JT Trujillo With hand+sum

Intro: [00:00:04] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Atlanta Business Radio, brought to you by on pay. Built in Atlanta, on pay is the top rated payroll and HR software anywhere. Get one month free at onpay.com. Now here’s your host.

Lee Kantor: [00:00:31] Lee Kanter here another episode of Atlanta Business Radio. And this is a very special one. It is our Gsu eni radio edition and it’s going to be a good one. Today on this show we have JT Trujillo and he is with Handsome. Welcome JT.

JT Trujillo: [00:00:46] Hey Lee, Thanks for having me.

Lee Kantor: [00:00:49] Well, I’m excited to learn what you’re up to. Tell us a little bit about your company. How are you serving folks?

JT Trujillo: [00:00:55] Yeah, absolutely. I’ll definitely go into that. So handsome is an alternative lending solution for payday lending. The three components behind Handsome are that it offers fixed rate fees rather than high interest rates. It allows customers to earn discounts on those fees, like depending on what their journey is throughout the loan and then as well as the funding takes place. Almost immediate leveraging some of that a to a the account debt account technology kind of like when you Zelle someone you get the funds almost immediately so yeah handsome is on a mission to provide more affordable lending solutions to the underrepresented minorities.

Lee Kantor: [00:01:40] Can you explain for the listener who isn’t familiar about kind of this payday lending? How does it work? Who do they target and why it can be? On one hand, it’s helpful, but it can be detrimental in the long term.

JT Trujillo: [00:01:54] Yeah, absolutely. So payday lending actually leads a lot of families into a vicious debt cycle. So I like to say and there’s statistics backing this, that there’s like a dual credit market. So typically individuals that have good credit earn anywhere over 60,000 a year. They can go into a regular financial institution like a bank or credit union, ask for a personal loan or maybe like a credit card, and have pretty reasonable rates. Now coming to payday lending. What really inspired me was this statistic that kind of scared me is that there is an only 37 states allow payday lending and there are more payday lending storefronts than there are McDonald’s in the entire US. And so payday lending actually targets the underbanked community. And basically you just go in there and to apply for a loan anywhere between typically it’s between $100 and $400. And they just take your pay stub and they give you, you know, sometimes up to 50% or more of what your actual earnings are for that pay cycle. And so what happens is that a lot of individuals are just going in there to either bridge the gap, kind of like my parents were. And what happens is that it catches them in a debt trap because when their next paycheck comes in, they have other expenses to pay and it makes it really difficult to pay that payday loan that they have outstanding. And then it just becomes a constant cycle of just paying that. Most payday loans are actually borrowed about nine times, so that’s where that industry is and it’s a pretty big one.

Lee Kantor: [00:03:39] Now, what are the choices for people if they don’t go payday lending? Where can they go or is there nothing else? Is that the best move they can make?

JT Trujillo: [00:03:53] Yeah, the only other options that they have are borrowing from friends and family, which can bring a little bit of shame. There are some fintechs that are out there that are coming up with some sort of anonymous ways of requesting funds from friends and family. But, you know, they don’t they’re not really they’re left in the dark. They’re left behind by some of these financial institutions. So they don’t really have a lot of options other than that. So payday lending, although it is a vicious cycle and it does trap people in a vicious cycle of debt, it is a necessary tool. There’s just a lot of improvement in ways that it can be done better.

Lee Kantor: [00:04:31] Now, if you were to look at it through the lens of the payday lender, how do you think they’re kind of justifying the high rates? Like what’s their rationale for their high rates?

JT Trujillo: [00:04:45] Yeah, good question. So from a business perspective, there is a little they’re taking on a lot of risk. So a lot of these individuals either have a very short credit history or if not, they have pretty bad credit. That’s why they don’t actually pull credit to verify these loans. It’s more based off of income. So some of these interest rates can go up to 396% and that’s an API. So it’s pretty scary how high these interest rates can go as well as the hidden fees that are associated with payday loans. So maybe you might take out a loan for $100. And you know, if you roll that over or request an extension, there’s a fee for that. And then on $100 loan, you can end up paying. Act like $250 for just that $100. So I do think that the business is look at it from a high risk perspective, but there’s still so many other components in ways that you can make that better and more affordable for people who are already having a tough time affording life.

Lee Kantor: [00:05:48] Now, you mentioned a personal kind of maybe impetus that got you into this space. Can you share a little bit about that and what your solution is to help kind of alleviate some of the pain?

JT Trujillo: [00:06:00] Yes, absolutely. So I used to actually be a customer of payday lending early on in my adulthood. I wasn’t making a lot of money. I didn’t have the the tools and the education to know how to and understand money and how to manage it. And so I did go to a few payday lenders and I experienced that vicious debt cycle myself. And so it was just difficult. It was like playing catch up every time. But even before that, I’m a first generation Columbian American, and my parents immigrated to this country and we lived in a low income neighborhood and community. And I saw that despite that fact, a lot of individuals worked really hard. They they worked odd jobs. They worked multiple jobs. And they would pay their bills on time. And sometimes they just needed a little bit more to get them over the hump until they received another paycheck. And they would turn to these payday lending storefronts and it would just be a trap. And sometimes it was just money to put food on the table, to keep the lights on, you know, to pay for tuition. So it made it really, really difficult. And then fast forward to being at GSU and my entrepreneurship class. I’ve I just heard this scary statistic that, you know, over 67% of the adult population in the US can’t afford a $400 emergency. So that quickly, you know, just inspired me and made me so enthusiastic to find a solution to this that would not only help, you know, individuals such as myself and my family, but, you know, so many other Americans that need an affordable alternative solution to payday lending. So that’s where Handsome came about.

Lee Kantor: [00:07:48] So how does it work?

JT Trujillo: [00:07:50] So handsome. So the way that the Hansell works is that you apply for a loan anywhere between $100 and $400. Now, what I’m working on right now is trying to structure an algorithm that would help alleviate some of that underwriting. So there’s some financial components that in, you know, an applicant would have to submit. We would look at some of the financials so we won’t pull credit because it’s historically known that, you know, some of these individuals will qualify for certain loans. And rather than digging their credit, we’re trying to pull from other sources to underwrite them and get them a loan and approved. And then after the approval, after they’ve been their financials have been reviewed, if they can’t receive or qualify for the entire loan, then there will be a counteroffer made rather than just a straight denial of the loan altogether. And then after approval, once they sign in and basically finalize the documents, the funding can actually take place almost immediately, which is needed and always overlooked because some of these individuals are in a pinch in the middle of the night, or they get off on a late shift, their car got towed, sometimes their cars break down in the middle of the night and they just don’t have anything else to get them through the next pay period.

Lee Kantor: [00:09:10] So who is your underwriter or funder?

JT Trujillo: [00:09:14] So that I don’t have one yet. So I’m doing everything manually right now. And that’s what Main Street, that’s where Main Street came in. And I’ve been guided and mentored a lot as to what our other solutions. So right now I’m doing a lot of this work manually, so I don’t have any partnerships just yet. Hopefully that’s what I achieve to do. That’s what I’m hoping to achieve when Demo Day comes around in October.

Lee Kantor: [00:09:41] So do you have targets like who would be an ideal partner for you? Or is this something that can be done, maybe peer to peer and do some sort of, you know, crowdsourcing for the the people that are lending?

JT Trujillo: [00:09:56] Yeah. So I actually thought about the idea originally as a peer to peer lending, but then there’s a lot of regulations that comes around the peer to peer because then you have both sides. You have to appease both sides, not only just the borrowers, but also the lenders, and it just makes it a little bit more complicated. So I am hoping to target a partner that I can actually receive some of the funding from and maybe process the loans through that way on a short term loan basis, almost like Squarespace does with some of its. Like some of its vendors and stores where they might have a short term loan of three days to pay back, you know, X amount of like X amount of revenue. So all the other streams of revenue that they’re getting through three days, they’ll get a loan and then they pay it off. So that’s that’s what I aim to achieve.

Lee Kantor: [00:10:49] So how did Main Street get on your radar? How did you get involved with that program?

JT Trujillo: [00:10:55] I was actually a student at the time at Georgia State University, and I was taking an entrepreneurship class and my professor, Arthur Stepanian, at the time, he made me aware that there was a school, not only just an incubator, but then there’s an accelerator. So there’s launch JSU and then there was Main Street. And he after I submitted my project and my idea, he thought it was really mature for the, for just a simple school project. And he and he really taught me that maybe I should use this little, I might have caught lightning in a bottle. And he thinks I should definitely develop the idea. So I took him on and I took his word for it and I applied to Main Street. I wasn’t sure what the outcome was going to be because I was still a student. I was applying to business school and I’m a father of three, so it was a lot to juggle. But then, you know, after the interview process and the and the first couple of rounds, I was I was admitted. So, yeah, that’s how Main Street came on my radar.

Lee Kantor: [00:11:58] So prior to that, were you thinking your career path was going to be a guy to get a job at a, you know, an enterprise level organization and just follow a traditional kind of career path. And now you’re into this world of entrepreneurship.

JT Trujillo: [00:12:12] Yes, exactly. I thought I graduate from Georgia State, go back to work and basically, you know, a nice, cushy, remote job or, you know, something of that sort. And but then once I got every day I work at this at Handsome and chip away at it and understand, especially with the pandemic as well as inflation and everything that’s going on in society right now. And the current in in the news, it’s like, you know, more than ever, so many individuals are in need of a product like this, you know, just to get by.

Lee Kantor: [00:12:51] So has it been how you imagined? Is it harder or easier? What have been some of the challenges?

JT Trujillo: [00:12:58] Yeah, that’s a good question. I can definitely say it’s been a lot harder, but Main Street has definitely helped in providing a lot of mentorship, a lot of guidance and direction, if there’s any support that we need or any question. The entrepreneur in residence as well, some of the other mentors that are part of the program, it’s very easy to reach out to them and and kind of say, hey, I’m lost or reach out to your own cohort. We’re very close and we have like a Slack channel, you know, for all of us. So yeah, it’s it’s been hard and I thought I was the only one struggling. But it’s nice to hear from the other founders that they’ve run into a lot of hurdles and obstacles, and you’re very ambitious as an entrepreneur and you think you’re going to achieve a goal and like a week and it really takes a month. And so that’s one thing that I’m starting to realize. You know, there’s always you know, you have to plan for one step. It’s going to take multiple steps to get there.

Lee Kantor: [00:13:57] Now. Do you have any advice for other startup founders?

JT Trujillo: [00:14:03] Never stop working. That’s always my key piece of advice, because when you stop working and you put your startup down for a second, that’s when doubt starts to creep in and you have all those other voices and there’s just so much noise that comes in, even if it’s just an hour a day or 30 minutes a day, just getting ahead on something, I would definitely just say, never stop working.

Lee Kantor: [00:14:27] Now. What do you need more of? How can we help?

JT Trujillo: [00:14:33] I guess. I mean, what do I need more of? I mean, more than anything. Capital, for sure. A nice software developer, CTO would help too. But no, just a platform of choice. I think that just the awareness that there’s actual there’s a big need that needs to be filled and just using this platform to kind of just spread the awareness on payday lending and how many Americans actually need help just to get by and put food on the table. That would that’s just that’s helpful enough.

Lee Kantor: [00:15:05] And when you were saying that it’s not that they need loans for $1,000,000, they need loans for a few hundred dollars. So, I mean, it seems to me like this is a dream that could come true if you have the right players involved.

JT Trujillo: [00:15:20] Yes. Yes. My goal is not behind this idea. I mean, I am a for profit business. This is not a for profit organization. But I do want to provide underrepresented minorities with the option, you know, seeking just they don’t have to go and and put themselves in a vicious cycle of debt and really, really disrupt their family’s livelihoods just because, you know, they need a few hundred bucks. This is going to be easy. And so, yeah, I definitely look to achieve and bring a solution to the market that would help all these families in need.

Lee Kantor: [00:16:00] Now, how many do you have any idea of the number of people that are underbanked?

JT Trujillo: [00:16:06] There’s about 12 million Americans that are underbanked, and then there’s even more that are just unbanked altogether. But yeah, 12 million Americans in the United States just have a simple checking account with a debit card. And there’s so many other alternatives. There’s so many other products and solutions to their financial needs that can be offered to them. But sometimes they feel like they are just left behind and just written off just because they might not make more than $60,000 a year. But as we know, with inflation now, 60,000 is a lot different than it was just a year ago or two years ago.

Lee Kantor: [00:16:44] Right. And if there’s more of these payday lenders in more locations than McDonald’s, there must be a lot of demand for the service because they’re not opening up storefronts just for their payday.

JT Trujillo: [00:17:00] Lending is a $46 billion a year business. So they are they are definitely around. And they’re they’re making a lot of money. And the sad part about it is that only about 14% of individuals who take out these payday loans can actually afford to repay it. So, you know, it just goes to show that those hidden fees and those high interest rates, also the individuals just don’t know what they’re getting themselves into with payday lending. I know my family didn’t, you know, speaking a different language. They thought it was just a quick loan. They didn’t understand that when you borrow $100 in two weeks, it’s over $150. They didn’t understand that component.

Lee Kantor: [00:17:42] Well, if somebody wants to learn more about Handsome, get on your radar. Maybe have a conversation with you more, learn more. What is the website? What is the best way to connect with you?

JT Trujillo: [00:17:54] So I am still in the process of launching the website, but you can go to you can visit Handsome IO. If not, you can reach out to me on LinkedIn. Jt Trujillo You’ll, you’ll definitely find me under there. But yeah, those are the ways to connect.

Lee Kantor: [00:18:11] Well, JT, thank you so much for sharing your story today. You’re doing important work and we appreciate you.

JT Trujillo: [00:18:16] Thank you so much for having me, Lee. I really appreciate it.

Lee Kantor: [00:18:19] All right. This is Lee Kantor. We will see you on. See you all next time on GSU Inai Radio.

Intro: [00:18:27] Today’s episode of Atlanta Business Radio is brought to you by on pay. Built in Atlanta on pay is the top rated payroll in HR software anywhere. Get one month free at on paycom.