Fig Loans

Fig Loans, operating under the legal name Fig Tech Inc., positions itself as a socially responsible lender targeting the substantial market of underbanked American consumers. The company was founded in 2015 by Jeffrey Zhou and John Li, who met while pursuing their MBAs at the Wharton School. Frustrated by the predatory nature of payday loans, they aimed to create a lending model that aligns business success with the financial well-being of the borrower. Zhou, the current CEO, holds a degree in Chemical Engineering from MIT and previously worked at Boston Consulting Group, bringing a background in strategy and data analytics to the company's mission.

The company's history is rooted in a collaborative effort that began in October 2014 with the United Way of Greater Houston to understand the challenges faced by communities dealing with high-cost loans. This partnership was instrumental in shaping Fig's initial product. Significant milestones include graduating from the Techstars accelerator program in 2016 and becoming the first fintech to be certified as both a B Corporation (in 2017) and a Community Development Financial Institution (CDFI) by the U.S. Treasury (in 2019). This dual certification underscores its commitment to social performance, transparency, and serving low-income communities.

Fig's business model centers on providing small-dollar installment loans as an alternative to conventional payday loans. These loans typically range from $300 to $500. The company makes money through the interest charged on these loans, with APRs significantly lower than predatory lenders but designed for a high-risk market. A key feature of its model is reporting payments to the three major credit bureaus (Equifax, Experian, and TransUnion) from the outset, allowing customers to build a positive credit history. The company emphasizes flexible repayment terms, allowing customers to reschedule payments without penalty to prevent them from falling into debt traps. Its underwriting process does not rely on traditional FICO scores but instead uses proprietary predictive analytics based on the applicant's banking history and repayment ability.

Fig offers two primary products: the traditional Fig Loan for emergency cash needs and a Credit Builder loan. The emergency loan provides quick access to funds, while the Credit Builder loan places the borrowed amount into an escrow account. The customer makes regular payments, which are reported to credit bureaus, and receives the full loan amount only after the final payment is made, effectively combining a credit-building mechanism with a forced savings plan. Additionally, Fig has developed a "lending-as-a-service" platform called Fig36, which provides its technology—including risk models, software, and compliance support—to non-profits, enabling them to offer their own affordable loan programs.

Keywords: financial inclusion, alternative lending, credit building, payday loan alternative, subprime consumers, CDFI, B Corp, small-dollar loans, fintech, personal installment loans, responsible lending, community finance, underwriting technology, financial stability, debt trap prevention, social enterprise, low-income financial services, Houston startup, Wharton founders, microloans