Forums: Discussions for entrepreneurs and small business.

Note: Please don`t slam this idea - but please critique it and tell me if I`m off my rocker. It`s just an idea. :)

The Issue: Small Business Owners have trouble finding funding.

The Solution: MySimpleFunds.com

When you register to the site you have the option of selecting 1 of 3 memberships. Each membership has a different dollar value.

Bronze Membership = $100
Silver Membership = $250
Gold Membership = $500

Each value represents 5% of what you`re allowed to "draw" from the site`s bank.

Bronze Membership can draw up to $2,000.
Silver Membership can draw up to $5,000.
Gold Membership can draw up to $10,000.

Each membership has different terms as to how the loan can be paid back.

Bronze Membership = Loan + 15%
Silver Membership = Loan + 12%
Gold Membership = Loan + 10%

Each membership has different terms as to the length of the loan:

Bronze Membership = 6 months
Silver Membership = 12 months
Gold Membership = 18 months

Now then, the rules:

1) The business -must- supply a Photo ID, Bank Account ID / Routing Number, proof of DBA / Business License, a valid SSN and a notarized & signed copy of our contract.

2) A business is allowed to miss 1 payment for every successful 6 payments made.

3) The business must agree to pay a $50.00 registration /setup fee at the time of the loan.

4) If the business misses -2- consecutive payments they will instantly be sent to collection for the amount they borrowed + their % based on their membership.

5) Payments are made on our website via Credit or Debit Card or by automatic withdraw from your listed account.

6) If the business pays the loan back in full within half of the time of the terms, the amount they are able to borrow next time is increased by 50%. We build trust with you as you borrow! (To avoid abuse - a business may only take out 1 loan every 6 months.)



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Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us

So - as I sit here and think more about this I think of things like:

1) Should the site focus more on micro-loans? $100 - $500 and membership prices of $10-$50?

2) Would the entity have to be a non-for-profit and setup as a Credit Union?

3) Could we use other things to determine whether or not someone is eligible for membership / loan - like:

* A Completed Business Plan that gets reviewed by our `experts`
* Matching startup capital.

4) What type of advertisers could we get for our site? What would be an honest, average fee to allow them to advertise on our site?



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Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us

Intriguing... I`m just looking at your gold membership.

Gold Membership = $500  fee
loan for $10,000
+ 10% interest
$50.00 setup fee

Sorry, but I have better rates on my CC with a $13K credit limit + cashback rewards

Borrowing $10,000 and paying back $11,550 is bad? When I was going to borrow money for a mortgage I think the house loan was for $80,000 and I`d pay back almost three times that.

I don`t borrow much money or try for loans but I question:

If you have a $13,000 spending limit on a credit card why would you need to borrow from the potential site anyhow? I`m not certain you`d be my target customer.

My target customer would be someone who does not own a credit card with a decent limit, who does not have good credit, who does not have other means to secure funding.

I wish there was a way to let the SBA secure this system so that they could sponsor said loans and provide the potential small business with a bit of confidence in choosing to lend to a small business owner.



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Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us

Dude, why are you getting defensive? You asked for a critique of the idea and I gave you ONE viewpoint, and you`re all out of sorts about it.  Why the heck ask for a critique?

If you have a $13,000 spending limit on a credit card why would you need to borrow from the potential site anyhow?

Who says I want to borrow?  This is just a critique right?

No, I won`t be the type of customer for this kind of bad terms.


Borrowing $10,000 and paying back $11,550 is bad?

For some people, yes.

My target customer would be someone who does not own a credit card with a decent limit, who does not have good credit, who does not have other means to secure funding.

I guess for these people they won`t think your terms are bad...
...and maybe that`s the reason these people are in that situation.


When I was going to borrow money for a mortgage I think the house loan was for $80,000 and I`d pay back almost three times that.

You got a lousy rate I think.  You`d pay back 3x as much on your 80K loan?

For the life of my loan, less than 40% will go to interest, the rest going to principal. 

Where would you get the initial funds to handle the loan requests?  For example, 25 people sign up at the same time for a gold membership and 4 took out a $10,000 loan.  Where would the $40,000 dollars come from to cover these loans?  Plus, how would you cover $210,000 dollars in loan request should the other 21 want to take out their $10,000 loan.  You only took in $12,500 in membership fees.  Unless you already have a revenue source aside from membership fees, this is barely enough to cover one loan.

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Goals are attainable at any age. It just seems to take longer the older we get. - S. Patrick Culshaw

Don`t read to deeply into my posts in terms of "emotion". It`s just text. :)

"I guess for these people they won`t think your terms are bad... "

These people? There are plenty of small business owners who are trying to get funding for their projects and have less than average credit, making it difficult to really get themselves going. Add into the equation the economic effects that we`ve been dealing with in the states for the last couple of years and *poof* you have a need for people to search out alternative ways to get funds.

The site I was contemplating is aimed at helping small business owners get start up cash to help them reach their goals. Try to look at the site from the perspective of a person who might need alternative ways to secure funding and take another glance at the site and give me pros and cons or ways that you think the site might work.

I appreciate your response - but it came across as, "Well, I wouldn`t use it." And thats not much of a helpful review either way.




-------------------------

Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us

This is where you need a series of solid investors to understand the need for microloans in our current economy. We would need to do two things as a company:

1) Start with a "Bank" that is listed on the front page.

IE: We have $60,000 left to lend!

That number would change depending on how much we have out in loans.

2) When the Bank reaches 0, you obviously stop funding loans. There would be additional revenue from advertisements (Small Business Related) as well as possible services that relate to small business owners.


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Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us

Yes, an investor or two would be needed.  But, you would have to have enough money on hand to provide maximan loan amounts to every one who signed up.  In the above example for instance, you would need $250,000. plus around $50,000 in operating expenses.  Will an investor put money into a lending institution with lax controls over who can barrow money?

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Goals are attainable at any age. It just seems to take longer the older we get. - S. Patrick Culshaw

First, I don`t consider this business to be "lax" we would just institute a different set of checks and balances than a credit check. There are LOTS of companies doing this same style of business with cars (timebuyer.com) and programs where they automatically take $$ from your paycheck each week (paydayone.com).

Second - Making sure the investors are reassured that they will get their money back + their return is essential in securing them as investors. There would need to be some sort of assurance that people can`t just get $$ and *poof* they disappear.

Approving legit small business owners is the key to making this work. With any lending group you can never guarantee the person paying you back. The amount of hoops that people will have to jump through to secure funding will help remove the people who want to click a couple of buttons and get some free cash.

Perhaps there could be a review committee that would take each loan and not only ensure the person had everything they needed (business plan, etc) but perhaps we require approval from a local Small Business Development Agency that can make a recommendation on behalf of the borrower, "This person has a good business idea, is ready to launch and appears to be a low risk borrower."

That being said, on the last page I mentioned possibly working with the SBA to guarantee these loans (up to a certain percentage). Same kind of idea as above - someone to review the borrower and say, "Everything looks in order."

Great questions and discussion! Again, this isn`t even something I`m planning on doing. Just had the idea one day while reading another forum topic. :)


-------------------------

Shawn R. Tooley
North Country Design
87 Lisbon Street
Heuvelton, NY 13654
Phone: (315) 307-3359
Email: shawn@northcountrydesign.us
Web: http://www.northcountrydesign.us