When Jack and Hodges Markwalter realized people were getting rejected from loan applications simply based on their credit score, they figured there had to be a better system.
That’s why the brothers in 2019 founded Viva Finance, an Atlanta-based financial technology startup that provides loans based on employment history rather than just credit scores.
That model became especially useful during the Covid-19 pandemic when people suddenly lost their jobs or faced hefty medical bills. The brothers said Viva Finance has given out about 1,000 loans, mostly to people working in the education and health-care industries.
“Working is so important,” Hodges Markwalter said. “People should be rewarded for being able to demonstrate an ability to keep and retain a good job, and oftentimes that’s overlooked in the traditional financial system.”
By providing loans based in part on employment history, Jack Markwalter said Viva Finance gives people more social mobility options. By still getting a loan despite having bad credit, people can increase their credit score in order to get a future mortgage or car loan.
Viva Finance caught the attention of New York’s Acumen Fund, which led the startup's $2.3 million seed round. Atlanta Technology Angels and other small investors also participated, the brothers said. The startup’s total investments to date are $3.5 million.
The brothers plan to start raising another round toward the end of 2021 and expect to see threefold growth during the year. With seven employees right now and a concentration in Georgia, they hope to grow their team to double digits and expand across the Southeast.
Jack Markwalter said the idea for Viva Finance came during the his time at the University Notre Dame, where he learned about the predatory payday loan industry.
Some people had no choice but to turn to payday lenders, Jack Markwalter said, even if they had stable incomes and good employment history. The brothers set out to change that by forming a nonprofit at Notre Dame and building Viva Finance around the same concept.
Viva Finance works with a California-based private debt fund in order to provide loans, which range between 12%-26% for interest rates, which they compared to competitors providing unsecured personal loans at about a 30% interest rate.
“As we grow and are able to bring down our cost of capital, we’ll bring those interest rates down as well,” Jack Markwalter said.
