Silicon Valley Startup is Rebranding Payday Loans, One Advance At a Time

A Silicon Valley startup is changing the way consumers use payday loans, and is even making the financial industry take a second look at how effective their loan options really are. “Earnin” is the new app that has everyone talking.

Founded by Ram Palanianppan in 2013, Earnin positions itself differently. It does not characterize its advances as a loan, for starters. A spokesperson describes the apps services as “facilitating an advance on your paycheck.” Essentially, the app allows people to quickly and frequently borrow small sums of money.

The idea came about when Palanianppan, who has a background in fintech, was working at a different company. He got in the habit of fronting employees the money they needed to cover expenses before payday after hearing them complain about overdraft fees.

“It didn’t make any sense, because I thought I was paying everybody well,” Palaniappan said, but then he realized the problem was that employees “needed money the next day and could not wait until the following Friday.”

He went on to explain that “When I left the company, the people I was doing this for wanted to know if I would still do it for them,” Palaniappan said. “That’s when I realized that if I didn’t try to make it into a product, I would feel bad about myself.”

According to Palanianppan, the issue is not necessarily how much people make. Of course, bigger paychecks are always helpful. It’s the timing that is the real issue. Their paychecks simply weren’t coming in when their bills were due. Thus, Earnin came about. 

How does the app work? Earnin allows the user to withdraw up to $100 a day, never more than what he or she actually makes in a pay period. Once the individual’s direct deposit hits, the money is then withdrawn from their checking account. There is no fee or interest rate for the loan. Instead, Earnin simply asks for the borrower to leave a “tip” which is used to cover the cost of transferring the funds.

So far, Earnin has raised more than $190 million in venture funding from a number of investors (including Andreessen Horowitz and Spark Capital). The company has more than 100 employees and is used by workers at more than 50,000 companies. It often ranks among the top 10 apps in the financial space of Apple’s App Store, where it has garnered more than 60,000 reviews.

Are you curious about what your loan options are? Every individual and business will encounter a situation at some point where a little extra cash is needed. Alternative lenders can help you bypass the long wait times for funding that traditional lenders entail and get you your cash fast. The team of experts at EMerchantBroker, for example, can help you secure capital in as little as 24 hours. Be sure to also inquire after a payday loan merchant account, and ask how this option can help your business.

Author Bio: Electronic payments expert Blair Thomas is the co-founder of high risk payment processing company eMerchantBroker. He’s just as passionate about his business as he is with traveling and spending time with his dog Cooper.