A quarter of American households lack access to basic financial services, while 56% lack access to credit and lending.
LendUp, which was founded in 2012, designs affordable online credit and loan products for emerging middle-class Americans. Its flagship product, LendUp Ladder, was designed as a flat-fee alternative to payday loans where customers could borrow more by watching financial education videos and making payments on time.
The company says its automated lending process has helped save Americans $75 million in fees and interest.
California-based LendUp landed in hot water with federal and state consumer protection bureaus last year for its early lending practices and was ordered to pay out more than $6 million for fees and lending violations.
The company, which didn’t admit wrongdoing, said the regulatory actions dealt with issues going back to the early days of the company, before it had a full compliance department, The Wall Street Journal reported last year.
LendUp now has a compliance department. The company received early backing from GV — Google’s venture-capital arm — Andreessen Horowitz and other venture-capital firms.
The undisclosed investment from PayPal will be used to grow its customer base and to explore a partnership with PayPal.