How One Company Fights Predatory Credit and Endless Debt Cycles for Black Women

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How One Company Fights Predatory Credit and Endless Debt Cycles for Black Women

While the economy is slowly but surely starting to pay off, with employment in May rose to 550 thousandWe must not lose sight of how the pandemic has significantly affected blacks, especially women. According to US News, over 58.4% of black women were / are unemployed, leaving black families at a disadvantage as they have to take care of daily necessities such as food, rent, gas, transportation and more.

Fortunately, SoLo Fundsthere is an online community founded by the two leaders of financial services BIPOC, whose members can request and fund short-term needs without predation and in an affordable way. SoLo strives to create a community that provides financial autonomy and level the playing field for those who need help. In the last year alone, SoLo Funds has financed 28,084 borrowers, of which 7030 are borrowers. to be women of color.

According to SoLo Funds co-founder and CEO Travis Holloway, the company was created out of life experiences shared by both he and co-founder Rodney Williams. As the two most successful people in their families, they began to shoulder the burden of financially supporting those in their families who were not as fortunate or financially stable.

“In the end, we wanted to send them somewhere else to get access to the funds, but we just couldn’t find any viable and fair solutions. We realized that the best way to get a loan of up to a thousand dollars is to borrow from friends and family, ”he explained to ESSENCE. “When you don’t have access to these kinds of resources, giving up gasoline to fill your car and giving up work can be a downward spiral that sometimes takes months or even years.”

Below is our conversation with Holoway about how the community supported women of color long before the pandemic, the benefits of peer-to-peer lending, and how the company is blurring the stereotype associated with short-term loans. Check this!

ESSENCE: How do you see the prospects for the development of SoLo funds in the coming years?

Travis Holloway: SoLo creates an opportunity to move up financial mobility… The whole goal here was to create an opportunity for fair loans, and we do this by giving borrowers the ability to determine all the terms of the loan. SoLo is the only place you can “go” (because it is mobile) and tell the institution how much money you need to borrow, what you need it for, what day you are going to return it, and if you are willing to pay what anything other than the principal.

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

Holovey: Our number one user is a minority, especially black women. This is an interesting dynamic when you think about who is actually funding these transactions. In fact, they tend to make up the majority of white men, and SoLo proves that the world is more empathetic than the media allows us to believe. The support taking place every day on the platform and since its inception is that there are women who can buy groceries, pay rent, pay their utility bills, and get the drugs they need. Everything is entirely on their terms when they decide what to pay, when they get paid, and this allows more control over autonomy and dignity.

When you think about not having to be vulnerable anymore, ask a friend and now he knows that you are in poor financial position, you can post your own terms for the market. It looks like magic. You place loans on a marketplace, and on average, within 36 minutes, a stranger somewhere in this country sends you the money you need. It is an opportunity when it gives the borrower the ability to access the required capital. It also creates this new opportunity where black women also lend and invest on this platform. Sure, you can lend money and not focus on profit, but for many people who invest, they make significant returns.

ESSENCE: What is peer-to-peer lending and what are its benefits?

Holovey: I like to say that SoLo is pure peer-to-peer lending. In the past, there were peer-to-peer lenders that were much more institutionalized. They usually took money from someone like you, and then the company kept your money. In peer-to-peer loans, you have to give your money to the credit club, they will accept applications from someone like me, and they will decide if I am approved or rejected. If they decide to approve of me, they will take some of your money and some of other people’s money and give it to me. Then I returned the money to the credit club.

They will provide you with all the profits based on these lending transactions. Peer-to-peer lending to Solo literally means “Travis lends directly to Natasha.” As a borrower, Natasha posts the terms of her loan on the marketplace. I come as a lender and determine whether it is comfortable for me to lend money to Natasha. I look at what she needs it for, when she returns the money, maybe what the profit actually will be, and the SoLo estimate. Our SoLo score is a credit score based on a transaction that measures its ability to repay this loan to me on the 15th of the month, and takes into account cash flow to a large extent.

If I am satisfied with her rating and I clicked the loan button, the amount will be debited from my checking account and immediately credited to her checking account. This happens in real time. In a matter of seconds, she has funds ready to use, and on the agreed maturity date, funds are automatically debited from her checking account and refunded to mine. Peer-to-peer lending is individuals who directly finance loans to others and provide a market for connecting the two together.

ESSENCE: How does SoLo Funds erase the stereotype associated with short-term loans?

Holovey: We put all power in the hands of the users. We do not tell lenders which loans to fund. We give them information so they can make informed decisions, but they have complete control over where their money goes. When you think about a borrower’s prospects, they have autonomy over all the terms of the loan. We do not tell them how much they should pay. We are not telling them to pay anything other than the principal. We do not choose a maturity date. We give them all this control.

Most importantly, we are not a traditional lending company where the lending company reaps the benefits of capital allocation. This money goes back to the community. When you think about financial collaboration and community empowerment, we are like the new community bank. Previously, you had the option to go to the bank and your last name, depending on your origin, and the particular city allowed you to access the capital. We’re bringing back some of those aspects, but what’s really important is that the community benefits from it. Everyone in the community benefits from this. Individual benefits, lender benefits, borrower benefits, but this financial partnership is incredibly empowering.



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