New Investment: VIVA Finance Provides an Alternative to Predatory Lending

Acumen has invested in Viva Finance, a fintech business that offers affordable loans to improve the financial health of underserved Americans who are otherwise forced to rely on expensive lending products

The Challenge: Exploitative Lenders

In 2019, financially underserved consumers in the U.S. — encompassing consumers who are unbanked or underbanked, credit challenged, or who have low-to-moderate and/or volatile income households — spent nearly $190 billion in fees and interest on financial products and services. Of these fees, nearly 55% came in the form of short-term and single-payment credit products such as instalment loans, title loans, pawn and payday lending, and overdraft fees. While certain particularly predatory subsegments of this market such as online and storefront payday loans are shrinking with the growth of more affordable, transparent, and consumer-friendly fintech alternatives, the aggregate market size for predatory products has continued to expand at a troubling rate, reflecting unrelenting demand for and dependence upon these products and services. This dependence on short-term, small-dollar credit products is driven by low-income consumers’ well-documented inability to build sufficient savings to weather income fluctuations or small financial shocks and is reinforced by the onerous fees and complicated repayment structures. The result is millions of underserved consumers trapped in debt spirals that render them unable to achieve financial stability and build wealth. 

The Innovation: Affordable, Transparent Lending

VIVA Finance extends affordable credit to an underserved subset of the population otherwise forced to rely on expensive, opaque, and predatory products which make saving – and therefore long-term wealth building – either difficult or impossible. By offering loans up to $10,000 in size, VIVA Finance unlocks borrowers’ ability to access and finance more significant life expenses.

“We joined the Atlanta fintech scene with two goals: Provide a greater number of hard-working Americans with access to affordable loans and equip them with tools to build a brighter financial future. Amid current economic uncertainties due to the COVID-19 pandemic and other factors, our mission of building an inclusive financial system is more crucial than ever,” said Jack Markwalter, VIVA Finance Co-Founder and CEO,  

Why we Invested: Better Financial Health for Millions of Americans

Acumen’s investment in VIVA Finance led the company’s Series Seed Preferred Equity Financing, the proceeds of which will be used to build out core company operations and teams to substantially increase loan originations. 

“Acumen America is proud to support VIVA as it models an alternative way of underwriting to expand access to affordably-priced credit products for Americans who are typically marginalized or exploited by the traditional financial services system,” said Acumen America Associate Director Eliza Roady. “We believe that VIVA’s employment-based lending solution has the potential to empower millions of Americans to achieve greater financial health while also mitigating creditor risk.”

Explore wheretonext.org for Acumen America’s latest solutions to the widening racial wealth gap.