JumpStart Loan featuring Capital One Credit Card
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Gretchen Campbell, seamstress, has seen her credit score go up 70 points since she took out a credit builder loan six months ago!
"Even though you may be a good, profitable company, once they see a bad credit score, no one wants to give you a chance. It seems like your credit score is like a mouthpiece for your business — it precedes it. I don't care what you're doing — if your credit score is shot, you might as well hang it up. I cannot thank The Intersect Fund enough for being able to assist me with that. Now, when I go out to represent my business, I will have a positive credit score that will show more credibility."
-- Gretchen
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Loan Amount: $600 across three products:
$200 installment loan,
$200 line of credit plus
$200 to secure CapOne credit card
Interest Rate: $75 fixed financing fee to Intersect
Fund bundles interest, setup, and
closing fees; plus 19% for secured
CapOne credit card
Additional Fees: $10 application fee
Term: 12 months
Requirements: - 18-year age minimum
- At least $1,000 monthly income
- No past due rent, mortgage, tax,
or child support
- Must possess bank account
- Must meet separate CapOne
criteria for secured card approval
Target: Entrepreneurs with no credit or thin
files who want to build credit so they
can establish and/or grow their
business
What’s better than a credit builder loan? According to Intersect Fund (and Justine Petersen), THREE credit-building loan products built into one convenient process! Intersect Fund set up with CBA Reporter in early 2010 and by year end fully embraced CBA’s mantra, “It’s not cool to be thin!” with a new JumpStart Loan. The JumpStart Loan is a $600 loan split into three financial products to bulk up an entrepreneur’s credit file with the goal of helping them access larger loans sooner. The JumpStart Loan creates three active trade lines:
– $200 installment loan with Intersect Fund
– $200 line of credit with Intersect Fund
– $200 secured credit card with Capital One
Rohan Mathew, Intersect Fund co-founder, says that entrepreneurs with a no-score can anticipate their score to jump to a 660 in six months!
This loan product also brings an exciting new partnership for Intersect Fund with Capital One Bank. Intersect Fund worked with Capital One to understand aspects of the secured card underwriting criteria to “pre-screen” their clients. While the Capital One approval rate for the secured card is already high (about 80%), Intersect Fund has been able to raise the approval rate of their clients to 90% with their pre-screen process. By partnering with a mainstream financial institution, Intersect Fund also helps entrepreneurs establish a relationship with a “Big Bank” – typically difficult for individuals with no score and no credit history.
What might be most innovative is the high-tech and streamlined application process that Intersect Fund, a student-run MDO, created. Intersect Fund has made the Jumpstart loans very easy to underwrite – a student with an iPad can accept an application in the field in 2-3 minutes, and Intersect Fund can close the loan in under 24 hours! Once the Fund verifies the borrower requirements with a photo ID, proof of address, and proof of income, the borrower receives $400 in cash, and an order is placed for the Capital One card.
So far, Intersect Fund has disbursed just 20 JumpStart loans since August 2010, but it is aiming to reach 100 loans by the end of 2011. Mathew has seen the immediate impact on scores, particularly for people with no credit. As such, the Fund hopes the triple product will prove to be an effective credit-building tool and strengthen its relationship with Capital One Bank.
The Intersect Fund is a non-profit organization, founded and run by students and alumni at Rutgers University, offering a host of services to low-income entrepreneurs in the area. Since getting started in November 2008, the Fund has served over 200 clients, training them in the basics of running a business. The fund also offers business loans ranging from $500 to $5,000, one-on-one strategy consulting and tax preparation guidance.
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