Fig Loans cofounder Jeff Zhou, WG’15 talks about how to turn bad credit into good credit–and how to find the right entrepreneurial opportunity–with Karl Ulrich, Wharton Vice Dean of Entrepreneurship & Innovation.

Fig Loans is super cool for a bunch of reasons:

  1. They’re in the payday loans business, but they’re helping people rebuild their credit;
  2. The founders–Jeff Zhou, WG’15 and John Li, W’07, ENG’07, WG’15– are Wharton alumni who met and founded the company while they were getting their MBAs (fun fact: their first project, created at PennApps Hackathon two weeks before school started, was a game called Llama Run);
  3. Karl loves the way they identified the opportunity for Fig Loans;
  4. Their goal is to “survive indefinitely and to not rely on venture capital money, but to take it, instead, for purposeful growth.”

There’s so much here to love.

Basically, they help out people who messed up their credit in the past (think credit scores of around 520), so they don’t have access to credit cards or online lending—and who run into a financial emergency where they really need a few hundred dollars. Cofounder Jeff Zhou, WG’15 says that “the typical loan size is roughly between $300 to $500.” Recipient income levels are around $30,000-$90,000 per year, and they’re living paycheck to paycheck.

Fig Loans gives people those crucial small loans, at a fraction of the cost of your typical payday loan. That typical payday loan comes at a steep 662% interest rate, according to the Fig Loans website. Fig charges 190% for a first time loan–and they’re trying to lower the rate still more. While that rate does still sound extremely high, it comes out to, according to Jeff, “roughly about six bucks to borrow a hundred dollars for a month.”

The best part comes next: the second loan comes at a lower rate, and the third lower still, as people rebuild their credit. Then when a person’s credit score is about to be good enough for standard credit card rates, Fig Loans lets Capital One know—so that they can send out a credit card offer. Jeff explains: “Our goal is really just to be that bridge. We want to give people that opportunity to prove themselves, and then send them on their way when they’re ready.”

For more about points two, three, and four, listen to the full half hour interview—especially if you’re wondering how to find the right opportunity for your own venture.

Posted: July 27, 2018

The Wharton School

Launch Pad

Fig Loans cofounders Jeff Zhou, WG'15, and John Li, W'07, ENG'07, WG'15
Fig Loans cofounders Jeff Zhou, WG’15, and John Li, W’07, ENG’07, WG’15

Recently, Jeff Zhou, cofounder of Fig Loans, joined Karl Ulrich, Wharton’s Vice Dean of Entrepreneurship and Innovation, on his radio show, Launch Pad.

Listen to hear Karl talk with Jeff about how they’re turning payday loans into a bridge to good credit for people who are “underbanked”–and for some crucial takeaways for entrepreneurs looking for the right opportunity for their next venture.

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