In late March, San Francisco finance tech startup Earnest launched its merit-based loan program in the Boston area. Nearly two months into the pilot, the company is now announcing that it has closed a round of $15 million, according to the Wall Street Journal.
A trio of elite venture capital firms from both coasts participated in the round: Cambridge’s Atlas Venture and California’s Andreessen Horowitz and First Round Capital.
Earnest’s underwriting technology looks at an individual’s current and future potential – not just their credit history. If qualified, people receive one-year loans of $1,000 to $10,000 at a flat six percent interest rate, with no hidden fees.
The loans are intended to be put toward major life events, like weddings, honeymoons, a car or an apartment.
Earnest C0-founder and CEO Louis Beryl got the idea for Earnest when he was having difficulties getting a student loan without a co-signer for graduate school at Harvard Business School and the Harvard Kennedy School of Government.
“I had a good income. I was headed to great schools. I was going to have a good income in the future,” Beryl, a former Morgan Stanley options trader, explained to BostInno in a previous interview. “ I thought, ‘Why am I being charged so much when I feel like I’m such a low-risk individual?' I constantly felt like the credit system wasn’t pricing me accurately.”
The startup began shelling out its ultra-low interest loans in Massachusetts in March, and they are now also available in Florida, California, New York, Pennsylvania, Texas, Connecticut, New Jersey and Utah.
Earnest employs 11 full-time people in its offices in San Francisco.
Image via Earnest
