Fynanz, a peer-to-peer lending website that specializes in student loans, has raised $6.5 million in Series A funding from Draper Fisher Jurvetson, DFJ Gotham Ventures, The Brazos Group, Zelkova Ventures and JBR Media Ventures.
This new round of funding brings Fynanz’s total funding to just over $ 8million. Fynanz says that it will use the new money to expand its credit union and student lending marketplace, as well as for the development of additional lending programs which include financial literacy initiatives.
The company launched in 2008 with the aim of taking the peer-to-peer lending model of Prosper Marketplace and Lending Club to student loans. Students can apply for loans and lenders can help fund those loans. Unlike other peer-to-peer lending sites, Fynanz guarantees each loan. The loans that Fynanz offers are also qualified educational loans, so students can deduct interest from their taxes when they begin repayment.
The company uses a number of factors beyond a traditional credit-score model to determine whether or not a student will repay, including the student’s grade-point-average and what school the student is attending. The loans that Fynanz offers are written to both the student and the school. Fynanz also limits the size of the loan to a student’s tuition and related expenses so that students do not take out more than they need to.
Fynanz says that students benefit from their service because the interest rates Fynanz offers are often 0.5-1.0% lower than what a student would get from a bank or credit union.
