Tony Huang and other former members of the Axon development team were inspired to create Possible Finance because “it’s so damn expensive to be poor.”
The Seattle startup just launched its first product, a small sum loan that can be paid back in installments instead of all at once, which is typical for payday loans. Huang says he wants to serve customers like Alex, one of the first people to receive a Possible Finance loan. Alex is a musician who makes ends meet by delivering food for Caviar. He borrowed $500 from Possible Finance and is paying the loan back in installments.
“Like many millennials, he didn’t have a credit card and didn’t have any savings,” Huang said in an email. “He also has a gig economy job which meant he didn’t have pay stubs, and that meant it was incredibly hard for him to get any payday loan despite having income.”
Possible Finance customers can apply for small loans and receive approval quickly using a mobile app. Customers can build credit when they make payments, unlike traditional payday loans, which typically do not report to credit agencies unless a borrower misses payments.
“Low-income Americans pay much more to manage their finances because large banks have abandoned them and their only options are fringe financial services such as payday lenders and check cashers,” Huang said.
Possible Finance will have to prove that it can build a successful business facilitating riskier small loans. Huang says the startup’s technology will make that possible.
“Our technology, which cuts out expensive brick-and-mortar stores, allows us to benefit from greater economy of scale, and also lower default rates by instantly analyzing customer data to make a lending decision,” he said in an email.
Possible Finance also has regulatory hurdles to clear. The service is currently available in Washington state. Scaling to additional regions may be tricky because each state has its own financial regulations to comply with. In California, for example, there are limits on the number of days a lender can give borrowers before they have to pay back the short-term loan.
Possible Finance raised $555,000 in an early funding round, led by Unlock Venture Partners. Several angel investors also participated in the round.