New to lending on the SoLo app? Our Marketplace is a platform that empowers lenders to utilize a portion of their uninvested savings in an unconventional way. We have seen accomplished lenders use our platform for many reasons since our launch in 2018— the two main ones being to help others and to enjoy a good financial return. The most successful power-lenders on SoLo have maintained a portfolio with limited defaults, and we connected with some of them to gather their best tips and strategies to guide you as you begin your lending journey.
Don’t lend money you can’t afford to lose. This is passive income 101! After all, these loans are your hard-earned money—it’s best to approach with caution, especially with your first few loans. Lending money is always a risk, whether it’s $50 or $5,000,000, and regardless of whether it’s coming from an individual or an institution such as a bank. Just like the stock market or real estate purchases, there is the risk that you could gain or lose money. SoLo’s main benefits for Lenders are ease-of-use, the SoLo Score, and quick payback times, which allow you to repeatedly put your money (and profits!) back into the Marketplace. Taking this approach, you’ll be able to quickly grow your principal, assuming you take some basic precautions.
Kickoff your lending plan with small loans. If you want to dip your toe in the water, lend $100 or less (you can filter your view of requested loans based on dollar amounts from lowest to highest in the app). This allows a Borrower to prove their creditworthiness with this smaller amount and it doesn’t open up you, the lender, to as much risk as a $300 loan, for instance. You can build up from there as you become familiarized with the platform.
Look for Borrowers who have proven their creditworthiness by repaying multiple transactions in the past, demonstrating their ability to pay back loans on time and their commitment to the app platform. Transaction information will show up underneath the borrower’s name when you click on a loan request in the Marketplace. Total transactions also display automatically as part of a loan’s details as you scroll down your feed. Borrowers with no transactions are naturally higher-risk, but they may offer higher tips than others to compensate for this challenge.The SoLo Score is a Major Measure, but not the Only Measure
Look for Borrowers who have a higher “SoLo Score” — aka the little colored bubble to the left of their requested loan amount in the app. Those with higher scores (100 is the highest) will have a green tone, and the color gets progressively more yellow as it dips into the lower end of our range (in the 40s). The SoLo Score is a directional indicator of everything that we use to assess the reliability of a Borrower in our Marketplace. This score is always improving with our use of machine learning and new data metrics, and we welcome suggestions from Lenders regarding any data that they’d like to see incorporated into the Score in the future.
Finally, familiarize yourself with the terms of your loan and how we handle collections if a Borrower does not repay on time. Fully inform yourself before taking the risk. Finally, look for Borrowers who have completed their profile picture (more personalization and accountability for them) and consider their reason for a loan request.
As the Lender, you play a crucial part in creating a better world where everyone has access to financial resources. SoLo, if used correctly, can become one of your best vehicles for generating high returns with a quick payback. We look forward to continuing to provide this platform, and adding more features for you as we progress throughout the year.