Access To Capital: The New Landscape of Business Lending

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Primrose Ward
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1 Access To Capital: The New Landscape of Business Lending 1 David Bann Vice President, Sales & Business Development StreetShares, Inc.

2 Mark L. Rockefeller - 9 years Air Force - B.S. (finance), MBA, JD - Nation-building in Iraq - Microfinance advisor in Africa - (recovering) lawyer at Wall Street firm - Co-founded StreetShares.com in 2013 mrockefeller@streetshares.com 2

3 Overview 1) Current Lending Environment 2) Small Business Funding Options 3) Q & A 3

4 Post-WWII: Veterans return to start businesses fueled by access to capital Number of Commercial Banks

5 Now: Business owners limited by access to capital Number of Commercial Banks

6 Then: Technology and big banks Libr. of Congress; public domain, no known restrictions

7 Now: Technology and big banks Brooklyn Trust Company, (cc) CC-BY-2.5

8 Technology has changed how we live

9 But technology has not changed banking Take deposits Then Cover Costs: Overhead Buildings Staff Red tape Now Brooklyn Trust Company, (cc) CC-BY-2.5 Make Profitable Loans

10 Current move away from traditional sources, driven by: ü technology ü new legal framework ü necessity

11 Why are we still dependent on big banks?

12 We re not And many, many more. 12

13 StreetShares is Shark Tank meets ebay for small business loans 1. Borrower underwritten and creates personalized pitch. 2. Institutional and retail investors bid to fund any part of the loan. 3. Lowest bids combine to fund the loan. 13

14 What are your financing options?

15 15 Debt or equity funding?

16 Early Stage Funding: Your Options STAGE OF BUSINES S CONCEPT LAUNCH EARLY GROWTH GROWTH Idea & planning $0 in revenue In business <1 year <$25,000 in revenue In business >1 year >$25,000 in revenue In business >2 years >$100,000 in revenue DEBT EQUITY Angel Investors Angel Investors Venture Capitalists Angel Investors Venture Capitalists Venture Capitalists ALTERNATIVE Grants Grants Grants 16

17 Small Business Administration Loans SBA 7(a) Loan The SBA s most common loan program. 0% fee for Veterans with Express Loan Program (loans up to $350k). Microloan Program Up to $50,000 to help small businesses start up and expand. 17

18 Non-Profit/Micro-Lenders What do they do? Lend small amounts to businesses that have a socially impactful mission. 18

19 Short duration/very high rate lenders What do they do? Give very fast, very high interest loans. 19

20 Loan Matching Sites What do they do? Online services that take your information and try to match you with multiple potential lenders 20

21 Factoring/Merchant Cash Advance Factoring: A business sells its accounts receivable to the lender. Merchant Cash Advance: A business agrees to give lender a percentage of future credit card sales for lump sum a payment. 21

22 Crowdfunding 1) Donation-/Rewards-based Crowdfunding 2) Investment Crowdfunding 22

23 Peer to Peer/Marketplace Lending Online-based financing where groups of individuals can finance your loan request 23

24 Peer to Peer/Marketplace lending is booming Lending Club has originated over $5B in consumer loans By $1T in loans will be originated in this manner globally Source: Lending Club, Inc. 24 Proprietary and confidential

25 StreetShares is Shark Tank meets ebay for small business loans 1. Borrower underwritten and creates personalized pitch. 2. Institutional and retail investors bid to fund any part of the loan. 3. Lowest bids combine to fund the loan. 25

26 Customer example: Marine Corps veterans Andrew & Kyle Need a <$50K small business loan for their company, Waza Media. 26

27 They face 2 bad options Big Banks Receding from lending to small businesses in amounts below Banks have been $250K exiting the small business lending market for over a decade. Economic Commentary, Federal Reserve Bank of Cleveland, August 14, OR - Online Payday Lenders Higher approval rates than big banks, but at a major cost. Rates up to 134%* 27 *Bloomberg Businessweek, Patrick Clark, May 1, 2014

28 They found StreetShares affinity-based lending solution " Personal: Andrew and Kyle pitch directly to investors " More informative: investors see business and personal info " Dynamic pricing: set by marketplace auction 28

29 Why not try social-lending ü Tell investors the whole picture ü Investors compete to lend to you ü Free to apply to post ü Free to build pitch (takes about 15 minutes) ü Loan offer after auction is complete ü Don t like loan offer, don t accept it. No obligation. ü No prepayment penalty ü Spread the word about your business 29

30 About StreetShares Loans ü Loan Amounts: $5,000 - $50,000 ü 1 or 3 year un-secured term loan ü Must have at least $25,000 in annual revenue ü Must be at least 1 year in business ü Reasonable personal credit 30

31 How do I choose a lender? 31

32 How do I choose a lender? Bank loans MCA, Factoring, Short term loans Micro/Non-profit Lenders Social-lending Interest Rate Loan Size Based on what? Easy/ Fast 32 5%-20% 20%-300% $100K-$5M Up to $250K Kiva: 0% Accion: 9%-16% Kiva: Up to $5K Accion: Up to $50K 5%-28% Up to $100K Numbers only Numbers only Whole picture Whole picture No Depends No Yes

33 David Bann VP, Sales & Business Development streetshares.com Facebook: /StreetShares LinkedIn: /StreetShares 33

34 $5,000 Commander s Call Monthly Award To apply: 34 Proprietary and confidential

Financing Your Veteran-Owned Business. Mark L. Rockefeller CEO, StreetShares Inc.

Financing Your Veteran-Owned Business Mark L. Rockefeller CEO, StreetShares Inc. 1 Mark L. Rockefeller - 9 years Air Force - B.S. (finance), MBA, JD - Nation-building in Iraq - Microfinance advisor in