Startup offers loans to H-1B visa holders, DACA recipients

Stilt serves immigrants who may be shut out of traditional financing

By LEONARDO CASTAÑEDA | lcastaneda@bayareanewsgroup.com | Bay Area News Group
PUBLISHED: March 10, 2019 at 7:30 am | UPDATED: March 10, 2019 at 4:09 pm


Rohit Mittal knew he’d need financial help to pursue a master’s degree at Columbia University. But as an Indian national, he couldn’t apply for a U.S. student loan.

Instead, his father took out a loan in Delhi and put up their home up as collateral. Inspired by that experience, Mittal and Priyank Singh, who also came to the United States as a student, co-founded Stilt, a startup offering personal loans to immigrants. Originally focused on foreign students and H-1B workers, their clients now include DACA recipients and other immigrants.

Stilt, which came out of the Y Combinator startup accelerator in 2016, looks at an applicant’s education, work history, job offers and even how often they’ve paid on time for subscription services to determine a kind of credit score.

“If I can better understand how an immigrant is actually earning and spending money on a monthly basis, we can get a sense of how responsible this person is,” Mittal said.

Based on that analysis, Stilt offers applicants unsecured personal loans with an average interest rate of 13 percent. Though that’s about twice the rate of a federal graduate student loan, Mittal said it’s lower than other options available to immigrants without credit history or permanent resident status.

Stilt has thousands of borrowers from more than 150 countries, and has received more than $250 million in loan applications, the company said. The San Francisco-based company, which also has offices in India, ran into some trouble with California regulators in 2016 for issuing 35 loans with interest rates higher than what it was allowed to offer at that time. The company refunded about $6,400 to customers and paid a $20,000 fine. Mittal said the firm relied on advice of counsel when they issued the loans, has since hired more specialized attorneys and hasn’t had any further issues.

Credit unions are among the few other options available to immigrants. In the Bay Area, the Self-Help Federal Credit Union, with offices in San Jose, Oakland and Pittsburg, offers a DACA loan with a 15 percent interest rate to cover the cost of a renewal application.

Nationally, the Latino Credit Union, which focuses on immigrants and low-income borrowers, offers a secured personal loan at the same rate to those with at least one year of credit history.

Thulasi Nambiar, a data science manager with a property management company in San Francisco, said Stilt helped her access financial tools she’d been cut off from. An H-1B visa holder, Nambiar first came to the U.S. for a master’s degree at New York University.

Like Mittal, Nambiar’s family had to take out an expensive loan in India and use their home as collateral to pay for her education. The interest rate on that loan was around 13 to 14 percent, she said.

A federal graduate student loan in the US is between 6.6 and 7.6 percent.

Once she started working in the US for the banking group Citi, Nambiar started exploring options to re-finance or pay her family back. “I worked in banking and I explored all the possible financial products,” she said. “There’s absolutely nothing.”

She worried about the risk to her family’s home if she couldn’t make the monthly payments. “That kind of fear is always there,” she said.

Eventually, a friend recommended Stilt. Nambiar applied and was approved for a loan with an interest rate between 7 and 8 percent, she said.

“I clearly remember the day I got the loan.” Nambiar said. “It was, suddenly, like a huge responsibility off my shoulders.”

She paid off the loan in India, and then paid off her Stilt loan in about a year and a half, saving about $14,000, she said.

Research suggests that non-naturalized immigrants are more likely to be underbanked or not have a bank account at all, according to Maude Toussaint, a senior business economist with the Federal Reserve Bank of Chicago.

One of the early challenges is getting an identification — either a social security or tax ID number, which allows individuals to pay taxes regardless of their immigration status. But that’s only the first step. Then, they need to get a U.S. bank account and buildup a credit history.

In addition to paying off foreign student loans, Mittal said applicants have used money from Stilt to pay for moves to the US or to pay legal costs of applying for permanent residence.H-1B visa holders who are relocating their families to the US can use the money for security deposits and furniture.

Mittal hopes Stilt can show that immigrants are safe bets for lenders, regardless of their lack of credit history.

“They won’t take your money and run away,” he said.

“They will actually give you money if you help them stay in the US.”

https://www.mercurynews.com/2019/03/...ca-recipients/