How a business fights predatory loans and the never-ending cycle of black women’s debt

0

As the economy slowly but steadily begins to recover, with employment reaching over 550,000 in May, we must not ignore how the pandemic has had a significant impact on the black community, especially women. According to US News, more than 58.4% of black women were / are unemployed, leaving black families at a disadvantage to look after daily needs such as groceries, rent, gasoline and transportation, etc.

Fortunately, SoLo Funds, an online community co-founded by two financial services leaders from BIPOC, exists where members can apply for and fund short-term needs in a non-predatory and accessible way. SoLo aims to create a community that allows financial autonomy and a level playing field for those who need help. In the past year alone, SoLo Funds has funded 28,084 borrowers to date with 7,030 to be women of color.

According to SoLo Funds co-founder and CEO, Travis Holoway, the company was built from a lived experience that he and his co-founder Rodney Williams shared. As two of the most successful people in their families, they began to take on the burden of financially supporting those in their families who were not so fortunate or financially stable.

“At the end of the day, we wanted to send them elsewhere so that we could access the funds, but we just couldn’t find viable and fair solutions. We realized that the best way to get a loan under a thousand dollars was to borrow from friends and family, ”he told ESSENCE. “When you don’t have access to such resources, not having that gasoline to put in your car and not get to work can be a downward spiral that sometimes takes months or even years to get out. “

Below, check out our conversation with Holoway on how the community supported women of color long before the pandemic, the benefits of peer-to-peer lending, and how the company is breaking down the stereotype associated with short-term lending. Check it out!

ESSENCE: Where do you see the projection of SoLo funds in the years to come?

Travis Holoway: SoLo creates an opportunity for upward financial mobility. The overall goal was to create a fair loan opportunity, and we achieve this by allowing borrowers to create all loan terms. SoLo is the only place you can ‘come in’ (because it’s mobile) and tell the institution how much money you need to borrow, why you need it, what day you’re going to pay it back, and if you’re ready. to pay anything besides the principal for it.

ESSENCE: How did the SoLo Funds community support black women and women of color before the economic crisis of the pandemic?

Holoway: Our number one user is a minority, especially black women. It’s an interesting dynamic when you think about who is actually funding these transactions. They actually tend to be predominantly white males and SoLo proves the world is more empathetic than the media makes it appear. The support that happens every day on the platform, and that has happened since its inception, is that there are women who can shop for groceries, pay rent, pay their utility bills, and get them. medication they need. It is entirely on their terms that they decide what to pay when they pay, and this allows for greater control over autonomy and dignity.

When you think you don’t have to be vulnerable anymore, ask a friend and he now knows that you are in a bad financial situation, you can post your own terms for a deal. It’s like magic. You post the loans to the market and on average 36 minutes a stranger somewhere in this country sends you the money you need. This is an opportunity that allows the borrower to have access to the capital they need. It also creates this new opportunity where black women also lend and invest on this platform. Of course, you can lend money without really focusing on returns, but for many people who deploy capital, they get big returns.

ESSENCE: What is the loan between individuals and what are its advantages?

Holoway: I like to say that SoLo is peer-to-peer lending in its purest form. There have been peer-to-peer lenders in the past that are much more institutional. Usually they would take money from someone like you and then the company would withhold your money. In the case of peer-to-peer loans, you would give your money to a lending club, they would accept requests from someone like me, and decide if I was approved or denied. If they decide to approve me, they would take some of your money and some of other people’s money, and give it to me. Then I would pay the money back to the lending club.

They would give you all the returns based on those loan trades. Peer Loan, as far as Solo is concerned, is literally “Travis Lending Directly to Natasha.” As a borrower, Natasha has her loan terms published on a market. I come in as a lender and determine if I am comfortable lending money to Natasha. I’m looking at why she needs it, when is she going to pay it back, maybe what the actual return and the SoLo score will be. Our SoLo score is a transaction-based credit score that determines his ability to pay me that loan off on the 15th of the month and it largely looks at cash flow.

If I am comfortable with his score and have pressed the button to lend, there is a debit from my checking account and an immediate credit to his checking account. It happens in real time. Within seconds, she has funds ready to go and on the agreed repayment date there is an automatic debit from her checking account and a credit to mine. Peer-to-peer loans are individuals who directly fund the loans of other individuals and provide a market to connect these two individuals.

ESSENCE: How does SoLo Funds break down the stereotype associated with short term loans?

Holoway: We put all the power in the hands of the users. We don’t tell lenders what loans to fund. We give them information to enable them to make informed decisions, but they have complete control over where their money is going. When you think of the borrower’s point of view, he has autonomy over all the terms of the loan. We don’t tell them what to pay. We are not telling them that they have to pay anything in addition to the principal amount. We do not select their repayment date. We give them all that control.

The most important thing is that we are not a traditional loan company, where the loan company reaps the benefits of capital deployment. This money is put back into circulation in the community. When you think of financial collaboration and community empowerment, we are like the community bank redefined. Before, you could walk into a bank and your last name, depending on your lineage, and a particular city would give you access to capital. We bring back some of those aspects, but what is really important is that the community benefits from it. Everyone in the community benefits. The solo benefits, the lender benefits, the borrower benefits, but this financial collaboration is incredibly stimulating.

Share.

About Author

Leave A Reply