SoLo Funds Bets on AI and Banking Data to Rethink Credit Risk

Kristin Myers: So listen to this. Two in five Americans are living paycheck to paycheck, and they have less than $200 in the bank.

No, excuse me. Two in five Americans that are living paycheck to paycheck have less than $200 in the bank.

So when their car breaks down or they have to go to the emergency room, they borrow money from a subprime card, a payday lender, or a cash advance app, or even from friends and family or a pawnshop or somebody on social media.

But today's company thinks they should borrow from each other.

Rodney Williams is co-founder and president of SoLo Funds. The road from an idea to the opening bell starts right now.

$337 million. That's how much SoLo Funds says it has helped put back into the pockets of its members through lower borrowing costs and returns earned by people lending on its platform.

Founded in 2018 by entrepreneur Rodney Williams, SoLo is taking a different approach to finance.

Members who need short-term capital can borrow from other members looking to earn a return, and the numbers are getting big.

SoLo says it has facilitated more than $1.7 billion in transactions, reached nearly 3 million members, and generated $75.5 million in returns for lenders since launch.

And now SoLo is adding AI-powered risk models and financial data to its community and banking strategy.

But here's the pitch Rodney has to prove: Can a community built on people lending to people really take on traditional finance? And can SoLo turn $337 million in claimed impact into a multibillion-dollar business?

From Startup to Stock Exchange, Rodney Williams' business is next.

And joining us now here at the desk is Rodney Williams, co-founder and president of SoLo Funds. Rodney, thank you so much for joining us today.

Rodney Williams: Thank you. Thank you.

Kristin Myers: So I want to start with essentially how this all works.

So let's say I need $300. I've got the SoLo Funds app. I open the app. How does it work? How do I get the money?

Rodney Williams: Well, you make a request. Everyone starts with an account and a debit card, but your request is on your terms.

So you set how much you need, when you're going to pay it back, and what you're going to ultimately pay for it. So it's all about your control.

And then, as a lending member, I see your request. I can see your reason. Maybe it's for, you know, rent or, you know, a sick child. I can see your reason, and then I decide to fund you.

Kristin Myers: Okay, so unlike a traditional bank, you, Rodney, SoLo Funds is not providing me the money. It is coming from a person, another member, essentially.

So I'm curious to know. It's another member who's essentially putting their money up, but they also might be someone who is also needing money from someone else.

So this is truly like community financing, community lending.

Rodney Williams: What we've proven is not only is there an affiliation and an appreciation that develops when someone, a stranger, gives you money, our repayment rates are more healthy.

Also, as the lending member, I'm making an impact and I'm making a return. So my financial position is also changing and increasing.

And when you think about companies that lend, they need to go out and get a warehouse line of credit, and they have to lend on the terms of that credit facility.

That entire construct is more expensive than the model that we're operating right now. And I think that's a testament to how we've reached a pinnacle of success that I think others haven't.

Kristin Myers: Okay, so I have here this statistic. You guys say that members have earned about $75.5 million from lending on the platform.

So what's the typical lender actually making, I guess, either by transaction?

Rodney Williams: Yeah, I mean, it's about a percentage point per transaction, but they're making that every 14 to 15 days.

Kristin Myers: Okay.

Rodney Williams: When that compounds, that's well over 20% annually.

Twenty percent for someone who only has $1,000 of savings is a big deal, let alone someone who has tens of thousands of savings.

But the average lender on SoLo is opening up the app every day. They're lending every day and then doing, like, 20 or more loans in a given 30-day time period, which is truly amazing because what we see is they're keeping the money in the system, and they're lending to make an impact and make a return.

Kristin Myers: Okay. So talk to me then about the risk, because that's obviously something that banks think about quite a bit.

And we're going to get into credit ratings a little bit later, but your repayment rate, 94%?

Rodney Williams: Correct.

Kristin Myers: So pretty high. And I think you mentioned earlier that because you're lending to a stranger, getting money from a stranger, repayment rates tend to be higher.

But that does still mean that 6% of those loans default, essentially. So who eats that risk when that happens?

Rodney Williams: Well, the return that I'm actually communicating at 20-plus percent is net of the default. So that's post-losses.

What I will say is the core of why that's possible is the innovation that we have created, which, we built our own risk model. We built it since 2018. It's developed by us, and it continues to get better over time.

It right currently is five to six times better than the nearest single-installment payday-like loan. They default at plus 30%. We're defaulting at 6%. We project it will be at 3% next year.

So I would say it a bit differently. I think we have figured out that this asset class, which has historically been too risky for banks to participate in, we've created a model where it's not risky, or in comparison, it's less risky to participate in.

Kristin Myers: So the lender does then still take on the full risk of that loan if it does...

Rodney Williams: They do.

I will say that we've built a product feature that we're proud of. We call it SoLo Lender Protection.

And basically, for a fee, in the event that you're not paid back, we will step in and credit you a portion of what you would have made so that you can use that for a subsequent loan.

That has created what I would call a great floor of sorts, so that as a lending member, you can manage your losses in the event that there are any.

Kristin Myers: And I'm assuming, based on what you were saying, if I am on the app, right, and I want to lend money, I can almost see the risk profile, right, of whomever I'm choosing to lend to.

Rodney Williams: Correct. So that's our SoLo Score.

You see the SoLo Score. You see the reason why they need the loan. You see how much you're going to actually lend and what you would make within a few weeks.

Kristin Myers: Okay. So talk to me a little bit about the score. Say more.

How is it different than, I guess, FICO, right? We all have heard about the three credit reporting agencies. Gives us that number, you know, upwards of 800. I think it's actually 850 now.

So how is that different, the SoLo Score different? What does it account for that maybe the FICO score doesn't?

Rodney Williams: I think the best way to articulate that is the standard credit score is an over-time historical view, and it's stale.

It works really well for traditional credit and long horizons of credit. So think of, like, a mortgage or owning a vehicle over a span of years.

It doesn't necessarily work to understand your short-term position today and your ability to repay in a few weeks. That is a cash-flow type of assessment.

Our model does not use credit rating or credit reporting whatsoever. It's 100% focused on your transactions and your banking data.

So our platform, we allow up to three banking connections. So think your bank account at Chime, your bank account at Wells Fargo. We're assessing those transactions.

And we have the ability to create a rating of sorts, a SoLo Score, of that particular borrower at that specific moment in time.

Kristin Myers: I'm so happy we're chatting about this because I find this so fascinating.

So I want to dive just a little bit more into the plumbing, a little bit about the cost, because it is unusual, right?

When you go and get a traditional loan, you know, if it's a credit card, you know, you're taking out a credit card loan that's 19%, 20%, 21%.

If you go get a loan at a bank, it's usually going to be dependent on where interest rates are at the time and also your credit score.

You guys have no interest rate. There is a tip and a donation.

Rodney Williams: Yeah.

Kristin Myers: The average, however, comes to 17%. But the loans, as you mentioned, are usually five to 15 days, so about two weeks.

So, I mean, if you think about that, 17% over two weeks stretches annualized, it does become a lot more than a credit card.

So talk to me a little bit about that advantage. I mean, is 17 really that right number to look at?

Rodney Williams: We like to talk about what consumers are actually paying.

So when you compare a credit card or an installment loan product over time and what someone is actually paying, it's well over the advertised APR, right?

APRs do not consist of subscription fees, annual fees, late fees, cash advance fees, early withdrawal fees, you name it.

So what a consumer actually pays is significantly more than the APR.

And we've published a report, third year in a row now, called the Cash Poor Report, where we assess the actual cost that individuals pay with traditional bank products, and it's significantly more than the 17%.

The difference, the major difference, is the compounding nature.

So what happens? I put $20 on a credit card. I pay $5 minimum. The balance compounds. I'm late 80% of the time, which the standard subprime person is late 80% of the time on their credit card.

There's a late fee. $5.99, $4.99, $9.99. Great.

Do you see what happens after 12 months, 24 months? It balloons.

So the actual cost of what you pay, the average cost that a credit card user pays, is over 40% annually. And it's because of the compounding nature.

So, you know, what we'd say is, let's talk about what they are actually paying, not the advertised rate.

We communicate what you're actually going to pay on average, and that's a safe factor for individuals to understand what they're going to pay and the max of what that would be.

Kristin Myers: So before we go into the break, you're going to stick with us through the break.

I want to ask, because you're not the traditional finance guy. So I'm curious to know how you came into starting SoLo Funds, because this is something that you and I have chatted about before.

You were not a guy that was working in the traditional banking space previously.

Rodney Williams: I like my fintech brothers, or my finance bros, but no.

I started in a completely different place, mostly in government and then finance, oh, excuse me, and then marketing.

But I will tell you this: The premise of this started because my mom was taken advantage of by products, and what hurt her the most was her inability to calculate what she would pay.

And that calculation was really difficult.

So I wanted to create something that was safe for my family to use.

And more importantly, I actually think the wealth problem in America is the biggest problem that no one is talking about.

I think there's a recent article of Bill Gates saying that AI is only going to make that worse if we're not figuring out how to create ways to not only create savings in terms of credit, but also ways to grow your wealth.

We're going to create greater disparities than are already present today.

So I'm not a fintech bro in the sense of, like, all returns over everything. Actually, we want to make a difference and we want to make an impact.

Kristin Myers: Now, before we go any further, let's dive into the person or family that SoLo is trying to help.

SoLo Funds surveyed 2,000 Americans in a partnership with Opinium Research and Morgan State University. And here is what they found.

Two in five people living paycheck to paycheck have less than $200 in their checking and savings combined.

Forty-one percent of them have a full-time job, and one in five earns more than $75,000 a year.

They hit an average of 2.4 unexpected expenses last year, mostly medical bills, utility bills, and car repairs, all totaling about $1,400.

But 72% could not cover it with savings or a credit card, and 7% could not cover it at all.

We're back now with Rodney Williams, co-founder and president of SoLo Funds.

Rodney, again, thank you so much for joining us.

So the report says that 31% of people living paycheck to paycheck have actually been denied a basic banking account, which I didn't, to be truthful with you, I did not actually know was even almost possible.

How does that happen in 2026?

Rodney Williams: You know what happens to this group of Americans, which I think are just working-class Americans, right?

It's the barista. It's your Uber driver. They're underemployed.

And underemployed means that their expenses are almost break-even, and sometimes their expenses are more than the income they're taking in.

What that means is they're overleveraged. If they have a credit card, it's maxed out. If they have a bank account, it's overdraft.

What happens when your bank accounts get overdrafted too much, right? Your account gets closed and you get on ChexSystems.

ChexSystems won't allow you to open a new bank account, and all of a sudden you're stuck.

How do you get yourself out of that situation?

And that's the problem that we see when someone enters a scenario or part of their life where they're just overleveraged and they're trying to make it out.

Unfortunately, there isn't a source of help for them. There isn't a product that they can turn to.

People need access to capital when they don't have it, right? The traditional system wants to give you capital when you have it.

Kristin Myers: Right. Absolutely.

So then 3% in this report said that they took an unregulated loan. And of those, a third went to a loan shark. Almost half found someone on social media.

So what does that tell you, then, about what was actually available?

Rodney Williams: Honestly, this concept that even payday loans, or whatever you may think is hurtful for a community, in reality, it's significantly better than the loan shark.

It's significantly better than selling something or turning to crime.

Seven percent that go without actually turn to crime. There's a large percentage of women that go without and they turn into uncomfortable circumstances, right?

So it's hard for me to understand scenarios and communities that completely outlaw short-term access to capital when it's probably a factor in spikes in crime and sentiment and all of the things that can hurt a community.

Kristin Myers: So let's talk a little bit about the wealth gap because you mentioned it before the break.

So you say that SoLo has closed the wealth gap by $337 million. How do you calculate that? What does that really look like? And what does that really mean, that closing of the wealth gap by that amount?

Rodney Williams: So the one factor is how much we've saved our consumers.

So from using us instead of using a credit card, we've saved our consumers over $260 million in fees, again, based on that structure validated by Morgan State and many other researchers.

That figure, plus the amount that our lenders have earned, which is $75 million. So the combination, we say, has closed the gap by over $337 million.

Now, these are hardcore facts that other lending companies are afraid to go out and communicate.

You know, big credit company, tell us, how much do you save consumers in terms of your fee structure?

And even better yet, has that money gone back into the community?

I think that's the difference between our product and every other product.

The community, the money that's made from this activity does not leave the community. It goes back into the community.

And that impact, I think, is exponential. And I think we're on the surface of the results of that.

Kristin Myers: Right. So then, I guess, really to connect the dots, you know, for everyone watching, helping people get back up on their feet and become more economically productive obviously is not just a win for their own household economically, but their community economically.

And then, obviously, the ripple effect continues on to a greater scale.

Rodney Williams: Correct. That's what we need, right?

When you look at the products that are hot right now, prediction markets, DIY stock trading, crypto, the false promises of NFTs, all of these things absorbed capital from our communities.

You know, they resulted in losses. No one is actually making significant returns on every study that you can look at. No one, no regular American, has truly benefited from these products.

I'm just speaking facts now.

You compare a community finance product like us that's outperforming them.

When you look at the return of our lenders, it's outperforming the S&P 500. It's outperforming every retail asset class since 2021.

Now, I understand it looks like philanthropy, but it's actually not.

We believe the concept of including everyone outperforms the concept of excluding someone, and that's what we're proving.

Kristin Myers: So I'm glad you mentioned that because, obviously, this is Startup to Stock Exchange.

So this is still a business. So I'm going to ask the business question.

If the costs are optional, the borrower can pay zero, right? You said it was a tip and a donation.

Where does the revenue come from, then, if folks say, "I just got an interest-free loan, and I'm going to just take that interest-free loan"?

Rodney Williams: Well, when we look at our example, 80% actually donate to the platform.

That means 20% don't, and they actually click zero. It's okay. Our model takes into account that.

The difference between our model, when you think about other models, they're paying for credit reporting, their entire infrastructure. They're paying for the debt.

Their entire business model has higher costs.

So when their business model has higher costs, those costs have to be transferred to the consumer.

Our business model doesn't. We do not use those traditional high-cost elements to underwrite, as an example, or to move money.

That just creates an efficient structure where our cost of capital and our cost of doing business is just significantly less.

And we're proud of it.

Now, everyone thought this wouldn't work, but not only is it working, it's reaching scale faster than our fintech counterparts ever did with significantly less capital.

Kristin Myers: So I want to ask about the products, because you've mentioned products, and this is something that you and I have briefly touched on, the products that are coming next.

So you're moving into the banking and, you know, selling data products.

So I'm curious to know if the lending marketplace is really the business, or do you see that as a data generation and that being the product or the thing that you can sell?

Rodney Williams: If you think about what we do better than anyone else, it's underwrite.

And that proprietary risk model we've built since 2018 and perfected over time leverages machine learning and AI.

And it is incredible.

Now, that intelligence can do many things. Not only can it assess our borrowers, but it also can predict consumer intelligence looking forward.

And that's how SoLo forecasts products. And, for example, we've successfully predicted the CPI multiple months in a row.

And, you know, individuals and funds are like, "Wow, how is this possible?"

But that's what we're actually really good at right now.

I think as we look in the future, we're going to continue to offer better products because we believe we have a better risk model, and we can predict consumer performance because we understand real-time consumer data, we believe, better than anyone else.

But that's the core of what we do. That's, I think, best in class.

Kristin Myers: So we only have about a minute and a half left, and my producers will kill me if we go too far over time.

So I'm going to ask something that I ask absolutely everyone that sits in this chair.

We are obviously on the floor of the New York Stock Exchange. We've got the bell right over there.

I'm curious to know, when you think about ringing the bell and going public, what does that day look like and what does that day feel like for you? And when do you think that that day might come?

Rodney Williams: Well, you know, as a company, we crossed over $100 million in revenue total.

And over a 12-month time period, we believe we're going to cross that over the next 18 months.

And we're going to continue to accelerate our growth. That means we're going to put ourselves in a position to hopefully ring that bell in the future, right?

I think it's going to be a proud moment.

I don't think there has been a fintech with a founder like myself who has ever rang that bell, but I hope to represent a group of people and technology that's deserving of it.

Kristin Myers: Well, I want to ask, since you are the only, you know, Black-owned, certified B Corp fintech in North America, do you think that made it harder to raise capital or made it easier?

Rodney Williams: Well, I think, of course, it made it harder.

But finance is hard. Fintech is hard. To be successful here, you're one of the few.

You know, we've had many counterparts that aren't here.

You have to deliver a product that's actually making a difference, and you have product-market fit.

But hard is not something we shy away from, not at SoLo Funds.

Kristin Myers: All right. Thank you so much. Rodney Williams, co-founder and president of SoLo Funds. Thank you so much for joining us on the floor today.