SoLo Funds is Building an Innovative FinTech Company for Underserved Communities

In episode 121 of the Disruptors for GOOD podcast I speak with Rodney Williams, Co-founder of SoLo Funds, on building a non-predatory FinTech startup for underserved communities in America.

About SoLo Funds

SoLo Funds is a mobile lending exchange that connects lenders and borrowers for the purpose of providing more affordable access to loans under $1,000.

SoLo was created to disintermediate the predatory payday lending system. Today, SoLo is one of the fastest growing fintech companies in the country.

The predatory payday lending system is a problem that affects many people. These lenders prey on people who are in a tight spot and need cash fast.

They charge high interest rates and fees, which can make it very difficult for people to repay their loans. This can lead to a cycle of debt that can be very difficult to break out of.

SoLo’s story starts the way every SoLo request begins: with someone needing a hand.

Co-founders Travis Holoway & Rodney Williams were noticing that family members, friends, and roommates were asking for financial help here and there, and they understood why.

There weren’t any fair, reputable options for small, short-term loans.

They decided to create one by harnessing the power of community. SoLo was formed in 2018 to create a viable, non-predatory option for moments when life happens.

SoLo tap’s into the power of community and generosity to form an online safety net that is mutually beneficial to all of its members.

Travis and Rodney know that SoLo is needed because they needed it. Our loved ones needed it. And they know that SoLo makes a difference because nearly 80% of Americans live paycheck to paycheck.

Today, SoLo is driven to new heights, but grounded in the same hope and mission: to build a community that enables financial autonomy for all.

Predatory Payday Lending Practices

Predatory payday lending practices are a growing problem in the United States. These practices can trap vulnerable individuals in cycles of debt and lead to long-term financial instability.

It is vital that you understand how these practices work so that you can protect yourself from becoming a victim. Let’s take a look at what predatory payday lending looks like and how it affects borrowers.

Predatory payday lenders offer short-term loans at high interest rates, often with exorbitant fees and hidden charges that may not be disclosed to the borrower until after they have signed the loan contract.

This type of lender does not carefully assess the borrower’s ability to repay the loan, which often leads to borrowers taking out multiple loans in order to pay back the original loan.

The combination of extremely high interest rates and excessive fees quickly compounds, trapping borrowers in an endless cycle of debt while lining the pockets of predatory lenders.

The Impact on Borrowers

Unfortunately, this cycle of debt can have serious consequences for those who find themselves stuck in it. In addition to skyrocketing expenses, these individuals are often deprived of access to other mainstream credit sources due to their inability to pay off their existing debts.

This lack of access can create further economic instability as well as limit their ability to purchase important needs such as medical care or housing.

The high costs associated with predatory lending can also have serious implications for an individual’s credit score which can prevent them from ever getting out from under their debt burden.

About Rodney Williams

Rodney has been recognized with numerous awards, including Ad Age’s 40 Under 40 in 2012; the Ernst & Young EDGE Award in 2013; Cannes Gold Lion award in 2015; Tech Entrepreneur of the Year by Black Enterprise, 2016; NAACP Inspiring Innovation list 2017; 25 Inspiring Entrepreneurs Under 40 by Entrepreneur Magazine 2016; Entrepreneur of the Year in Connected World Communications in the Ohio Valley Region by EY in 2017; Ebony’s Power 100 in 2018 and CNBC Disruptor 50 List in 2015, 2016, 2018 and 2019.

Rodney attended West Virginia University, where he earned his BBA in finance, his BA in economics, and his MS in integrated marketing communications.

Rodney also holds an MBA in finance & supply chain management from Howard University. He is a member of the 2019 Class of Henry Crown Fellows within the Aspen Global Leadership Network at the Aspen Institute.

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Interview Transcript

00:12

Host: Thank you so much for joining me today, Rodney. Looking over your career path and journey, you’ve done a lot of interesting stuff before SoLo Funds. SoLo Funds seems to be an incredible adventure, and we’ll get into that soon. But let’s talk about your journey and path before SoLo Funds.

00:29

Rodney: Originally from Baltimore, I graduated from Howard University and West Virginia University. I started my career at Procter & Gamble as a brand manager. My first venture was Lisnr, which was my introduction to financial services and technology as a whole.

Then I moved on to SoLo Funds. I’ve done a lot along the way, but that’s the abbreviated version.

01:03

Host: What did Lisnr do?

01:05

Rodney: Lisnr was a wireless communication technology that allows for data to be shared between devices more easily, faster, and more securely. It uses audio that humans can’t hear, but devices can decipher and communicate with each other.

02:07

Host: That’s pretty cool. So financial services have been around your career for a bit. What was the starting point for SoLo Funds? How did the origin story for SoLo come about?

02:30

Rodney: While at Procter & Gamble, I got there really young, at 24. I started Lisnr, which is now celebrating its 10th anniversary, having raised $40 million from investors like Visa. But I’m from Baltimore, and I shared experiences with my co-founder, Travis Holloway.

One holiday season, we connected and discussed how friends and family often needed small loans, like $50 to $100. It became apparent that this wasn’t just a problem in our community but for many Americans who live on tight budgets. Fintech hadn’t addressed their needs equitably, and that was the premise behind SoLo Funds.

04:13

Host: So, to sum it up for listeners, SoLo is a microloan app where anyone can apply for a small loan, and others can agree to lend the money at a small interest rate. It widens the community beyond just family and friends, making it more inclusive. Is that correct?

04:59

Rodney: Yes, you summed it up well. Borrowers have complete control over their terms, choosing how much they need, what they need it for, and what they’re willing to pay for the loan. They post it to a marketplace visible across the US. Lenders resonate with the request and make an impact on their fellow human.

05:35

Host: Was it a plan from the beginning to potentially eliminate payday loans, which have high-interest rates and aren’t healthy for communities?

06:05

Rodney: Yes, that was a major purpose. We wanted to create a platform that was transparent and equitable. Traditional payday loans profit off communities without giving back. We wanted to redistribute wealth and create a better fee structure.

Our B Corp certification shows that 80% of our members reside in underserved zip codes. Both lenders and borrowers often live in the same neighborhood, which was exciting for us.

07:28

Host: When looking at the business model, did you reassess traditional APR and fee structures and build them from the ground up?

07:50

Rodney: We believe in empowering financial literacy. On SoLo, there are no default fees, no mandatory fees. Everything is optional and controlled by the borrower. Borrowers naturally learn the cost of capital and pay less over time. We teach them to ask for only what they can repay in a short period, building good repayment habits.

10:49

Host: Does the platform build a person’s credit over time? What are your thoughts on the traditional credit score system?

11:22

Rodney: Not yet, but we are working on it. We believe credit bureaus have failed many Americans. Our platform has better default rates than traditional lenders. We use banking data from Plaid to understand cash flow and the ability to repay. Our model learns faster and understands the real American experience better than traditional credit scores.

13:48

Host: Is there an age limit for using SoLo? It seems like a great tool for young people to learn financial literacy.

14:46

Rodney: The minimum requirement is 18 and a bank account. We believe children are underserved in financial services. Microloans can help them learn the cost of things, commitment, and the reward for keeping commitments. We aim to teach good financial behavior through simple and transparent products.

16:22

Host: How has the response been from the community, both borrowers and lenders?

17:18

Rodney: We’ve had a very positive response from borrowers, with 85-90% consumer satisfaction. They feel empowered, equitable, and in control. Lenders have also been positive, especially after we introduced Lender Protection in 2020, which credits lenders if borrowers don’t repay on time.

This significantly changed the trajectory of the company, and we’ve grown tremendously with around 200,000 loans.

20:55

Host: Microloans have been around in other parts of the world for a long time. Did you look at those models when developing SoLo?

21:25

Rodney: Yes, we looked at models like Tala and Branch, and others from Southeast Asia. We participated in three accelerators before launching, spending about three years from idea to launch. It’s hard to innovate in the US due to regulatory scrutiny.

Regulations often don’t consider lower-income Americans, which is a big problem. We hope to create frameworks for new business models and opportunities for others.

24:32

Host: Many FinTech solutions require raising a lot of money early on to deal with regulatory systems. Do you see it getting better from a regulatory standpoint?

25:54

Rodney: Today, we wouldn’t have had a chance 10 years ago. FinTech infrastructure companies like Plaid have made it easier. It’s still a significant financial commitment, but it has become more accessible. We’ve been lucky to partner with these infrastructure companies and be case studies for them.

27:51

Host: Doing things out of necessity often leads to great results. You’ve proven organic growth without big marketing campaigns. How has that shaped SoLo?

29:05

Rodney: It’s interesting how necessity drives innovation. We have a small team but a big impact. We’ve grown organically because people tell people. When you’re stuck on the side of the road and someone from Idaho helps you with a loan, that excitement spreads. We have product market fit and are growing regardless of investors’ understanding.

30:52

Host: Looking three to five years down the line, what does success look like for you and the team?

30:52

Rodney: We want to make a serious impact on everyday Americans. America has a growing emerging class, and we want to redefine FinTech for them. We launched an apparel line, and our members bought it, showing their commitment to SoLo.

We aim to redefine financial services, go global, and provide the best peer-to-peer lending model, making an impact and offering returns. We believe in creating a better marketplace for lending and helping people.

33:29

Host: Best of luck to you and the team. Keep up the great work, and congrats on the B Corp certification and all the success ahead.

34:51

Rodney: Thank you so much. I really appreciate your time and letting us tell our story. Thank you.