Lending Club, a website where people looking to borrow money can connect with lenders, has raised $12 million in a second round of funding.

Given the extent to which credit has dried up, it’s not hard to see why borrowers would be interested in peer-to-peer lending sites, rather than going through a bank; The New York Times wrote about the phenomenon last fall. Sunnyvale, Calif.-based Lending Club says the number of loans made through the site increased from $4 million in 2007 to $20 million in 2008 and estimates that number will reach $120 million this year. Lenders earned an average annual return of 9.05 percent over the last 20 months, Lending Club says.

Of course, with last fall’s market implosion, the regulatory environment around these sites has changed as well. Lending Club actually shut down for six months last year (making that $20 million number more impressive, by the way) for the required “quiet period” after registering with the Securities and Exchange Commission. Competing sites, such as Prosper, have had to do the same.

The new round brings Lending Club’s total funding to $22.26 million and was led by Morgenthaler Ventures, with participation from previous investors Norwest Venture Partners and Canaan Partners. The company also announced adding Pamela Kramer, whose past roles include chief marketing officer at E*Trade, as its new chief marketing officer.