With one in six UK adults in need of borrowing in the coming months, the lending industry is still growing with there being over 100M near-prime borrowers across the UK and US looking for a better way to borrow. Creditspring the London-based fintech carving out a new category of lending, Subscription Finance, has today announced it has raised $60M (£48M), backed by Monomyth Group.
“As people increasingly turn to borrowing to survive the cost of living crisis, it creates a perfect hunting ground for predatory lenders who do not have the best interests of their customers at heart. We must do all we can to help people reduce their chances of falling into unmanageable debt – never has this been more important than it is today,” stated Creditspring’s co-Founder & CEO Neil Kadagathur.
The subscription finance model
Simply explained, Creditspring is similar to a subscription service, implying that its users pay a monthly fee starting at £5 ($6.3), building to £8 ($10) and peaking at £10 ($12.5). In return, users can borrow based on their respective subscription’s limit on two separate occasions throughout the year with four months to repay the debt and zero interest on loans. There is also a 14 day wait period before approved members gain access to their first advance. This offers them the opportunity to plan ahead.
Creditspring is FCA-regulated and provides educational tools alongside its short-term no-interest loans to the UK’s 12-15M near-prime borrowers whose credit files are in need of repair or thin, which makes it harder for them to access mainstream credit products.
The platform features a free ‘Stability Hub’ which allows customers to know when they are pre-approved to borrow and avails customers information about making better informed financial decisions.
The key benefit to its members is the clarity of repayments schedules, capped costs and the absence of hidden charges or confusing interest rate charges. The risk many faces of their debt spiralling as a result of large & recurring interest charges, which has always been the concern with payday loans and other forms of short-term borrowing, doesn’t exist with Creditspring. It’s only the annual membership cost.
“Its pioneering subscription finance model is making lending more inclusive, responsible, and fair at a time when borrowers need these qualities most. Creditspring is driving real, positive change for people across the UK, and we are proud to be with them on this journey,” commented Chip Dunn, the lead investor, Founder and CEO of Monomyth Group.
Impacting an industry, recognised for its efforts
Founded by Aravind Chandrasekaran and Neil Kadagathur in 2016, Creditspring has remained committed to steering more people away from costly & unscrupulous lenders, helping them manage their finances through the cost of living crisis which is increasingly tightening its grip across the UK. Over the course of 2022, Creditspring intends on lending £100M to support its members through its fixed-cost subscription loan services, trumping the total of £25M lent in 2021.
The number of Creditspring subscribers has already increased by 50%, from 100k to 150k, since the start of 2022 with the company expecting to add another 200k members by year-end. Of its new members,14,000 applied to join the Stability Hub in their individual quest for more informed financial decision making. 81% of its customers state that they have improved their creditworthiness within 12 months of joining the platform.
It comes as little surprise that people are looking for support to manage their finances, with the real value of wages declining owing to increasing inflation, rising energy bills and increasing cost of goods. Data from Creditspring’s Financial Stability Tracker shows that three in ten (29%) are scared for their financial future, with this higher to one in four (39%) among people on the lowest incomes (under £10,000 per year).
To deliver on its goals, the fintech expects to focus its funds on substantially growing its team, aiming to double its employee base by the end of 2022, with 30 new hires targeted in this quarter alone. All areas of the business, including data, engineering and customer operations have positions up for grabs.
In late 2019, Creditspring emerged as a finalist of Nesta Challenges’ Open Up 2020 Challenge, with Neil also being listed among Alumni Spotlight’s ‘Top 100 Princeton Alumni in Technology of 2021’. Creditspring was just recently awarded the Lending Innovation Newcomer Awards in the Finder Lending Innovation Awards 2021.