ImpactAlpha, June 4 – Fig Tech, a Techstars Seattle graduate launched in 2015 as an alternative to payday lenders, is rolling out a new product to help non-profit and community organizations create their own lending programs.
Fig36 packages the company’s lending system as a service and includes software, underwriting, credit reporting and customer service. Fig says the 36% interest rate charged for loans in the new product will cover the cost of the platform and loan servicing.
Fig founder Jeffrey Zhou says the company launched the product after seeing non-profits struggle with rudimentary lending systems. He described one example as “giving out cash and [doing] collections in person, with just an Excel spreadsheet.” Zhou says Fig’s offering can improve partner organizations’ ability to offer loans and keep interest rates relatively low.
- Seed round… Fig closed $1.5 million—of the $2.6 million total raised—in the past 30 days. Backers include Access Ventures, Arrow Venture Partners, Tubergen Ventures, Village Capital, and several startup founders and entrepreneurs including Bizible’s Aaron Bird, Remitly’s Shivaas Gulati and the Wharton School’s Peter Fader.
- Debt capital… Fig also raised debt capital for its own lending activities and to help partner organizations leverage their funding for lending. Since launching, Fig has originated $1.2 million of its own loans, which average around $400 for a four-month term.
The company says the loans it makes to individuals are cheaper than those offered by payday lenders, which can charge annual interest rates of 400% or higher. It says its loans, which according to its website can come with annualized interest rates as high as 190%, carry the high rates because its loan book and average loan size are so small.
Fig offers educational materials and supports borrowers’ efforts to build a credit history. “We report all payments to the credit bureaus—most of our competitors don’t do that,” Zhou says, adding that most of Fig’s borrowers come to it as a last resort before using a payday lender.