Business Plan Challenge

Cheaper payday loans? This Miami startup says its technology can make that happen.

The payday lending industry gets a bad rap, often justifiably so.

But Guru Financial’s founders, Arturo Garcia and Warren Krupp, believe their new startup can disrupt the $46 billion industry by offering consumers with limited or no access to credit a better way to access fair rates for short-term loans. Garcia and Krupp took second place in the FIU Track of the Miami Herald Pitch Competition.

Although U.S. payday lenders make about 330,000 loans a day, “the sector hasn’t really evolved or transformed with the rest of the finance world, and you have consumers who don’t really have any alternative to the traditional brick-and-mortar storefront that charges wild rates — a lose-lose situation for the consumer,” Garcia said. “We are micro-finance made easy. We try and make the process for quick, affordable small-dollar loans as seamless and efficient as possible,” Krupp added.

Friends since their college days at Florida International University, Garcia has worked in the finance and international banking world; Krupp comes from business-to-business sales and business development. Financial Guru is their first startup venture. To create their mobile app for short-term lending, they have added a chief technology officer and a user-interface designer. Advisers include a Greenberg Traurig lawyer and a crypto fund manager.

Guru’s biggest competitor is the traditional payday lender storefront. Guru can charge a significantly lower interest rate – 10 percent for a typical two-week loan, less than half the payday industry average -- because it doesn’t have any of the overhead expenses, Krupp said. Guru will also provide the same rates in every market, and will provide consumers educational resources to help consumers improve their financial situations, the company said.

One key feature of Guru: incentive program, called Zencentives, that rewards a good repayment history. Guru will continue to discount a recurring user’s interest rate by 1 percent with each successful repayment up to five times, potentially cutting the cost in half, Garcia said. And while the APR on a 10 percent short-term loan would be 260 percent, Guru says its consumers will get an additional two-week free grace period and its loans won’t roll over past that time period and compound, as other payday loans do. (Nationally, average pay-day loan rates are about 400 percent, according to the Center for Responsible Lending. The average rate in Florida is 304 percent.)

Guru ( has a fully functioning product with an app that has been tested for fraud detection, Krupp said. About 30 live users have tested the app, and about $2,500 in loan issuances have been cycled through the app. During their beta testing, the founders got some valuable feedback from users that the app was not intuitive enough. They then hired an interface designer who revamped the entire flow of the app, cleaned up the visuals and made the process easier for a new user. A user will be able to go from downloading the app to submitting for a loan in four minutes, according to the team.

The Guru app has been approved on the Apple and Google Play stores. The founders have financed the projects themselves but are now seeking to raise about $230,000 to pay for the state license and take the app to market. They plan to launch first in Miami-Dade and Tampa.

“We hope to launch in the next four or five months,” Garcia said. “We have all the boxes checked.”

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