Frequently Asked Questions

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Investors

What is Honeycomb Credit?


Honeycomb Credit is a web-based platform that allows small business owners to borrow loans from their own customers and community. We recognized that many great local business owners struggle to get access to small growth capital loans for their businesses while many individuals are looking for ways to invest locally in causes and companies they believe in – Honeycomb connects these two groups through our platform to build communities one small business at a time.




Is this a Crowdfunding site?


Yes, we believe in democratizing the lending process by allowing individuals to invest relatively small amounts in loans for businesses they care about. All of the opportunities at our site are offered under section 4(a)(6) of the Securities Act of 1933, which is often referred to as “Title III Crowdfunding” or “Regulation Crowdfunding” or “Reg CF.”




Is this like Kickstarter or GoFundMe?


Not really. At Kickstarter/GFM, you make donations to businesses and get nothing in return other than “rewards.” – this is referred to as Reward Crowdfunding. On our platform you are actually making a loan with the expectation of getting your money back plus interest.




Who can invest in these opportunities?


Anyone can invest, as long as you’re 18 or older.




Are there fees to join?


Only upon making an investment, will you be charged a transaction fee. The fee helps to cover Honeycomb's expenses and will be 2.85% of your total investment but will not exceed $37.25. You will have a chance to review the exact fee amount before completing your investment commitment. Please review our website's Education Materials for additional information on this transaction fee.




Is the information I give you secure?


Yes. We use SSL (Secure Sockets Layer) for security by making an encrypted link between your browser and our associated servers. SSL is an industry standard for protecting the integrity of online transactions.

Under our Privacy Policy, we won’t sell or share your personal information with anyone.




Are these safe investments?


No, these are not safe investments. All of the opportunities on our site are offered by small businesses with limited resources. It is very likely that some of the companies listed on our site will fail to repay their loans. These opportunities are only for investors who can handle losing some or all of their investment.




What are some of the risks of investing?


Our Educational Materials list some of the generic risks of investing. You can also find additional risks specific to the business listed on the "Form C" which can be found on the Investor Info tab of the campaign's page.




Where can I learn more about the businesses?


When you click on a business, you’ll see a lot of information right away on the campaign page. For more information, after you click on the project, click on the Investor Info tab. There you’ll find the company's "Form C" which provides more in-depth information about the project and the investment.




How do you make money?


At the bottom of each campaign page, you'll see how Honeycomb Portal is compensated. Generally, Honeycomb receives a percentage of the total amount raised for each successful campaign.

Additionally we have a posting fee for the issuer and a small percentage-based investment fee to cover our costs to host and manage a campaign.

Our compensation structure may change from time to time and you can find the latest information in our Educational Materials.




Why do you need my social security number?


When you invest, you'll be opening an investment account at our partner U.S. bank to make your investment and subsequently receive principal and interest payments back from the business.

Under U.S. Federal law, the bank needs your social security number to open an account on your behalf.




Are there minimum investments?


You can invest as little as $100 in most campaigns on the platform.




If I invest in one of these businesses, do I become personally liable for anything?


No, not at all. We choose our legal structures to protect investors from personal liability. If you choose to invest in a campaign you are only liable to make the investment in the amount you designate.




What will I own if I invest?


You will own a promissory note of the business that borrowed the money.

Kind of like a loan from a bank, they'll make repayments back every month. Except, unlike a bank, all of the repayments will go back to you, the investor. If a business pays on-time, your share of the repayment will be distributed to your bank account every 3 months.




Where does my money go when I invest?


Your money is held safely in an escrow account (which we don’t control) until the project is fully subscribed, i.e., until the full amount is raised from investors and all other terms of the agreement are satisfied. Then, it is distributed to the business. If the project is not fully subscribed, your full investment amount will be returned to you.




Where can I view my investments?


A summary of your investments can be found in your Investor Dashboard. When in your Investor Dashboard, select the “Investments (Earnings and Documents)” button from the column on the left-hand side of your screen.




What is my "Investor Dashboard" and where can I find it?


Your Investor Dashboard is an overview of your Honeycomb account. The dashboard gives you quick access to your account information, investment summary, and completed investment documents.

To access the Investor Dashboard, login to your account. While logged in, select the “Menu” dropdown located on the top banner of the page. Selecting the “Dashboard” option will bring you to your personal Investor Dashboard.




What happens if a business stops making payments on their loan?


In the event that a business stops making principal and interest repayments required under the Note Purchase Agreement you sign with them, the loan will be considered to be in default.

At this time, as an investor, you will have the opportunity to vote on your desired remedy whether that be seeking maximum reimbursement, forgiving all or part of the remaining loan, or some alternative in between.

Some loans will be personally guarantied by the business’s ownership and/or have collateral which may be used to recover some investor losses in the event of a default.




Can I cancel my investment?


You can cancel until 48 hours prior to the offering deadline identified in the issuer's offering materials.

To cancel an investment, visit your Dashboard. Your Dashboard can be found by logging in to your Honeycomb account and viewing the "Menu" at the top of your screen. Once in your Dashboard select "Investments", find the relevant investment, and select "Cancel".




Can the business cancel my investment?


Yes. The business has the right to accept or reject investments in its sole discretion. But once the business accepts your investment (and takes your money), it cannot cancel.

Also, if your investment is not completed 7 days after you've committed to invest, your investment may be cancelled.




Will I be able to sell my promissory note?


Generally speaking, no. For one thing, there won’t be an active market, meaning you probably won’t be able to find any buyers. For another, the business might restrict your ability to transfer your promissory note. Finally, Regulation Crowdfunding generally requires you to hold your promissory note for a period of one year. There are some exceptions to this requirement, which can be found in our Education Materials (see "Restrictions on Resale").




How is the interest rate set?


Interest rates are established though Honeycomb's standardized credit analysis process, taking into account such factors as historical financial performance, ownership experience, ownership financial history, personal guaranties, the value of pledged collateral, and a general assessment of business and industry risk.

THERE IS NO GUARANTY THAT THE INTEREST RATE ON A LOAN WILL COMPENSATE YOU ADEQUATELY FOR THE RISK.





 

Business Owners

How do I apply for a loan?


Simply select the “Apply for a Loan” button and complete the short form. We’ll reach out within 48 hours if we need any further information. If your loan request meets our standards, you will be invited to create a campaign which will be reviewed by us before going live.

Once your campaign is live you will need to encourage your customers and other community members to invest in your loan.




Is there an application fee?


No. Business owners or managers can apply for a loan at no cost and with no risk of impacting their personal credit score.




What’s the maximum I can borrow?


Right now, the maximum is $250,000.




Do you restrict how I can use the loan?


We are looking for borrowers who want to invest in the growth of their businesses. If you’re unclear if your use of funds would qualify, feel free to submit an application and we can discuss in more detail.




What are the typical terms of the loans I could get on your site?


Our loans are typically fully amortizing with a term of 2-5 years based on the preference and needs of your business.




Will I have to personally guaranty the loan?


No. Personal guaranties are an option that will help lower your rate, but for some businesses would not be a requirement.




How long will it take you to decide whether to allow me to create a campaign?


Once all of your information has been submitted and you have answered any additional questions, we will have a decision to you within three business days.




Does Honeycomb lend the money?


No, Honeycomb is only a portal that connects small businesses with potential investors. The loans will be made by investors who sign up at our site.




If you accept my application, am I guaranteed to be funded?


No. If we accept your application, it just means that you will be invited to create a campaign which will be listed on our site.




What kind of investors will register at your site?


Anyone can register and invest, as long as he or she is 18 or older.




Can I ask my customers to participate?


Yes! This is very important to increase the odds that your campaign is successful. However, there are some rules to follow when you advertise your campaign. Our recommendation would be to simply direct your customers to your campaign page on our site where they can learn more and decide whether to participate in the loan.




What kind of information will I have to provide?


The SEC requires that you provide information about the business, including recent financials, your ownership structure, and a business model. We’ll provide more information when you apply.




How long does the process take, start to finish?


The whole process from loan application through campaign creation to funding typically takes several weeks. Campaigns are required by law to be open for a minimum of 21 days.




How do you make money?


For each offering we will disclose exactly how much Honeycomb Credit, Inc. is being paid.

Honeycomb receives a percentage of the total amount raised for each successful campaign. Additionally we have a posting fee for the issuer and a small percentage-based investment fee to cover our costs to host and manage a campaign.

Our compensation structure may change from time to time and you can find the latest information in our Educational Materials.





 

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Securities offered through Honeycomb Portal LLC or Honeycomb SMB LLC have not been recommended or approved by any federal or state securities commission or regulatory authority. Honeycomb does not provide any investment advice or recommendation, and does not provide any legal or tax advice with respect to any securities. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. Securities sold under Title III are speculative, illiquid, and investors can lose all of their money.

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