Millennials Need Loans, Too

In today’s lending marketplace, young people in particular face a high degree of difficulty in securing individual loans. In many cases, their credit histories are lacking in context. Oren Bass co-founded the lending platform Pave specifically to address this gap. He recently shared with PYMNTS the methods behind his company’s business model in its quest to help millennials get funding. 

Your site says that Pave has “reinvented the traditional loan.” What do you mean by that? Are you an alternative to traditional lending or a new generation?

OB: The two big areas of innovation for us are the underwriting and the user experience.

With respect to underwriting/pricing, we have built a credit model that takes a context-dependent approach. This means that we go beyond FICO to understand how each trade line on the credit report influences the score, and how it predicts risk on our product – especially for applicants with limited credit profiles. We also go beyond credit to understand each applicant’s current financial circumstance, while also considering how one’s finances may change over the term of the loan.

As for the user experience, we have designed a product that is seamless, transparent and personal. We do this through a simplified online application, use of non-bank straightforward language, and a heightened emphasis on customer service. This all translates to a product that is tailor-made for the millennial generation.

Access to funding continues to be a big problem in particular for small businesses owners. What relief can you provide in this regard?

OB: A small number of our loans are used by small business owners; however, the majority are used to replace or refinance credit cards. Our key use cases, therefore, are further education courses – such as coding school courses – relocation expenses and credit card refinancing. Accessing reasonably priced funding for individuals early on in their careers is a huge issue.

What measures do you have in place to ensure that your customer information is safe?

OB: We follow industry best practices, which includes encryption of all customer sensitive information, two-factor identification and limitation of employee access to sensitive information. Our internal compliance officer has significant experience in this regard.

Finally, what is next for Pave? What exciting projects do you have in the works that you can disclose?

OB: We will be expanding our lending program nationwide in June. Our mission is to provide access to funding for the millennial generation and – although we have started with a simple loan product – we have plans to expand our product line into credit card and mortgages. These two are products that are in vital need of disruption.