[Editor’s note: This is a guest post from Funding Circle. Funding Circle is a platinum sponsor and will be in attendance at LendIt USA 2015 on April 13-15. In this post, they give three reasons to invest in main street businesses.]
It’s no secret that a major lending gap has left millions of American small business owners without access to the financing they need to grow, invest in their futures and stimulate local economies.
The traditional banking system is clearly broken, so five years ago we set out to build a better solution. Thousands of loans later, we are proud to have helped investors lend almost $1 billion globally to successful and established small businesses hungry to kickstart growth and increase their bottom line.
Since we launched the Funding Circle marketplace in the US, we have been continually inspired by the ways these tenacious small businesses continue to defy expectations and lead the charge for economic recovery despite insufficient access to credit. According to the Washington Post, for example, the new employment numbers of larger corporations are wavering, but small business hiring continues to grow impressively month over month.
There are a billion reasons why we believe the world should be invested in small business, but here are just three that have inspired us along the way:
- Small businesses create jobs and grow their local economies.
An accomplished entrepreneur and Harvard MBA, Dorika’s passion has always been building great organizations that impact people and society for the better. After caring for her mother-in-law in her last year of life, Dorika decided that there had to be a better way to help people through the aging process. In 2013, she launched LiveWell Home Care to offer patients an innovative way to maintain a dignified and self-sufficient lifestyle in their own homes.
In early 2014, customer demand was growing so rapidly that she needed to hire more staff – immediately. An experienced entrepreneur, Dorika already knew how long the traditional bank or SBA loan processes would take, and why it wasn’t the right solution for her: “I needed answers that month – that week! The traditional bank process is not aligned with where the world is going.”
Ten days later, she had a $150,000 secured small business loan from Funding Circle. “I used to show up on clients’ doorsteps to collect checks because our cash flow was so tight. Thanks to Funding Circle, I have never missed payroll and am able to pay my employees well. For a small business owner, that is huge. That is powerful.”
Since then, Dorika has seen her revenue more than double and expects to quadruple her sales by the end of 2015. “My goal isn’t to stay a small business. My goal is to be a billion-dollar business. Funding Circle was the spark we needed to grow.”
- Small businesses create innovative new products and experiences.
With thousands of wine and liquor stores doing business in New York these days, standing out from the crowd in the city that never sleeps can be pretty tough. Cris opened Renaissance Fine Wines & Spirits with his business partner in 2002, and for more than a decade business flourished in their growing neighborhood. But as the popularity of wine increased, so too did the number of wine stores opening in the neighborhood. Cris and his business partner knew they needed a way to cork the competition.
With that came the concept of the Vino Maestro Wine School — an online wine education and tasting program. Cris knew that building out this kind of concept was going to require a strong injection of capital, so early on in the process they visited a local bank branch armed with a detailed business plan, a 12-year track record of stable ownership, profits and a reliable customer base. They quickly realized they needed a more efficient way to get the capital necessary to launch their new product in time.
That’s when Funding Circle caught their eye. Shortly after, Cris was on the phone with an account manager and underwriter from Funding Circle talking about his business and the market opportunity. “Banks may offer slightly more attractive rates, but Funding Circle’s process was quick and easy and their terms were much more reasonable than credit cards or other cash advance financing options.”
- Small businesses are investing in global expansion.
Solé Bicycle Company isn’t your typical bicycle shop. Founded in 2009 by two friends who were fed up with the state of bicycles, Solé introduced high performance, stylish and affordable bicycles out of a small headquarters in California. Five years later, they’re still doing what they love – putting their passion for “design, simplicity and community into every bicycle they create” – and their customers can’t get enough.
When Solé president Jimmy Standley first embarked upon a search for capital to purchase inventory and meet rapidly growing demand, he thought the banks would love his business as much as his customers did. Instead, his applications for a traditional bank loan were rejected 20 times over two years, despite strong and growing sales.
Like any good Millennial, Jimmy turned to the Internet for answers and elected to borrow $75,000 from the nonbank lender that offered him the best rate: Funding Circle. Later that year when Solé was ready for another injection of capital, Jimmy applied for a second term loan while waiting in line at the airport for a flight to China. By the time he landed, it was processing. One week later, after Funding Circle’s credit experts had reviewed the application, Solé had the funds it needed to launch a new line of three-speed bicycles and open a retail storefront. And, the full-time team of six has plans to go global: by the end of 2015, you’ll see locals and tourists alike cruising around Europe and Australia on Solé’s works of art.
Hungry for more inspiring stories of successful investments like these? Follow our new LinkedIn page for investors interested in marketplace lending, or join 35,000 other people and institutions across the world who are already investing in Main Street.
Funding Circle (www.fundingcircle.com) is the world’s leading online marketplace for business loans, matching small businesses who want to borrow with investors who want to lend in both the UK and the US. Since launching in 2010, investors at Funding Circle – including 35,000 individuals, financial institutions and even the UK Government – have now invested more than $900m in 7,000 businesses globally. Funding Circle was the first financial technology company to announce a formal referral partnership with Santander, one of the UK’s leading high street banks, and has since announced a similar partnership with RBS in the UK. It has raised $123m in equity capital from the same investors that backed Facebook, Twitter, Skype and Wealthfront.
