A local startup giving microloans to cash-strapped college students announced that it raised $12 million on Wednesday.
Boro, founded in 2015, is a mobile financing app that provides affordable loans and financial education to students, who usually don’t have the credit to apply for traditional loans.
The startup’s $12 million Series A round was led by Chinese fintech company LexinFintech. To date, Boro has raised more than $14 million in venture capital. In 2018, the startup also secured a $100 million line of credit from Arcadia Funds.
Boro gives loans to students who need to pay for textbooks, apartment deposits and other college-related living expenses. The idea is to give students more cash in their pockets so they can focus on getting an education. Boro is currently available at more than 200 colleges across 31 states.
Boro doesn’t use traditional metrics when approving people for loans, such as credit histories, income or FICO scores. Instead, the startup evaluates students based on educational background, utility bills and bank transactions. Boro says that 86 percent of its customers have no previous credit history, but by using the startup’s service, have been able to build credit.
Unlike traditional credit lines, Boro says its loans have fixed term limits, which prevents students from becoming trapped in a debt cycle.
“Our goal is to create meaningful opportunities for students to build healthy borrowing habits that will serve them well beyond their time in college,” said Hao Liu, co-founder and CEO at Boro, in a statement. “Students today are overserved by unethical lenders. Boro breaks that pattern by helping users get access to stress-free financing that helps them grow their financial confidence, and protects them from high-interest rates and hidden fees.”
To help educate students on financial literacy, Boro provides blog posts, quizzes and other educational content.
The new funding will be used to expand its service to more colleges across the country and improve its mobile app. Besides expanding in the U.S., Boro’s investor LexinFintech also plans to help introduce Boro to Generation-Z users in China.
