The approach is a stark contrast to predatory lending that’s plagued impoverished communities
More than three in four Americans — 78 percent — report that they are living paycheck to paycheck, a number which has grown year over year in the last decade. Unexpected car trouble or necessary dental work can be enough to cripple someone who’s struggling just to make ends meet, and unfortunately, fair, safe options for accessing funds are hard to come by in a pinch. That’s why SoLo Funds in Cincinnati built a peer-to-peer marketplace for individuals to lend money, risk-free, to those in need.
“My co-founders and I were, quite frankly, being asked for money from our friends and from our family. It was never for a lot of money, maybe $50 to $200. Resources for loans under $1000 are extremely scarce. You can ask friends and family, which can be embarrassing and put a strain on personal relationships,” said Travis Holoway, co-founder & CEO of SoLo Funds. “You can take a payday loan or title loan, which hurts your credit and carries predatory interest rates of 400% on average, something most people can’t pay back. Or, you’re taking grandma’s ring, and you’re pledging that asset as collateral at a pawn shop. None of these options are favorable.”
So Travis, who was working in finance in New York City at the time, decided to leave his job and develop a better option for those friends and family members on his mind, as well as the scores of other Americans struggling just to get by. The solution is centered around individuals lending discretionary cash to those in need at a more affordable rate than a payday or a title loan, and without causing that personal friction in their personal relationships.
“It’s peer-to-peer lending in the purest form. Tom, who has an extra $400, can lend $100 to help Suzy, a single mother living in Cleveland, whose utilities are about to be cut off in the dead of winter. He can help her with that utility bill by giving her that $100, and he’ll make a return on those lent dollars in the form of a tip when it’s paid back, an amount which Suzy has full discretion over,” said Holoway. “This financial collaboration helps both parties out, keeps Suzy from taking a loan she can’t pay back, and doesn’t hurt her credit score. And Tom makes a little extra cash.”
To start the company, Holoway ditched Wall Street for High Street, joining the Lumos Accelerator, an Ohio Third Frontier partner in Columbus, to refine his idea. After that, he moved to Cincinnati, where he was able to attract high-level talent from companies like GE and Fifth Third Bank, as well as cut down the distance between himself and co-founders Rodney Williams (of LISNR), Jarrel Carter and Taylor Conophy. After going through Hillman Accelerator, the first minority and diversity-centered accelerator program in the Midwest, SoLo grew rapidly, from just Holoway to 9 full-time employees in one year. The company was recently accepted into the national Techstars accelerator.
Holoway, who has lived and worked outside of Ohio, says there’s no better place to grow SoLo funds.
“Oh man, this is the perfect spot for us. When you look at the sheer amount of companies — quality companies — that are doing well in this state, we do compare, per capita, to other more well-known tech hubs throughout the country,” said Holoway. “I’m always singing Ohio’s praises to those who aren’t from here. And if you need proof of the willingness to help develop companies here, just look at us. We’re a product of a system that’s set up to support us.”