Sketchy Solo Funds Reaches Lending Milestone
I’ve written before about the legal troubles surrounding fintech lender Solo Funds and their “innovative” lending platform offering loans with interest rates up to 4000%.
Interest Rates in Excess of 4000%?!?
Fintech darling Solo Funds held accountable by Connecticut Banking Commissioner
Now, American Banker reports that Solo Funds has reached a lending milestone — $100 million in loans.
According to AB:
The company, which has picked up on an idea that LendingClub and Prosper abandoned several years ago, recently reached a milestone of $100 million in loans made through its platform. It has 700,000 users. It’s also creating what it calls a “lending [distributed autonomous organization]” or co-op, an independent entity that will manage the person-to-person loans.
The company’s leaders say SoLo has a unique model that is bringing affordable credit to underserved communities. State regulators and critics call it a standard-issue payday lender.
As I noted earlier, Connecticut’s banking regulator shut down Solo’s operations in the state, citing the egregious interest rates.
The state regulator claimed that while SoLo asked consumers to pay voluntary “tips” for the small loans they received, it only approved loans for people who paid the tips. According to the order, 100% of SoLo’s loans to Connecticut residents from June 2018 to August 2021 contained a tip to the lender or to SoLo itself and those tips were the equivalent of annual percentage rates ranging from 43% to 4,280%
According to Solo, they’re doing things “differently” and expanding access to credit.
Here’s the reality: All payday predators tell the same story. They claim to expand access to credit and suggest that the only way they can do that is by offering loans at crazy high interest rates.
A tipping model like Solo’s is not new — Dave and others use it, too. In this case, though, Solo ONLY approved loans…