Today, the gig economy is one of the largest and fastest-growing segments in the U.S. Professionals are increasingly looking for more flexibility in their schedules and greater freedom with where they work. With this freedom, though, comes a greater financial burden for workers to shoulder: what do they do if their car breaks down? What happens when they want to take a vacation? How can they stay home to care for a sick child?
New York-based alternative finance company COVERR is providing independent contractors with needed liquidity by offering cash advances of up to $1,500. With a current audience of Uber, Lyft, and other rideshare app drivers, COVERR founder and CEO Kobina Ansah, says, “We look at alternative and traditional metrics to provide contractors with funding.” All independent contractors need to do is fill in a few details on an online application—and verify they’ve been employed for at least a month. This digital method enables COVERR to make funding more accessible to more contractors who may not be able to complete the paperwork for securing a business or personal loan.
But COVERR’s model wasn’t always so accessible. In fact, prior to digitizing its origination processes with LendingFront, Kobina and his team were handing out advances to local contractors using cold, hard cash—meaning contractors also had to travel to COVERR’s offices to pick it up. Here’s how LendingFront helped COVERR grow its business to support more independent contractors more easily.
Eliminating the gray areas in financing
More than 50 million Americans now work as independent contractors—and many of them operate as one-person companies. Starting launching in 2019, Kobina found that it was nearly impossible for these contractors to obtain capital from traditional banking institutions.
“Traditional banks haven’t adapted their models for gig economy workers,” said Kobina. “To get a consumer loan, [workers] need a W-2—and for a business loan, they need two years’ worth of statements. This leaves them with a gray area where they can’t get financing to smooth out [cash flow] volatility.”
COVERR’s business model solves many problems that modern workers like Uber or Lyft drivers face—but initially, its financing process lacked the convenience 1099 business owners needed.
“[Before LendingFront], our process was very rudimentary,” Kobina said. “We had hundreds of thousands of dollars physically in our office, and contractors needed to print an application and come to our offices, taking an hour of their time.” The in-person, in-office approach severely limited who could obtain a cash advance from COVERR. It was also extremely cumbersome on COVERR’s side, where the team used five disparate software systems to manage cash advances and repayments.
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Meeting demand and scaling up
Kobina knew that this financing process was inefficient, laborious, and had inherent safety issues, but he also knew his business was onto something. “We saw a demand for the cash advance services we were offering and needed something with less chance for errors—and the ability to scale,” he said.
COVERR’s team looked at dozens of options to streamline how they brought clients into the sales funnel, underwrote cash advances, tracked and deployed capital, and managed repayments. They needed an end-to-end solution that was customized to their clients’ and their own business’ needs. “We found several programs that offered just front- or back-end services,” said Kobina. “LendingFront was the one solution that covered it all, with online origination, processing, and repayment tracking in one platform.”
“Since integrating with LendingFront, our customer experience and valuation process have improved tremendously—becoming smoother, more transparent, and faster,” said Kobina. “Drivers used to have to visit us, pay for parking, and spend time in our office. Now, they can apply for a cash advance online, and we can process and transfer funds to them in one business day.” The digitized process also offers a more secure way for contractors to input sensitive, personal information, compared to the manual pen-and-paper method.
Measuring success and looking ahead
Now, when COVERR provides capital to an independent contractor, it’s creating a supportive business relationship. “[Our customers] appreciate that they’re acknowledged. They work hard every day and are upset when they get turned away from traditional funding avenues,” Kobina said. “COVERR’s services help these small business owners overcome adversity, such as unexpected maintenance costs and sudden emergencies, and literally keeps them on the road.”
COVERR is still in its business infancy, but with LendingFront streamlining the critical financing process, Kobina and his team are able to set their sights on future expansion. “Right now, we’re serving the New York state market, but we’re expanding state by state,” he said. “Our vision is to serve the entire United States.”
Kobina is happy to have a partner to facilitate his company’s growth. “I view the LendingFront team as an extension of our own. They really understand our business and how to adapt to meet our needs,” he said. “I’m very satisfied with the decision to use LendingFront—and our partners and clients are too.”
To learn more about how COVERR is using LendingFront to extend more capital to more independent contractors, watch the video below.