Last week, relationship lending platform Zirtue secured a $4 million seed funding with participation from Northwestern Mutual. The fintech company is helping drive financial inclusion through peer-to-peer lending that offers transparency for borrowers, lenders and bill pay recipients like utility and medical billings companies. The Dallas-based company has found financial footing through synergies with companies that borrowers ultimately pay.

We make money through corporate partners who are looking to received past-due or at risk payments, in exchange for that Zirtue gets a success fee, Dennis Cail, Zirtue co-founder and CEO, told The Plug. We measure synergies through the loan approval ratios on the application, in other words, what are friends and family approving loans for?

The platform has a 70 percent loan approval rating for friends and family that lend and borrow money for medical reasons and a more than 60 percent loan approval ratio for money borrowed for electric bills.

Hospitals are teaming up with us and a lot of electric companies are being onboarded as we speak. We're seeing a lot of requests for back due rent and loan requests have gone up 4X since the onset of Covid, Cail said. Borrow requests for rent are the third-highest loan request after medical and utility expenses. Later this month the company will partner with Mastercard to issue a debit card from which the company will receive an additional interchange and merchant fee stream of revenue. Part of Cail's mission is to take relationship lending from a cottage industry that is often preyed upon by predatory payday lenders. In low-income Black communities, the cost of funds is untenable.

I grew up in public housing in Monroe, Louisiana. We didn't have banks in my neighborhood, so the store we had was the grocery store, the liquor store and the check-cashing store, Cail said. People would walk out with 25 to 30 percent less than what their paycheck was because of the fees. Even as a child I did the math on that and realized that was not a fair and equitable transaction.

A 2017 study by the Pew Charitable Trust found that Americans that borrow through payday loans facilitators, whose interest rates average a staggering 400 percent, could save $10 billion a year in fees. Predatory lenders are more heavily concentrated in Black communities.

A 2020 study found that Black respondents were more than twice as likely to live within less than a mile of a payday lender than white respondents. Providing an alternative to this credit-damaging industry was a shared goal of Northwestern Mutual. Zirtue aligns with Northwestern Mutual's commitment to providing financial inclusion and their recent growth demonstrates the unmet need for this type of lending platform, Craig Schedler, managing director of Northwestern Mutual Future Ventures, said in a statement.

Zirtue is leveraging technology to provide a unique offering and tapping into a market that is often underserved in the financial services industry, Schedler said. Since 2018 the company has processed over $10 million in loans, with an average loan size of $700.We have to get those in the Black community who are unbanked to come out of the shadows and stop operating in these worlds where they're paying these 400 percent interest rates to these predatory lenders, Cail said. We're on a mission to hack the wealth gap by creating a more financially inclusive and responsible world by mobilizing fair and equitable loans between friends and family, that's baked into our business model.