The Columbus Chamber is offering small businesses a new way to raise money by telling them to join the crowd.
In a new partnership, the chamber is making SoMoLend its first recommendation for "crowdfunding," which involves raising money through small pledges online.
"We do over 700 one-on-one meetings with businesses small, medium and large every year," said chamber President and CEO Michael Dalby. "The No. 2 most cited need is access to capital. That's behind finding the right people.
"They have a bank relationship. But they want to know what else is possible. We're just playing the role we traditionally do, as a connector to a potential resource."
SoMoLend --the name is derived from "social, mobile lending" --is a debt-based crowdfunding concept aimed specifically at businesses.
While many crowdfunding concepts typically reward those who pledge money with T-shirts, merchandise or other perks, SoMoLend's model has small businesses repay those who pledge cash.
"So it's term loans," said Cheryl Stamm, SoMoLend's vice president of sales. "We also do offer convertible notes. But, so far, most are looking for small-business loans." An interest rate is charged on the loan, providing an incentive to potential investors.
SoMoLend is not the lender, but facilitates the process. "We have banks, community funds, cities that are lenders," Stamm said. "Accredited investors can lend, and friends and family. The thing that's cool is that small businesses only have to do a business application one time and many, many people can view it."
The Columbus Chamber became familiar with SoMoLend through working with the group's nonprofit arm, Bad Girl Ventures, an educational and micro-financing organization dedicated to women entrepreneurs.
One reason the chamber-SoMoLend partnership will likely succeed is that the platform gives investors a certain amount of confidence that the business has been vetted, said David Marlett, founder and executive director of the National Crowdfunding Association.
"This gives local banks an opportunity to say, 'If you're successful, we'll guarantee an X-dollar loan,"" Marlett said. "This is a way for them to get involved in deals they may not have gotten involved in before."
The partnership between the Columbus Chamber and SoMoLend is part of a growing trend, Marlett said, partly because it is a way to get money from outside local communities. "In time, maybe a year from now, I'd say that a lot of municipalities will be using various crowdfunding portals to encourage citizens to go out and raise money," he said.
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