By Claire Ballentine
The News & Observer (Raleigh, N.C.)
WWR Article Summary (tl;dr) Loanable is a website that helps people borrow money online from their social networks. The platform and others like it are often appealing because they allow users to avoid the high interest rates of many traditional loans.
Borrowing money from friends and family can be a messy process, leading to tense relations and awkward group gatherings, but a new lending platform developed by a Durham entrepreneur is seeking to streamline and formalize the process.
Founded by Bernard Worthy and Justin Straight, Loanable is a website that helps people fund within their networks and repay on a monthly auto draft, designed to lower the default rate for friends and family loans.
Millennials especially utilize these kinds of loans, often to pay back student loan debt, Worthy said.
“There’s $1.3 trillion in student debt in U.S. that affects 44 million Americans,” Worthy said. “Many are delaying life‘s major events, and we thought, what if you could save thousands on a lower interest rate on friends and family loans?”
In addition, Loanable strives to create cycles of investment for small communities, especially to increase economic opportunities for minority populations, Worthy said.
He explained that friends and family loans often have unclear terms or can change over time, leaving both parties confused about how often repayments will occur and how much they will be. This leads to a 50 percent default rate on friends and family loans.
“When you don’t have a solid document, you don’t have anything as backing to that agreement,” he said. “By formalizing and clarifying the terms through a document that both parties can negotiate back and forth, we think we have a unique process.”