The Wall Street Journal recognizes Honeycomb’s impact on small business lending!
No need to pinch ourselves - we’re not actually dreaming. Honeycomb Credit was recently featured in the Wall Street Journal! As it becomes more difficult for small businesses like the ones we work with every day to get funding, the innovative means of funding them (like what Honeycomb does) are starting to get noticed!
Platforms like Honeycomb allow ordinary people - not just accredited investors - to invest in their favorite local businesses. You know, those businesses that you just want to root for. Maybe you saw them struggle through the pandemic, maybe they’re a local landmark, or a new up-and-coming spot that’s bringing vibrancy to your area. With Honeycomb, you can invest as little as $100 in a local business to help them grow.
What does Honeycomb do?
What made this possible was something called the Jumpstart Our Business Startups Act, which when it was approved in 2016 made it so that small businesses could use something called regulation crowdfunding to gather investments from their communities and biggest fans.
Small businesses put up an investment offering on Honeycomb’s platform, where their customers, family, and friends can take a look at the project they’re raising money for, and invest if they so choose. Businesses can raise up to $124,000 at a time, or more depending on if they’re able to produce reviewed financial statements.
And businesses don’t necessarily have to give up equity when they do regulation crowdfunding. Honeycomb started primarily providing debt investment offerings - so that no business owner had to give up any ownership in their beloved business. Since it started in 2017, Honeycomb has expanded its offerings to include equity investments, SAFE offerings, and revenue share agreements.
Why is alternative small business funding important now?
If you’ve been paying attention to the news, with these uncertain economic times, bank lending for small businesses has gone way down. Lending standards are tightening up, which is putting the pinch on businesses that need capital in order to grow. It gets even harder if a business doesn’t have good enough credit, or enough collateral to put up for the loan, or a long enough history of being in business.
This is especially true for local businesses that you might find on any Main Street - and definitely in the restaurant industry. Even before the pandemic shuttered many of our favorite restaurants, banks were hesitant to lend to them, being a business with slim margins and high risk. However, the banks doing the lending aren’t always the ones who get to see the proof of how good the restaurant actually is - usually because they’re larger commercial banks which have historically been eating up the small community banks that actually do know the businesses and the owners.
The Wall Street Journal quoted Honeycomb’s CEO, George Cook, who said, “‘Historically, community banks obviously looked at the financials of a business, but they also sat across the street from the business. So, they knew if the bakery made a good baguette. They knew if they opened their shop on time and if they treated their employees and customers well.”
Now, a business’s customers and community get to take on the role that George is expressing above, judging a business by its financials but also by what they know of it - the experience they get walking in their doors or sidling up to its food truck window, and making an investment from that.
This has resulted in over $16.3 million being invested in small local businesses across the Honeycomb platform in its five years of operation. In June 2023 alone, $1 million dollars was moved to the hands of small business owners so they could grow. Honeycomb is so excited about this feature in The Wall Street Journal, and can’t wait to continue shining national attention on a platform that’s making a difference not just for small businesses, but also communities across the country.
Join the movement in changing how we think about small business lending
Are you a business owner looking for a new way of funding your next growth project? We’d love to chat. Fill out the form below to get in contact with us!