Huge letters on the boardroom wall at Refresh Finanical say: The best way to predict the future is to invent it.
“Yes, we are inventing the future,” said Refresh founder and CEO Michael Wendland, 36.
“We have a cool business model where we lend people with bad credit money so they can build good credit, save some money and change their lives. We’re a socially-redeeming for-profit company.”
This is how it works:
Refresh is a completely online financial services business based in Kelowna, but has clients from across the country who have found Refresh via ‘bad credit loans’ Internet searches and referrals from mortgage brokers, credit counsellors, bankruptcy trustees and other financial institutions that can’t help them because their credit stinks.
The typical loan is $2,300 over a three-year term with 15.99 per cent interest.
Whoa, that’s big interest considering someone with good credit can get a personal loan at a big bank or credit union for less than half that.
But Refresh clients come to Refresh because they have no credit or bad credit from a bankruptcy, insolvency or not paying bills and no one else will touch them because they are too high a risk.
Almost 16 per cent is also less than payday loan places charge.
Plus, a Refresh loan is a good credit builder and forced saver.
So when you pay off the loan you’ll have better credit and can get on with your life and borrow money for a house or a business at a lower interest rate.
Here’s the catch.
This is a reverse loan.
So you aren’t handed the $2,300 to start.
Instead, you start paying about $100 a month for three years and at the end of the term you have better credit and Refresh turns over the $2,000 you saved in the process.
“Obviously it’s less than the original loan because there’s a net cost to the whole process,” said Wendland.
During the three years, clients also have unlimited access to Refresh Fit online education to learn how to make sound financial choices.
Rather than praying on the clients who have no other choice, Wendland sees it as a win-win.
“We get a lot of satisfaction knowing we help people move forward,” he said.
“I just heard from a client from Nova Scotia who paid off her loan, has better credit, found a job in Kelowna, moved here and has bought a house.”
This is vastly different from the international banking career Wendland envisioned for himself in 2001 when he graduated from Trinity Western University in Langley.
Initially, he worked at a big bank in Vancouver and then was recruited to help out at a private mortgage investing firm in Kelowna.
After growing up in Enderby, Wendland was happy to be back in the Okanagan, get married and start raising a family.
Feeling entrepreneurial, Wendland started his own mortgage brokerage in Kelowna.
By 2010 that business led him to the Refresh idea as a way to help people who traditionally would never get financing.
Back then it was only him, but the hyper-growth of Refresh means he has 38 employees now who mostly work the phones and computers taking applications and following up on repayments.
Considering the high-risk and high- interest nature of these loans, surprisingly most Refresh clients pay on time.
It’s because they want to improve their credit and move on, according to Wendland.
“The people we hire all love helping people and love the unique angle of the product we offer,” said Wendland.
Wendland’s volunteering is similar to his job.
He co-founded the charity Launch Kelowna (formerly known as Metro Up), which helps low-income individuals with financial training and matched savings grants.