A large portion of the population is excluded from the financial system, preventing them from obtaining loans for important life events like buying a car or a home or starting a business. Travis Holoway and Rodney Williams saw the detrimental effects this had on their friends and family members who required short-term loans but were unable to get them. These events motivated them to develop SoLo Funds, a community finance platform where individuals may borrow from and lend to one another for financial gain or social good. Learn about solo funds, the app, and why it is unavailable in California by reading this post!
What Are SoLo Funds?
SoLo Funds is a smartphone app that facilitates p2p (peer-to-peer) loans through a section called “The Marketplace.” Cash advances are requested by borrowers, and are ultimately funded by individual consumers rather than traditional banking institutions.
When compared to its rivals, the solo app allows borrowers more flexibility in determining the terms of their loan funds by allowing them to set their own repayment schedules and loan amounts. Unique among payday loan apps, there are no set fees associated with using this one.
However, the funding time is the main disadvantage of SoLo Funds. Your loan funding decision may take up to three days to be made by the lender. There are apps that inform you immediately if you qualify for a cash advance and how much you can borrow. Co-founder Rodney Williams estimates that between 55% and 60% of approved requests for advances from SoLo Funds are actually paid out.
Brief History of SoLo Funds
The CEO and co-founder of SoLo Funds, Travis Holoway, claims that his company offers more than simply a simple means to obtain a short-term loan. Something greater is about to begin.
Solo Funds, which just closed a $10 million Series A fundraising round, is known for its peer-to-peer lending app. Borrowers typically provide a little “tip” to their lenders when repaying the money, which in turn increases their “SoLo Score” and makes it possible for them to borrow more money in the future.
Although Holoway claims that SoLo’s primary function is to facilitate rapid access to short-term funding, he also claims that the company’s ultimate objective is to establish a self-sustaining cycle in which SoLo’s borrowers eventually become the platform’s lenders. He intends to provide those customers with access to hitherto unnoticed banking and investing options.
He notes that the network’s ideal user life cycle involves borrowers taking out loans when they need them, repaying them on time, then returning to the site as lenders.
However, there are nuances to the reality to consider, even if the firm does fulfill its claims of increased financial security. Even though apps like SoLo Funds aren’t as harmful financially as high-interest payday loans, they nonetheless pose risks. And in the case of SoLo Funds, in particular, there are worries about bias introduced by the use of social data to assign a trustworthiness level to users.
We’ve issued over $200 million in loans and processed over $400 million in transactions since our inception in 2018. 82% of its membership comes from underserved areas. Since the number of Black-owned banks has been decreasing, SoLo Funds is attempting to meet this need. The firm claims to be the largest fintech/neobank formed and operated by people of African descent.
How Do SoLo Funds Work?
SoLo Funds differs from Earnin and Dave because it doesn’t lend and doesn’t depend on employee pay. Instead, it uses a form of crowdsourcing in which customers can submit loan requests on a marketplace. Borrowers can choose the exact amount, but lenders can receive tips of up to 12% of the initial loan value for taking on the risk.
SoLo Funds lends from $50 to $500, but it doesn’t allow new borrowers to choose their own terms. Users that demonstrate a history of timely loan repayments will be rewarded with increased borrowing limits. This activity also factors towards a borrower’s SoLo Score, which is used by lenders as a measure of loan risk.
However, SoLo’s marketplace is similar to how real credit ratings work. New users tip 8%, but as their reputations expand, they can entice lenders by offering lower loan rates and longer repayment terms. According to Holoway, long-term borrowers typically tip between 3 and 5%.
He explains that this is because “lenders look at these individuals as safer opportunities because they actually have more history on our platform over time.”
SoLo assesses a one-time late fee of 15% in addition to a $5 administrative fee for borrowers who are late in repaying their loans. After that, though, debtors won’t have to worry about their debts compounding or increasing.
This is in stark contrast to the standard payday loan industry, which thrives on keeping debtors in an endless cycle of debt. About a quarter of borrowers “roll over” their debts more than nine times, and the Consumer Financial Protection Bureau reports that the average borrower delays a loan payment three to four times. Loans that roll over more than 10 times in a year typically result in higher fees for the lender because of the compounding interest.
SoLo Funds Borrow Details
Here are some solo funds borrow details.
#1. Eligibility
To qualify for a SoLo Funds consideration, you must complete the following requirements:
- Age requirement: 18 and up
- Be a U.S. citizen or permanent resident having a card valid for at least 10 years without any conditions
- Use a debit card linked to a SoLo Funds-compatible bank account
When you apply for an account with SoLo Funds, they will also perform a mild credit check. Although it has no bearing on your eligibility, your credit score does factor into your Solo Score. SoLo Funds generates this score within the app to help its lender users choose whether they feel comfortable lending to you.
#2. Interest and Fees
SoLo’s loan products are interest-free. Instead, the loan’s monthly payment is entirely up to you. The interest rates on your loans will depend on which of two choices you make:
- Hint: You can choose a fixed percentage that will be paid directly to the lender, from 0% to 15%.
- Donation. You can voluntarily contribute to the SoLo Funds platform to help cover its expenses. A percentage of the profits made by SoLo Funds are given to charity.
These two expenditures are entirely discretionary. You will receive an interest-free loan if you do not specify a tip and gift amount. A greater tip may increase the likelihood that a lender will agree to fund your loan, but only if you include it in your funding request.
#3. Borrowing Amounts
You can borrow as little as $20 from us. The initial limit loan amount is $100 when you open an account. If you make all of your loan payments on time and improve your SoLo Score, you may be able to borrow up to the maximum amount of $575.
#4. Loan Default and Late Payment Fees
After the loan gets paid out, you’ll have 35 days to make payments. A 10% late fee will be added to your loan balance after that point. A transaction charge will be added to your bill to cover the cost of collections, as determined by the following formula. Two times (0.9% * loan amount + $0.70). If you’re late on a $100 loan, for instance, you’ll have to fork over an additional $29.40 in late fees and transaction costs.
SoLo Funds Fees and Pricing
Loans from SoLo Funds do not accumulate compound interest or “surprise” fees. But if the members who borrowed the money don’t pay back the loan on time, complications arise. Check out the late fees charged by SoLo Funds and who they affect below.
- 10% Late Fee. If payments are overdue by 35 days or more, the borrower will be assessed a 10% late fee. SoLo Funds claims that it pays the lender the late fees. SoLo Funds will submit the debt to a collections agency 90 days after the loan was originated.
- Synapse Transaction Fee. If a loan goes into collections because of a borrower’s inability to make payments, this fee is assessed as “funding and repayment transaction costs.” The payment provider, Synapse, apparently starts charging this fee as soon as a loan is more than 35 days late, not only as it reaches 90 days. Here’s how Synapse figures out that price: You’ll get your money back two times over (0.9% of the initial investment plus $0.70). In this case, a loan of $100 would cost a total of $113.20 ($100 plus $10 in late fees and $3.20 in transaction fees).
- Solo Recovery Fee. Lenders take note: this is the cost you’ll incur if a borrower doesn’t pay back on time. If SoLo funds are able to collect the cash 35 days after loan origination, it will get 20% of the initial loan principle.
- Tipping. Although gratuities aren’t exactly a cost, they may be part of the loan agreement. Tipping is optional, per SoLo Funds’ policy. Tipping is optional and up to 15% of the requested loan amount, but entirely at the discretion of the borrower. As a gesture of appreciation, you can either tip your lender directly or make a “donation” to SoLo.
What Services Do SoLo Funds Provide?
Here’s a quick summary of the company’s present offerings and future plans.
#1. Lending
Lending services are provided by SoLo Funds. In order to earn a profit and do good for your neighborhood, you can invest in SoLo Funds loans.
Lenders on the site have access to information about the borrower’s social score and repayment history, both of which may provide clues as to the borrower’s creditworthiness. It’s a simple and fast approach to investing tiny amounts of money with the possibility of large returns from gratuities.
#2. Interest-Bearing Accounts (Not Available Yet)
SoLo Funds has promised that it will introduce interest-bearing accounts in the near future. Again, specifics are lacking; as of September 2022, all that can be gleaned from the website is that clients’ accounts will earn competitive interest rates. This product, if it materializes, would be a welcome addition to the current selection of high-yield savings options.
#3. Banking
SoLo Funds is not a full-fledged bank just yet. However, the company claims that SoLo Wallet would provide debit cards and easy access to numerous ATMs. The lack of overdraft fees is particularly significant for underserved or unbanked populations.
#4. Borrowing
61% percent of Americans are always worried about making ends meet. People often need cash quickly because of unforeseen emergencies like automobile accidents or medical bills. Borrowers benefit greatly from a SoLo Funds loan because the app and approval processes are far faster than those of traditional lenders like banks. In addition, they get to decide when and how much they pay without having to worry about compound interest.
#5. Insurance (Not Available Yet)
Additional “soon” functionality will include a helping hand in signing up for a life insurance policy. SoLo Funds claims to desire to help people not have to turn to crowdfund to cover final expenses. Life insurance education and enrollment assistance are planned, but specifics are still forthcoming.
SoLo Funds Not Available in California
A Los Angeles-based community finance firm settled with California financial authorities, agreeing to pay a $50,000 penalty and refunding customers for donations they made to the firm.
In its settlement agreement with the California Department of Financial Protection and Innovation dated May 8, SoLo Funds made no admissions of wrongdoing. After the inquiry began in May 2021, the corporation ceased operations in California but continued to do so in other states.
SoLo Funds was a peer-to-peer lending platform that allowed borrowers to connect with lenders through a mobile app and request short-term loans of up to $500 for a period of 15 days. The service markets itself as a Black-owned fintech firm that provides an alternative to traditional payday loan services.
Even though they settled with the state, SoLo Funds has yet to resume business in California. A high-ranking firm executive, however, has stated that it intends to resume operations.
In an email to The Bee, SoLo Funds co-founder and president Rodney Williams stated, “We plan to adhere to all requirements in the consent orders and launch the updated model in the state of California.”
What Regulators Were Concerned About With SoLo Funds
The app’s marketing implied that borrowers might get low-interest “fast loans” in a matter of hours, as stated in the consent decree. Borrowers were allegedly coerced into giving 12% tips to the lenders and up to 9% to SoLo Funds, according to the California settlement.
Borrowers were encouraged to offer the platform’s maximum tip amount in order to have their loan request fulfilled, according to platform pop-up messages. According to the settlement decree, “one such pop-up claimed that borrowers who offered the maximum tip amount were twice as likely to have their loan funded.”
Authorities in California have claimed that users were encouraged by pop-up messages within the app to give SoLo Funds tips of up to 9%.
In the consent agreement, it is stated that “Borrowers could not dismiss the donation request prompt when making a loan request; the only way to disable the donation request pop-up was to toggle an unadvertised setting buried in the Platform’s general settings panel.”In addition, the Borrower had to disable this feature every time he applied for a loan.
The majority of California borrowers tipped and made donations, according to the state’s Department of Consumer Affairs.
According to SoLo Funds’ president Williams, tips were never necessary.
“Lenders do this every day,” he claimed, referring to a new breed of online lenders that provide payday loans in exchange for tips. For the benefit of those creditors, state financial regulators are looking into the matter and have proposed legislation that would cap the number of tips and force financial institutions to factor the tips into the overall interest payments.
Williams said that for Solo Funds, tips were included with nearly 100% of loans but were not included with 83% of donations.
SoLo Funds Alternatives
When you need cash fast but don’t have access to traditional lending sources like banks or close relatives, what do you do? This could be the result of a number of cost-increasing circumstances or a temporary halt in production. Despite many obstacles, including current legal issues, SoLo Funds has been a popular choice for small peer-to-peer loans.
Furthermore, loan requests are fulfilled by SoLo Funds by linking borrowers with targeted lenders. SoLo Funds requests from borrowers can potentially be funded in as little as 20 minutes. If you’re looking for an alternative to payday loans or credit cards, there are plenty of apps like SoLo Funds. Some even go further and offer banking features like overdraft insurance and the like. Look through our selection of alternatives like SoLo Funds. Also, read 401K PROVIDERS: Top Best 401K Providers in 2023.
Also, trustworthy cash advance apps like SoLo Funds provide quick access to loans for both individuals and businesses, regardless of credit history. These lending services and payday loan apps disperse funds rapidly and at little or no interest. In addition, they provide greater flexibility in terms of repayment and larger loan amounts, so you won’t have to resort to high-interest payday lenders.
#1. Possible Finance
Possible Finance and SoLo Funds offer loans that are very similar to one another. The Potential Loan could help borrowers get by without resorting to the high-interest rates and fees associated with payday loans. A Possible Loan gives you the opportunity to borrow up to $500 fast, with no interest or fees charged. Then, you’ll have four months to pay it back.
Right now the site is concentrating on smaller loans, but in the future, it hopes to launch a cash advance program that also grants access to a low-limit credit card. Possible Finance is a much more secure option than payday loans or high-interest credit card companies. The underbanked run the risk of financial catastrophe if they take out a loan to get out of a jam. Small personal loans from Possible could prevent borrowers from sinking farther into debt. A 4.5 rating from the BBB and an average rating of 4.3 from users in the Google Play Store attest to the reliability of Possible Finance.
#2. Zirtue
Zirtue is a well-known app that, like SoLo Funds, understands the importance of providing services to the unbanked and underbanked. Instead of publishing your loan request publicly as you would on SoLo Funds, you may directly approach a friend or family member on Zirtue and ask them for money.
You send a request to borrow money and some background about your financial position to contact via email. They can pay back your debt in full, or spread the payments out over a number of months, online. Zirtue stands out from the competition since it is free to use and because interest rates are negotiated with lenders.
#3. Prosper
Prosper is an online lending platform that operates similarly to SoLo Funds by connecting savers and borrowers directly through the web. Like most other peer-to-peer lending platforms and apps like SoLo Funds, you need to sign up for Prosper and verify your identity before you can apply for a loan through them.
The main perk of Prosper is that it connects borrowers and lenders who are willing to work with one another to deliver low-interest loans. Prosper does not use credit scores to determine whether or not to grant loan requests. In addition, the amount of collateral you are willing to put up is the most important factor.
#4. Hundy
Similar to SoLo Funds, Hundy promotes itself as a meeting place for those in need of financial assistance and those willing to help in the form of investors. While it does not make actual loans available to its users, it does offer advances of between $25 and $250 using a crowdsourcing platform. The Hundy website claims that the entire process of signing up and seeking payments takes no more than five minutes.
The funds will be deposited into the borrowers’ accounts within one business day. Hundy’s mission is analogous to that of SoLo Funds in that it seeks to unite borrowers and lenders in a shared network. Also, the company boasts that it “enables its members to benefit from their good character.”
What Are the Pros and Cons of Using SoLo Funds?
Pros.
- Loans up to $575 are available.
- Avoids overdraft accounts.
- User-selected payback dates are an option.
- There are no hidden charges.
Cons
- The acceptance rate for requests for advances is between 55% and 60%.
- It may take up to three days to get approval.
- Neither a budget nor savings aid is provided.
- Solicits gratuities and donations (optional).
Solo Funds Reviews
The opinions of those who have used SoLo Funds vary.
Based on 44 customer reviews published as of October 31, 2022, SoLo Funds has a 1.32 overall BBB rating. Most of the complaints come from loan providers who haven’t been repaid and who are confused about the consequences of late or nonpayment.
Here are some reviews from real users of Solo Funds.
- It’s bizarre that they promote themselves as a level playing field where everyone has an equal shot. At the end of the day, they’re just another snobby, prejudiced, pseudo-helpful platform designed specifically for white folks with moderate financial problems. After registering and completing the retreation process, I was notified that their third parties found me ineligible.
- I utilized this program for about a year, lost $5,000, and their recovery crew is so incompetent that they stopped responding to my emails asking about my missing funds. All they do is text the borrowers, so if the borrowers block them, they can’t steal any more money from the individuals who were trying to help them.
- Strike or miss. Never received payment despite getting an almost perfect score; it’s possible that the problem is with their system, but it’s still unfortunate to be turned down after having had such pleasant encounters previously. Excellent borrower, and they even made a donation to the service. It’s not a very gracious thank you, and I’m not taking it personally.
- Don’t give anyone on Solo Funds access to your bank account. Borrowers on this forum routinely break their commitments, damaging their credit in the process. If someone fails to make a payment, there’s money out of your pocket that you won’t get back. Don’t waste your money here; it won’t amount to anything.
Conclusion
As a whole, SoLo Funds seems to be working to address financial inequality, which is commendable. It has been successful for certain borrowers. Given the borrower’s leeway, quickness, and repayment terms, it appears to be preferable to a payday loan.
But the negative feedback from customers and the inquiries from authorities into its procedures are warning signs. It might be best to wait until the company’s track record improves before taking any action.
Solo Funds FAQs
What Happens if You Don’t Pay Solo Funds?
If you don’t pay back the advance in full within 35 days, SoLo Funds will keep trying to collect for another 60 days. The loan will then be forwarded to an external collections agency. SoLo Funds guarantees that your credit will not be compromised in the event of a loan collection.
Can I Make Money on Solo?
You can earn interest on your funds with a SoLo Impact Account. As long as you deposit a minimum amount and make regular deposits, you can fund any number of loans. Your results and contributions are tracked monthly.
Is Solo App Legit?
Yes, the Solo Funds app is legit. SoLo Funds is an actual Los Angeles-based company. Since April 2018, it provides payday loans. With over 8,000 reviews on Google Play and over 15,000 reviews on the Apple Store, the app gets an average rating of 4.6 stars.
How Much Money Can You Borrow From Solo?
The SoLo Funds app facilitates financial transactions between borrowers and lenders. Borrowers can apply for loans ranging from $20 to $575 and have 35 days to pay them back.
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