Getting a loan from the bank isn’t the easiest process, especially when you need funds quickly for a project, for college, or for a new business you’re starting.
That’s why Durham-based LoanWell created a lending platform to help local residents access funding while saving money on interest and fees (for borrowers) and earning interest (for lenders) instead of giving that money to the bank. LoanWell helps broker loans between users and the people in their community who want to help by lending, while offering a structured repayment system as well.
“Instead of (our platform) being a gift like a GoFundMe, a contributor having the ability to be repaid allows the freedom to offer more than one would typically give or donate,” said Bernard Worthy, LoanWell’s Co-Founder and CEO. “So we think that is what makes us different from other crowdfunding platforms.”
The loans the company helps facilitate are cheaper for the borrowers, while the community members doing the lending earn the interest. The crowdfunding-like campaign feature helps users receive loans for a variety of things, including for a down payment on a home, auto loans, coffee shop financing, brewery financing and more.
LoanWell is based out of American Underground, a Durham startup hub, and was co-founded by Worthy (who is also the Chief Technology Officer) and Chief Operations Officer Justin Straight. Worthy and Straight officially launched the startup in October 2017 but had been working on the company’s platform as a part-time “midnight-oil project” for years until they felt comfortable to incorporate LoanWell.
Worthy explained that while founding the company both he and Straight encountered regulation issues on how money moves and transfers. However, once they were able to work through the legal logistics it led to LoanWell launching officially, while also receiving a $50,000 NC IDEA grant in December 2017 to help fund the effort.
Multiple Loan Options
Currently, the startup offers a crowdfunding campaign where a user can fundraise from many different people. This service works similarly to Kickstarter and GoFundMe. The user can create a campaign and then invite people from his or her network to contribute to their campaign, but the “contributions” are in fact loans.
LoanWell also offers a system where a user can borrow from one person at a time. The user would utilize LoanWell’s basic loan system, where the user and the lender decide how much money is being borrowed, the interest on the loan, and when to start making payments back to the lender.
Currently, the company has about 700 people that have signed up for their platform and about 150 campaigns have started each month, Worthy and Straight said, despite only launching the Fundraising Campaigns product three months ago. They also said that has been about 4,000 visits to the website, with a lot of interest from small businesses.
LoanWell’s hustle hasn’t gone unnoticed. At American Underground’s inaugural “Undies” awards in December, the company took home the prize for “Scrappiest Startup.” It helps that the founders believe LoanWell isn’t just looking to make a profit—though it is—but aims to make the Triangle a better place to live, work and grow.
Says Worthy, “The fact that LoanWell is able to offer that cheaper access to capital makes for a more economically inclusive and flourishing community.”