Boro, a Chicago-based provider of affordable loans and financial education to students that have been mainly ignored by traditional lenders, announced a $12-million Series A funding 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. Its financial products are available at over 200 colleges and universities in 31 states across the country.
Founded in 2015, Boro is a mobile-financing app that provides affordable loans and financial education to students, who usually do not have the credit to apply for traditional loans.
Boro loans help cover the small but critical expenses – like textbooks, class fees, groceries, and test prep materials – that can snowball and force students to drop out, leaving them with student debt but no degree.
The funding will be used to expand the company’s offerings to more colleges and universities in more states, expanding its market penetration in the US. Boro is currently available in 15 states.
The startup projects that about one-third of the 20 million college students in the US could benefit from its products.
“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.
The firm does not 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, has 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.
“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,” added Liu.