Data Into Dollars: With Pave, The Collateral For Your Loan Is You
If America loves a comeback, Chris Wilson’s life is the great American story. After serving 14 years of a life sentence, Wilson is now a business owner (he owns town businesses, actually), a full time community workforce developer, an Entrepreneurs Fellow at the University of Baltimore, and (yes, even) a fitness model.
Recently, he was bemoaning the sorry state of raising capital for his own businesses, as well as for the people he helps move off the street and into jobs.
“We have revenue coming in,” Wilson told me, “But we need working capital. Small amounts of money, maybe $3,000 to $5,000 and banks all say ‘no’ to that. They say, ‘Well, if you had $50,000 in collateral, we could talk.’ And I think, ‘If I had $50,000, we wouldn’t need to talk.’”
That prompted me to ask Wilson if he’d ever heard of Pave.com, a company turning traditional lending practices on their collective head. Instead of securing your loan with collateral (wherein you lose your house or retirement funds, if you can’t make good on the loan) Pave allows you to leverage your own worth and future earnings to secure a loan.
Individual investors are paired with fund seekers via Pave. (Think Kickstarter for up-and-coming people.) To help ensure investors are repaid, those same backers also provides mentorship, connections, and other useful advice to their investees.
Pave also does you a few better than the bank in that there is no interest charged on your loans, nor are there any late fees. (Using Pave isn’t entirely free, as they take a small cut off the money loaned.) In the end, you pay back your loan based on a percentage of your earned income. So, the more financially successful you become, the better your investor does.
For Wilson, this virtuous cycle could mean he gets his new low-tech business incubator off the ground, spurring small business formation and job creation for unemployed and underemployed people, and *pave*-ing the way to a world of change.