FloatMe App Links Workers to Paycheck Sooner for Less

Financial emergencies can happen anytime. When they do, a surprise expense that pops up in-between paychecks can trigger late fees from not paying bills on time, to mounting bank fees from over insufficient funds and overdraft fees, to exorbitant interest on payday loans.

Founder Josh Sanchez experienced this when he had unexpected car expenses once and was short that week. After getting a payday loan for $200 that turned into a $250 payback balance after only two weeks, Sanchez started thinking of less expensive options to access money short term. His idea turned into FloatMe, an app that enables workers to get a “float” or short-term advance on their next paycheck without paying hefty fees or interest.

Once Sanchez paid back his payday loan, he discovered the high costs for many dealing with unexpected expenses. Payday lenders currently can charge up to 510 percent interest in Texas, according to Sanchez.

“My passion for this idea sprang from listening to so many stories because there aren’t many good alternatives that are low in cost,” Sanchez said.

FloatMe is a financial technology (fintech) solution that gives employees access to their earned wages sooner and for less—the fees are typically less than the cost of a cup of coffee per transaction. The app works as an employer-sponsored program that allows employees to withdraw a portion of their earned wages before payday.

App users must work full time at the participating affiliate partner employer and be paid by direct deposit. Employees can access their future earnings to borrow up to $200 instantly, with the borrowed amount deducted from the next paycheck. FloatMe integrates with the user’s bank account and validates the hours earned via the employer’s payroll system, giving users 24/7 access to an advance on earned pay by using the app.

Seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent in 2016, according to a 2017 report from CareerBuilder. The Center for Financial Innovation Services, which tracks the financially underserved market in the U.S., reported in December 2017 that $39 billion in short-term payday loan fees were paid in 2016.

The core team consists of Sanchez as CEO; Prashant Bhakta as chief operations officer; Chris Brown, who came to the team from Rackspace, is the chief technology officer; and Ryan Cleary handles data, financials, and legal issues as chief of financial operations.

The FloatMe team won $13,000 in awards from the October 2017 Three-Day Startup weekend challenge held at Geekdom. Before that weekend, the team members did not know each other. Since October, the team has learned much about regulation of the loan industry which helped them refine their concept into an employee benefit that could be offered by affiliated employers.

“We saw an opportunity to leverage big data, digital banking, and instant payments to offer short-term funding at affordable rates as an employee benefit,” Cleary said.

David Jones, a San Antonio lawyer and partner in Innocenti Jones PLLC based at Geekdom, was one of the Three-Day Startup judges when FloatMe won the October 2017 competition. Jones has tracked their progress since.

“I am really impressed with how a team that met for the first time over the Three-Day Startup weekend has evolved into a hard-working startup refining their concept for the market,” Jones said. “They found a pain point and developed a solution that is not predatory like payday loans.”

The startup is currently competing in the Venture for America (VFA) Innovation Fund 2018 competition. Its national crowd funding drive is designed to provide startups exposure and traction. FloatMe’s Indiegogo campaign is part of its participation in the VFA competition.

“Indiegogo support would go toward risk analysis, security features, and development of financial educational materials,” Cleary said. “Winning part of the $20,000 VFA prize pool would make a big difference,” Cleary said.

FloatMe is not without competition, as other fintech startups such as  Earnin, Pay Activ, and Daily Pay offer comparable apps.

“We differentiate by offering our affiliated partners expanded financial services beyond the app, such as checking account services so people can access their money,” Sanchez said. “We also promote financial education for users so they learn not to resort to payday lenders.”

Plans for FloatMe include using a portion of the app’s revenue to give back to those most in need.

“We’re committed to benefiting communities in need by using a portion of service fee proceeds,” Sanchez added. “That will go to help purchase and deliver drinkable water to those communities that lack access.”

The beta version of the app will launch May 1, with FloatMe ready for market in fall 2018. Those interested in partnering with FloatMe or who want notification of the app’s market launch can contact the team here.

The FloatMe team is keenly aware that San Antonio leads the country when it comes to the economic disparity in its population. They are looking to launch locally first to provide those working paycheck to paycheck a low-cost option for a short-term loan.

“We’re going to focus on user growth in Texas before going national,” Sanchez said. “My ideal is for a company like HEB or USAA to leverage this technology solution to provide their employees another option to access their paycheck when they need it most.”

Featured image is of Josh Sanchez, founder of FloatMe, a financial tech startup company based in San Antonio, Texas. Courtesy photo FloatMe.

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Iris Gonzalez

Iris Gonzalez is a writer based in San Antonio, Texas, covering innovation in emerging tech, cybersecurity, and bioscience startup companies in San Antonio.

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