Yes, you can't cash it out like you can with a stock (unless you sell on the secondary market-I have not actually tried to do this and don't know how long the process normally takes).
Notes return both principal and interest, so a 3-year loan returns 33% of your money in the first year. There's still a liquidity issue, and the secondary market doesn't help in my opinion. The secondary market is usually defaulting notes.
As an experiment a few years back I bought lots of notes about 85-95% off. Supposedly there could be value to this using Lending Club's data. In practice, nearly all notes defaulted. So I'd avoid looking for deals on FolioFn - and you should also expect to lose money when you sell there. The expectation is that unwanted notes are being dumped for a reason.
There's also a flaw in Lending Club's performance calculation, so it might pay to run your own numbers. When my 90% discounted notes defaulted, Lending Club acted like I paid the full $25 per note, and lost $25 when I had only spent $2. Very strange, but my performance dropped like a rock in their numbers... 5%... 2%... -3%. Lending Club treated my $2 loss as a $25 loss, which is incorrect. I lost what I paid. It makes me wonder what else they got wrong in their performance numbers - did the person who sold a $25 note for $2 see $0 loss? While I saw the full $25 loss?
So my second bit of advice with Lending Club is run your own numbers. For example, with very small payments and a 1% fee, a little rounding up can increase their fee. If you receive 0.80 / month, Lending Club takes out 0.01 - but that's 1/80th, not 1/100th. Their fee in that case was 1.2% owing to rounding. So as with any investment, check your own numbers rather than trust Lending Club.