A Chicago fintech startup has seen an uptick in business amid the Covid-19 crisis with its product that aims to help people avoid debt cycles.
Founded in 2005, SpringFour is a social impact startup that improves payment performance and reduces delinquencies by helping banks assist their borrowers during tough financial times. SpringFour sells its service to banks, which facilitates connecting borrowers with on-the-ground, curated and vetted nonprofit and government resources that can help borrowers get back on their feet.
"At the heart of SpringFour is the belief that when people are experiencing financial challenges, it’s because there is something happening in their financial life that makes it impossible for them to pay," said SpringFour co-founder and CEO Rochelle Gorey. "If we can address the root cause behind that payment challenge, we can get people paying and saving again."
SpringFour connects borrowers to organizations that specialize in helping people pay back mortgage loans, auto loans, education loans and credit cards. The startup says it has more than 15,000 resources available to clients in 475 cities throughout the U.S. SpringFour's bank clients are spread out throughout the country and include BMO Harris Bank, Enova, Key Bank and LendUp.
“It absolutely has an impact on their bottom line when we can help a bank increase their repayment rates,” said Gorey, who has a background working in foreclosure intervention. “That’s good for the bank but it’s also extremely good for their brand and reputation, and it demonstrates to their borrowers that they are there to help.”
SpringFour, which has seven full-time employees, participated in 1871’s BMO Harris fintech accelerator in 2018, which introduced the startup to the bank and allowed them to partner.
“The ability to be introduced to BMO and participate in that program was very instrumental in us forging a relationship with BMO, and it was only a couple months after that program ended that we entered a business relationship with BMO Harris,” Gorey said.
Since the Covid-19 crisis began, SpringFour has made more than 1.1 million nonprofit referrals for bank borrowers to find food assistance, foreclosure assistance, healthcare savings, employment services and childcare support, Gorey said.
Typically in the course of an entire year, SpringFour will make just over 1 million referrals. In the month of May alone, SpringFour made 500,000 referrals, according to Gorey.
“We’ve seen a huge increase in demand for referrals and assistance and a huge demand by the financial services industry to onboard SpringFour services,” she said.
Gorey attributes the increase in business to the pandemic and the economic turmoil it caused. As of July 2, the U.S. unemployment rate was 11.1%, according to the U.S. Department of Labor.
“Prior to the pandemic, nearly half of Americans were living paycheck to paycheck, and Covid has left no one untouched,” Gorey said. “I never imagined running a company in a pandemic but what it’s uncovering is that every person is just an incident away from a financial challenge.”
