Fast-growing online lender provides credit to college students and recent graduates who are underserved by traditional lenders.
CHICAGO, March 18, 2020 /PRNewswire-PRWeb/ -- Boro, a provider of affordable loans and financial education to students that have largely been ignored by traditional lenders, today announced a $12 million Series A fundraise, led by leading Chinese fintech company LexinFintech (NASDAQ: LX).
College students today face financial hardships that go beyond student debt. Without credit histories, it's difficult for them to get approved for safe, affordable loans. But when critical expenses for things like textbooks, class fees, and apartment deposits pile up, it creates financial pressure on students that can put their studies at risk.
This system has created a negative impact on society:
- More than half of college dropouts say the reason they stopped attending classes is because they needed money, but weren't able to balance work and school.
- Between 2015-2016, 3.9 million students dropped out of college with debt and no degree.
- 70% of college students report feeling financial stress.
- 59% of students say they cannot describe what a credit score is.
Boro is designed to solve this problem by offering loans to students who may not have a credit history at all.
Here's how Boro does it:
- No revolving debt: Most credit cards allow users to make minimum payments each month, racking up more and more interest with each passing statement. By contrast, Boro loans have fixed term limits, meaning borrowers fully pay off their loans on a controlled schedule, preventing them from being trapped in cycles of debt.
- Looking beyond FICO: Boro doesn't use the traditional factors that mainstream lenders use to assess creditworthiness, like credit histories, income, or FICO scores. Instead, Boro assesses applicants based on non-traditional data sources that most students have readily available, like educational background, utility bills, and bank transactions. Eighty-six percent of Boro customers had no previous credit history.
- Credit-building products: Boro's financial solutions are designed to help students build a credit history. Some customers have seen their scores improve by hundreds of points after just a few months of on-time payments.
- Education: Boro provides users with blog posts, quizzes, and other educational content to help them become financially informed.
- Easy to apply: Users can apply for loans on the Boro app in minutes. Boro's risk management engine will have an assessment in seconds, and funds appear in borrowers' accounts in 1-2 business days.
"BoroCash kept me from paying excessive late fees on my rent," said Lyric Campbell, a student at Florida A&M University and Boro user. "I work full-time while going to school full-time and sometimes money can get tight! With BoroCash, I don't worry about being charged outrageous fees like many payday loans are so famous for."
Boro will use its funding to expand its offerings to more colleges and universities in more states, and further improve its financial technologies by leveraging LexinFintech's expertise in serving underbanked Generation-Z users in China and managing risk with advanced technologies.
Boro will also use the new funding to increase its market penetration in the U.S. BoroCash, which was launched in July, is currently available in 15 states. Since its launch, the number of customers with a credit line has increased by over 300%.
Boro projects that about one-third of the 20 million college students in the U.S. could benefit from its products.
"Our goal is to create meaningful opportunities for students to build healthy borrowing habits that will serve them well beyond their time in college," said Hao Liu, co-founder and CEO at Boro. "Students today are overserved by unethical lenders. Boro breaks that pattern by helping users get access to stress-free financing that helps them grow their financial confidence, and protects them from high-interest rates and hidden fees."
Boro is a mobile financing app for college students who are discriminated against by mainstream lenders. Founded in 2015, Boro's proprietary non-FICO loan application process helps students obtain microloans and build their credit, even without a prior credit history or even a social security number. Boro loans help cover the small but critical expenses – like textbooks, class fees, groceries, and test prep materials – that can snowball and force students to drop out, leaving them with student debt but no degree.
In 2018, Boro secured a $100 million dollar line of credit from Arcadia Funds. In 2017, the company raised a $2 million angel round. Boro is headquartered in Chicago; its financial products are available at over 200 colleges and universities in 31 states across the country.
For more information, please visit GetBoro.com.