Despite the U.S. being one of the most financially well-off countries in the world, most American consumers are living paycheck-to-paycheck, according to recent research from LendingClub Corporation and PYMNTS.com. In the wake of pandemic-induced economic challenges over the past few years, LA-based Rain introduced a solution that can help millions of people access their earned wages before payday without resorting to costly loans.
Financial wellness company Rain announced the close of a $116 million funding round on Wednesday. The capital consists of a $66 million Series A co-led by QED Investors and Invus Opportunities, as well as a $50 million debt facility from Sound Point Capital Management.
Rain’s platform lets employers like healthcare systems, senior living groups, hotel franchises and fast food franchises offer an “income streaming” benefit to their employees. Rain’s solution integrates with a business’s existing payroll and timekeeping software and automates a payroll deduction flow with these systems.
Using Rain’s Instant Pay app, employees can access a portion of their paycheck shortly after completing a shift instead of having to wait until their next payday. Users can receive their wages after paying a small fee and are unable able to withdraw more than 50 percent of their earnings per pay period to prevent overuse, Rain said in a release.
A solution like Rain offers hourly workers an alternative to predatory lending practices, the company said in the release. Many people have had to juggle increasing expenses like childcare, food, rent and emergency healthcare services over the course of the pandemic, and these piled-up costs lead many people to take out payday loans to make ends meet, Rain said.
“We built Rain to empower people, especially hourly workers, to take control of their finances and eliminate the need for predatory payday loans,” Alex Bradford, Rain’s CEO and co-founder, said in a release.
With payday loans, a borrower has immediate access to a portion of their next paycheck, but they must pay the loan back, with interest, once their paycheck arrives. Payday loan lenders often charge high interest rates that can ultimately create more financial hardships for the borrower.
Rain currently operates across all major U.S. markets, Bradford told Built In via email, and with its fresh capital it plans to continue expanding across the nation.
Since launching its app in 2020, Rain said it has grown its user and client base by more than 20 percent each month. The platform has also distributed over $150 million in earned wages to employees to date, according to the release.
Rain plans to fuel market growth by investing in its tech and infrastructure, user experience and marketing, according to the release. While Bradford said Rain doesn’t plan to grow its headcount significantly this year, it is currently hiring across roles in engineering, product, operations and sales.
“We are most excited about helping millions of Americans reach financial freedom,” Bradford told Built In via email.
