Travis Holoway, the CEO and cofounder of SoLo Funds, says his startup isn’t just a quick way to take out a small, short-term loan. It’s the start of something bigger. The startup, which raised $10 million in a Series A funding round last week, offers an app in which users can loan money to one another. Borrowers usually grant a small “tip” to their lenders when paying the money back, and in turn build up a “SoLo Score” that helps them take out larger loans in the future. While Holoway says SoLo’s immediate purpose is to provide quick access to emergency capital, he adds that the startup’s true goal is to create a virtuous cycle, in which borrowers work their way up the financial ladder and become lenders on the platform. Along the way, he hopes to introduce those users to new banking and investment opportunities that they otherwise might have missed. “If we can have individuals come here, take loans when they need them, pay them back on time, get access to more traditional financial tools and resources, and ultimately come back as a lender and pay that forward, that is the best life cycle of a user on our platform,” he says. But while the startup may deliver on its promises of upward financial mobility, the reality is nuanced. Apps such as SoLo Funds aren’t as predatory as high-priced payday loans, but they carry some of the same financial traps. And with SoLo in particular, its use of use of social data to score users’ trustworthiness raises concerns about bias. [Photo: courtesy of SoLo Funds] How SoLo Funds works Compared to other small-dollar loan apps such as Earnin and Dave , SoLo Funds is unique in that it isn’t tied to employee paydays and doesn’t loan any money itself.
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These 2 Black founders aim to offer a fairer alternative to payday loans