NEW YORK, Dec. 8, 2015 /PRNewswire/ -- Backed, the only digital lending platform to lower borrowing costs for young adults by mitigating traditional co-signing risks, announced today that it has raised $1,500,000 in seed funding from angel investors, iAngels, and Cyhawk Ventures, and will begin accepting loan applications in NY, NJ, and FL immediately. The loans are primarily geared towards qualified millennials without a credit history who want to build their credit score and accelerate their financial independence.
"Most existing lenders don't have the capability to properly estimate the default risk of millennials and hence more than 86% are declined or overcharged around 20%+ APR," said Co-CEO and founder, George Popescu. "Our platform enables parents, or 'Backers,' to effectively lend their credit history to their children in exchange for lower rates. If they are paying anything more than 11%, they should come refinance with us."
Colloquially known as "The Boomerang Generation," the percentage of millennials moving back home has grown from 22% to 26% in the past five years, according to the Pew Research Center. Furthermore, 63% of millennials are without a major credit card, according to a survey conducted by Bankrate. This places an unprecedented financial burden on the Baby Boomer generation, whose retirement plans were predicated on their children's financial independence, and impede young adults from building their credit scores. Backed aims to reverse these secular trends.
"Parents might wonder how 'Backing' is different than traditional co-signing," added Gilad Woltsovitch, Co-CEO and founder. "Traditional lenders are incentivized to notify co-signers only after a loan has defaulted, so that they can profit from accumulated fees, penalties, and accrued interest. Our progressive form of co-signing, known as 'Backing,' immediately notifies parents of any payment shortfall prior to default, and provides a 15 day grace period, in which neither the Backer nor borrower's credit score will be affected."
"I was more than satisfied with Backed's service," said the company's first borrower, Marat Bernstein, an artist manager in NY. "I quickly received $7,000 at great rates to help pay back loans. It was fast, efficient and got the job done."
Backed plans to allocate about half of the funds to further developing the product, team and company, and half to customer acquisition, revenue growth and becoming profitable within a few years by capturing a share of the market - $4.7 trillion in financial services revenue at risk of being displaced by tech-enabled or fintech company entrants.
Backed is a digital lending platform that reduces borrowing costs for millennials by mitigating co-signing risks for parents. Backed was founded to address the 26% of young adults still living at home, 86% of millennial applicants declined or overcharged, and the 63% of millennials without a credit card. By combining sophisticated machine learning algorithms, a progressive loan application process, and enabling parents ("Backers") to effectively lend their credit history to their children in exchange for lower rates, Backed helps millennials launch their financial independence. For more information, visit us at http://www.backedinc.com.
Contact: Max Marine