and funding.

Additionally, as demonstrated by a recently announced agreement with Citigroup Inc. to provide $150 million in loans to low- and moderate-income consumers, there is an "increased desire by the [traditional banking industry] to partner rather than compete with us," Mr. Laplanche said.

At New York City-based OnDeck, which specializes in small-business lending, new loans rose 83% to $416 million in the first quarter while sales-and-marketing spending nearly doubled to $12.7 million.

Part of that marketing spending came in the form of a new national sponsorship of Minor League Baseball, whose patrons are 22% more likely than the national average to be small-business owners, OnDeck executives said on Monday.

Executives at both OnDeck and LendingClub told analysts on their respective earnings conference calls that for the time being they can handle the competitive pressure.

"What we believe is that this is a game of scale and that there are serious competitive advantages that go to the scale player," said OnDeck Chief Executive Noah Breslow. "We continue to enjoy that kind of scale advantage in the market and are very confident in our ability to maintain that over the next couple of years."

Investors appeared to like LendingClub's results more than OnDeck's. While shares in LendingClub were up 3.5% to $18.19 in after-hours trading following the company's results, OnDeck shares closed 15.5% lower at $16.91.

Traditional banks and financial service companies are also expanding into the sector. Discover Chief Operating Officer Roger Hochschild said at a conference on Tuesday that this year it will move to offer its personal loans unsolicited, rather than on an invitation-only basis.

"While [marketplace lenders'] business models are well suited to a benign-credit and low-funding-cost environment, we are very confident in our superior" underwriting and funding, Mr. Hochschild said.

Maria Armental contributed to this article.

Write to Maria Armental at maria.armental@wsj.com

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