Can we all agree that borrowing money from friends and family is THE WORST?
Few things are more uncomfortable than staring everywhere but someone’s eyes while you sheepishly ask them to help finance your life. For both parties. Since nobody likes dishing out direct rejection, many acquaintances struggle to say “No,” even if they don’t want to front the cash. Then if all goes “well” and the loan is actually provided, people are often stuck with the suspense and nuisance of timely repayment exchanges, as the sword of debt hangs over the relationships at each unsettled encounter.
A new app called “Ledge” wants to take the awkwardness out of personal lending.
“Everybody finds themselves in the position of having to borrow money. Yet the whole process is completely broken.”
Many would likely agree that CEO Adam Neff has a point. Including the investors who just made their own little donation of $900K in seed funding.
The app is somewhat of a hybrid between Square Cash and Kickstarter. Borrowers create a campaign of sorts, specifying the amount to be borrowed (up to $5,000), the interest rate, the payment schedule and the repayment term (up to 6 months). They can then send the campaign directly to friends or post the campaign on social media. Friends can pledge to the campaign without need to actually download the app.
You can see a representative Ledge campaign here.
Like Kickstarter, the borrower won’t get the loan unless the campaign is fully funded. Unlike traditional peer-to-peer lending networks, such as Lending Club, Ledge allows borrowers to dictate the terms of interest, ensuring that they can easily pay back the loan.
Instead of dealing with manual, stumble-prone repayment procedures, Ledge integrates with Venmo to automate all payments and ensure that they happen on time.
Given the fact that Ledge doesn’t do credit checks on borrowers, it seems likely that the company will find itself in the middle of disputes between stretched borrowers and frustrated lenders. The company promises to help mediate when possible, but is not assuming responsibility for any credit reporting or formal debt collection.
For Millennials embracing Uber, Breather, and other peer-to-peer solutions, Ledge is seems like very smooth solution to a very prickly problem.
Now I just need to convince my loan-shark to download the thing.
