Tony Huang was inspired to create Possibility of financing because “it’s so expensive to be poor”.
The Seattle startup has just launched its first product, a small-sum loan that can be repaid in installments instead of all at once, which is typical of payday loans. Huang says he wants to serve clients like Keegan Voss, one of the first people to receive a Possible Finance loan. Voss is a musician who makes ends meet by delivering food for Caviar. He borrowed $500 from Possible Finance and is repaying the loan in installments.
“Like many millennials, he didn’t have a credit card and had no savings,” Huang said in an email. “He also has a job in the gig economy which meant he had no pay stubs which meant it was incredibly difficult for him to get a payday loan despite his income. “
Possible Finance customers can apply for small loans and quickly receive approval using a mobile app. Customers can build credit when they make payments, unlike traditional payday loans, which generally do not report to credit agencies unless a borrower misses payments.
“Low-income Americans are paying a lot more to manage their finances because the big banks have abandoned them and their only options are fringe financial services like payday lenders and check cashers,” said Huang, CEO of the startup. . Huang co-founded Possible Finance with Tyler Conant and Prasad Mahendra, the first two software engineers at Axon.
Possible Finance will have to prove that it can build a successful business by facilitating smaller, riskier loans. Huang says the startup’s technology will make this possible.
“Our technology, which removes expensive brick-and-mortar stores, allows us to benefit from greater economies of scale and also lower default rates by instantly analyzing customer data to make a lending decision,” he said. he said in an email.
Possible Finance also has regulatory hurdles to clear. The service is currently available in Washington State. Expanding to other regions can be tricky because each state has its own financial regulations to follow. In California, for example, there are limits on the number of days a lender can give borrowers before they need to repay the short-term loan.
Possible Finance raised $555,000 in a first round of funding, led by Unlock Venture Partners. Several angel investors also participated in the round.
[Editor’s note: This story has been updated with Keegan Voss’s real name after he gave permission to use it.]