“I was blown away by the folks in the room who looked like me,” says Bernard Worthy, on his thoughts after attending events at last year’s Google for Entrepreneurs (GFE) Exchange Program for Black Founders, hosted by American Underground.
The experience inspired Worthy to ramp up development of his side project, Loanable, a platform that simplifies, streamlines and formalizes the friends and family lending process. The year’s worth of work paid off. After pivots, customer validation and perfecting the platform, Worthy attends this week’s Exchange not as an onlooker, but as a participant.
Designed to address the challenges many black founders experience when raising funds, the Exchange program is an intense one-week boot camp with group learning sessions, mentorship, one-on-one meetings with investors, and a celebratory pitch competition.
Loanable, one of 10 teams selected from a pool of 110, is the only Triangle-based company. The GFE Exchange selection team was impressed with Worthy’s “important mission and disruptive idea,” says American Underground Chief Strategist Adam Klein.
In timing with the Exchange program, Worthy and his co-founder, Justin Straight, launched their platform this week. It’s the culmination of years spent dreaming up the best solution to a pain point Worthy experienced while enrolling in code school. It also works to achieve a personal mission to spur a cycle of investment and increase economic opportunity for local and underrepresented communities.
“Our personal mission isn’t to extract value, it’s is to keep value in the communities that they are. The more we can save people money and make them money the healthier we’ll be as a company,” he says.
The Road to Loanable
Like many who find their way to the region from other states, school brought Worthy, an Atlanta native, to the region for undergraduate studies at UNC-Chapel Hill and Duke through the schools’ joint Robertson Scholars program. After a short stint away, he returned again when his now-wife enrolled in graduate school. But once she graduated, it was the budding entrepreneurial community and the opportunity to help build a diverse community at the newly founded Christ Central Church that kept Worthy in Durham.
He caught the entrepreneurship bug as an undergrad at Kenan-Flagler Business School. But before starting his own company, he heeded one professor’s advice to learn how to lead teams before becoming an entrepreneur. He was accepted to an executive management program at Macy’s where he managed five departments, supervised 30+ employees, and managed a $5 million budget. Afterwards, he recruited for the program throughout the Southeast.
Worthy returned to the Triangle in 2013 and launched his first startup, Feedstyle, becoming one of the first tenants in the newly renovated American Underground @Main. Since then he likes to say, “I’ve been in and out of the ecosystem [at American Underground] in just about every way you can.”
The first seed for Loanable was planted then. When he enrolled for the code school, he was disappointed to find just one financing option—a high-interest loan through a private lender he’d never heard of. He took the option but couldn’t stop thinking there should be better options—especially for people without access to capital.
When it came time to choose a topic for his final project, he thought back to the financing issue he faced, and created a crowdfunding site designed specifically for code school students called Hackstarter. He went to work at mobile deve shop CrossComm after graduating and eventually scrapped Hackstarter because the market was too narrow.
Later, after he met Straight through friends, the two were brainstorming on the way to a retreat when Straight said, “Have you ever thought about loans?”
Since then, Worthy has thought of little else. He and Straight immediately dove into SEC compliance—learning how to construct loan agreement documents, and studying how friends and family loans are conducted. The result is today’s Loanable platform where a borrower can enter the portal and within minutes create a personalized loan.
A Streamlined and Formalized Friends and Family Lending Process
Using their new knowledge about lending, Straight and Worthy built upon Hackstarter but made some major changes. First, they broadened Loanable’s mission to: “create a world where everyone has better access and cheaper capital from their network so their communities can better thrive.”
Second, they targeted three multi-billion dollar markets: students in coding, undergraduate and graduate programs; graduates looking to refinance their loans; and anyone already participating in the friends and family loan process. And they adapted from the micro-lending and Kickstarter models the idea of aggregating small sums together from disparate sources to combine into one large loan.
The result is a platform that simplifies and formalizes the process of borrowing money from friends and family members—reducing the cost of the loan for the borrower and increasing the potential revenue for the lender.
Here’s how it works: A borrower populates a form with the amount of money they seek to borrow, the interest rate they’re willing to pay, the length of the repayment time period (term), late fees, and the start and end dates of repayment. An interest rate calculator helps the borrower test different interest rates and terms before committing to the final details. The result is a legal loan agreement document that is sent to friends and family members identified by the borrower, requesting they participate in the loan.
The cost for using Loanable’s platform ranges between $29.99 and $299 depending on the number of loans and potential lenders. Worthy sees the ability to split an ask between multiple friends and family members as a feature particularly useful for securing larger loans like those needed to attend graduate school.
“When someone goes to friends and family, it’s already awkward and difficult and if you ask for too much it may be denied,” he says.
Once loans are executed, the platform automates the payment process, drafting the repayment from the borrower’s account as one sum (which means the bank can only charge one ACH fee for withdrawal) and distributing the agreed upon repayment to each lender.
Loanable does not secure the loans. But in helping formalize a typically informal process, Worthy believes the Loanable process is more secure than typical friends and family loans. In addition to choosing the amount they’re able to pay each month, and securing lower interest rates than they would through a bank or credit card, the borrower and lender are also able to edit the terms and agreements in cases of “hiccups in income.” And since it’s family and friends lending money to other family and friends, Worthy believes they’ll jump at the chance to reach amicable solutions.
In solidifying the interest rates, terms and repayment schedule, and automating the repayments, Worthy says Loanable decreases the risk of default for the borrower and increases the likelihood the lender will recoup the initial investment plus interest. Worthy calls it a win for each side, and unlike typical lending organizations which extract local dollars from their communities has another important byproduct, the opportunity to create a “virtuous cycle, keeping wealth in the communities, so that wealth then powers more wealth.”
The Exchange program serves as a big inflection point for the Loanable team. Worthy expects to discover new opportunities, expertise and connections he’s lacked to date. Specifically, he hopes to gain an advisor with marketing, user acquisition and growth strategy experience.
He also hopes to meet investors who want to “keep in touch.” He’s not raising funds—Loanable is bootstrapped to date—but says, “having the right connections to the right investors with the right timing for Loanable would be a big win for us.”
Worthy is also excited to participate in a program that advances diversity in a more comprehensive and earnest way.
“[It was] cool to see diversity not as a thing that was forced or diminished but see others embrace how diversity just truly makes every company better, makes them more competitive, and gives them more perspective,” he says.
The chance to pitch on his “biggest stage so far” Friday most excites Worthy. With a compelling business model and strong and nimble team, he feels the time is right to share Loanable with the world.
He says he, “hopes to use that time well. If we win, fantastic. If not, we hope to communicate our message to the audience and public.”
A year ago, Worthy was inspired by Brian Brackeen, founder and CEO of Kairos, the artificial intelligence company behind a facial recognition technology that can be affordably adopted by any company.
This year, he has the chance to inspire the next generation of Exchange cohort companies through a mission to open up access to capital for under-resourced communities and increase wealth within them.
Editor’s Note: Loanable is offering ExitEvent readers a 50% discount on their services with the promo code “GOOGLE”