InvestNextDoor is a crowdlending marketplace where investors directly lend to small businesses within their community. The marketplace creates an alternative source of capital for small businesses, offers better returns for large investors and promises longevity for community based financial services.
The key motivations behind the launch were to address a gaping hole in the economy, and to ultimately provide small businesses with the capital they sorely require on significant scale. The unique marketplace provides services that support the entire borrowing and investing lifecycle for both the businesses and their investors. Instead of loans being issued through an intermediary, businesses use promissory notes for the borrowing contract with their investors. Both accredited and unaccredited investors may be able to participate in lending to businesses, depending on which borrowing model the business chooses.
CEO and co-founder of InvestNextDoor Tabitha Creighton commented:
“This kind of progress demonstrates why we hit the reset button on borrowing and investing. It’s no secret that small businesses succeed because they’re loved by their communities – so who better to lend to them?”
“ InvestNextDoor has created a community-engaged Crowdlending marketplace. It creates a new source of reasonably priced capital for small businesses, and better returns for Main Street investors.”
“The tip of iceberg has barely been seen with the way in which private capital could be utilized to expand lending and create investment opportunities. The path of its evolution will depend on regulatory framework and economic factors as these new models are tested.”
COO and co-founder Lisa Ohman added:
“True crowd-based lending enhances traditional financial risk profiles with the impact of knowing the people you’re borrowing from, and them knowing you. Having investors be able to walk into the shop or refer customers to help support the business they’ve invested in, is a model that could create a much stronger connection that amplifies the impact of the actual dollars invested.”
“You’re not just investing in that business, you’re investing in their community as well – and getting market rates of return. It is complete disruption of traditional lending models.”
InvestNextDoor is a proponent of complete disintermediation – enabling borrowers and investors to be directly connected. This is something of a standout approach within the US market – where many large platforms are now increasingly reliant on third party loan servicers.
