Payday loan disruptor incubated by Y Combinator To lend raised $ 14 million in new funding from Google Ventures, QED (a company that includes the founder of Capital One and Data Collective. This brings the company’s total funding to more than $ 18 million.
LendUp is trying to redefine payday loans and make the lending experience for millions of unbanked Americans more fair and transparent. Rather than forcing Americans to turn to predatory lenders and banks, with their high interest rates, LendUp wants to give those looking for a quick fix to a short-term financial need a way to borrow money. money with no hidden fees, expensive renewals and high interest. rates.
At a grassroots level, LendUp is a direct lender and has created a way to use low value loans as an opportunity for consumers to build credit and move up the financial ladder. Consumers with little or no credit can apply for and receive short-term loans (up to $ 250 for a maximum of 30 days). But it does not stop there. The company uses these small loans to help clients build credit and move up the financial ladder.
Unfortunately, most credit bureaus are turning their backs on payday loans, so even though people are able to pay them off on time, it does not help their credit scores and the bad credit cycle continues to turn. Most of the banks do not touch these kind of loans because they are high risk, but as On Deck Capital (which attempts to streamline the lending process for small businesses), LendUp uses Big Data to perform instant risk analysis and assess creditworthiness, eliminating those who have bad credit for a reason from those who may have fallen victim of the system.
In fact, LendUp is now working with all of the major credit bureaus to report customer data so they can build their credit.
Rather than forcing everyone to submit bank statements, credit reports, etc. Right from the start, LendUp will use other available data and instantly approve those with good credit. It only asks for more information from you if questions arise, approving or rejecting as soon as it has enough information to make an informed decision.
Earlier this year, LendUp started offering instant online loans. This means LendUp now has the ability to deposit money into your account in as little as 15 minutes, so consumers can not only request and get approval faster than they normally would, but they have now almost instant access to this loan. LendUp loans are also available on mobile, and LendUp deposits this money into your bank account, which you can then access from your laptop or while on the go.
Co-founder Sasha Orloff told me that LendUp has focused on one state (California) and made sure that their platform complies as a lender with state rules. He compares these efforts to literally recreating a different loan application for each state, taking into account the laws and regulations of each region. The startup recently began lending in Louisiana and Missouri, but with the new funding, LendUp plans to expand nationwide.
With the startup’s new financial ladder education system, LendUp tries to get users to improve their creditworthiness by taking online courses in credit, savings and more. As you pay off your loans on time, take the course, you earn points to rise to the rank of Silver, Gold, and higher statuses. When you reach high statuses, you can access more money for loans at lower interest rates. In fact, Shane Berry and Christopher Walsh of the LendUp UX team, worked with a design team from Zynga (where co-founder Rosenberg worked) to help create that gaming experience and help educate users that win. this financial credit can be fun.
Orloff also comments that LendUp currently has debt commitments for an additional $ 25 million in debt for the startup’s loan portfolio.
The entire online lending space has started to seem a bit more crowded as companies like LendUp, BillFloat, Zest, Think Finance, Kabbage, On Deck, and Lending Club all try to make it easier for consumers and consumers to access. small businesses with capital without having to jump through a million hoops.
But what sets LendUp apart are its efforts to actually help many of those unbanked Americans who can’t find a loan, become creditworthy through education. The startup is trying to solve the root of the problem, which is poor financial education.