This year at SXSW I had the pleasure of meeting and hearing Ryan Gilbert from BillFloat.com speak at the “Dawn of the Data: Future of Consumer Lending” panel.
Ryan spoke of his service BillFoat.com, an alternative to payday loan lending. I remember sitting in my seat, surrounded by other finance thirsty attendees thinking, “wow, this sounds like a good idea.”
After visiting the site and sitting down to talk one-on-one with Ryan I have come to a different conclusion….. this sounds like a GREAT idea! Especially after I heard Ryan Gilbert comment that, “we believe you should treat your consumer as you want to be treated”.
BillFoat.com is a new and innovative company that lends small loans for people that are having trouble making ends meet with their bills. Ryan explained to the me that “when consumers take out a loan, 47% of the time consumers are taking out money to pay a bill”. Enter BillFloat. They work with over 3,500 billers nationwide, (like DirecTV, AT&T, State Farm, etc) and can provide small loans up to $225 to help you meet these bill requirements. In dealing with strictly bill payment, BillFloat is proving help with people that have an element of responsibility, trying to meet their requirements on time, instead of looking for quick cash to blow.
Unlike other small loan options, like payday loans, BillFloat only works with your bills specifically and will pay your bill directly to the company your bill is with and you make a commitment to pay them back the amount up to 30 days later.
In order to take out a loan you must have a bank account to link your account to, this ensures you have money coming in and an ACH debit authorization is required. BillFloat will give notice three days prior and will then deduct their owed money when time comes due. Sometimes a small upfront amount may be asked of you to go towards your bill. Probably just to confirm the ACH draft will actually go through.
Also unlike payday loans BillFloat operates under a flat 36% APR. While this amount may seem high it is significantly less than you would find attached to a payday loan (in some instances up to 1200% APR) and BillFloat has selected this set APR because the government has stated that it is an appropriate amount for a small loan.
Aside from the APR there are small fees for BillFloat operating on your behalf. A flat fee of $4.99 – $14.99 per bill. Gilbert mentioned, “we want to be sure it’s very well priced. We are working hard to keep a low price”.
The loan is structured on the price of the loan determined by state and federal laws, depending on whomever is making the loan. BillFloat will start by quoting the higher price of a loan and work to bring down the price and also any discounts.
One thing the website does, it provides a “shopping cart” for you to see your total amounts, including the price of your loan, the interest related and any fees, before you commit. This way consumers know exactly what they’re getting into along the way instead of being surprised after they enter into an agreement for a small loan.
Ryan Gilbert seems adamant and sincere about putting consumers first. He states that they try to run a very approachable company to break down the barrier currently standing between customers and lending institutions. “At the end of the day, these are people that just need help”. Ryan also stated, “the problem with lending is if you don’t understand customers’ predicaments you can’t asses their situation”. For example, if a person has a car accident and needs money to survive or if a family member is unexpectedly taken into hospital care and you need a phone to call others. These examples are what BillFloat customers are running into. Everyday life hiccups.