Alternative Funding Sources
posted in Business Finances |
Where to find start-up or expansion capital
I first read about Prosper.com in an April 2007 Fast Company article. I have been following the company since. The implementation of the concept of community based funding has been outstanding and might be a resource you want to consider for your business expansion strategy.
Access to capital, either for a start-up venture, or to fund an existing enterprise’s expansion plan, is an issue most entrepreneurs deal with. As the Circuit Rider for the Colorado Small Business Development Center, I spent the majority of my time developing business plans and arranging funding for small business owners. Colorado had established a Community Banking Initiative that funded start-ups with Micro-Loans of $25,000 or less. I wish a funding structure like Prosper.com had been one of the options I could have pursued for my clients. It seems to be structured as a win/win. The investors have the opportunity to receive a good return on their excess capital, and individuals can access the capital market directly.
The following is a description excerpted from the Prosper.com site. It is a fascinating concept and one worth investigating.
Prosper, America’s first people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone.
The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform.
People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using “standing orders”, which automatically make many small loans to different borrowers.
It is a fascinating concept, but like all things relating to business start-up and expansion, due diligence is the key to good decision making.
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