FinTech platform Kashable has raised $25.6 million to expand its employer-based lending program.
The Series B funding will help the company develop new financial wellness services and strengthen its ability to lend to employees “across the credit spectrum,” Kashable said in a news release Thursday (Jan. 18).
“In a world where financial instability can strike anyone, at any time, Kashable is taking a bold stance: access to credit shouldn’t be a privilege, it should be attainable,” said Einat Steklov, co-founder and co-CEO of Kashable. “Kashable’s program provides employers with a free, innovative software solution to empower their employees with inclusive financial wellness offerings.”
According to the release, Kashable’s platform offers low-cost loans to employees as an alternative to borrowing from 401(k)s or other retirement plans.
The company said its underwriting model “broadens access to credit” by considering group and individual employment data, income stability and other factors. Founded in 2013, it works with employers that include Cigna, Reid Health, Huntington Ingalls and Alight Solutions.
In addition, Kashable offers employees access to free financial education resources such as credit monitoring, individual financial coaching and budgeting tools.
The new funding comes at a time when roughly 30% of consumers have low credit scores — 650 or less — which have prevented them from accessing credit products.
These consumers and others are considered to be credit marginalized, according to the PYMNTS Intelligence/Sezzle report “The Credit Accessibility Series: The Credit Insecure Need More Education.”
“This large pool of credit-marginalized consumers, who may also fall under the broader category of underbanked, may benefit from assistance when it comes to credit products,” PYMNTS wrote in a report last year on financial literacy.
As previous research has found, customers are actively looking for education and tools to help them handle their debt. This could provide an opportunity for financial institutions and FinTechs to use the trust they have built with their customers to present tools and education that promote financial literacy — and deepen client loyalty in the process.
By offering financing to credit marginalized shoppers, merchants can gain repeat customers, Bruce Weinstein, CEO of Concora Credit, formerly Genesis Financial Solutions, said during a PYMNTS panel discussion.
“For the near-prime and subprime customers, they really appreciate that access to credit,” Weinstein said. “So, we spend a lot of time and energy because all of our products are revolving, meaning once the customer is approved, and if they are in good standing, they have an open credit line. We spend a lot of time and energy driving people back into those stores.”