New service delivers fixed-income returns while providing capital to small businesses looking for funding
TORONTO, March 1, 2016 /CNW/ - After a highly successful launch south of the border, InvestNextDoor is bringing its award-winning, "Borrowing 2.0" business model home to Canada. Capitalizing on the new national regulations which allow Canadians to participate in investing and capital raising for small businesses, InvestNextDoor delivers a model that seeks to reduce investment risk in current market conditions, and focus on above average fixed-income returns for retail and institutional investors.
Owned by two Canadian female entrepreneurs, Tabitha Creighton and Lisa Ohman, the easy-to-use platform is the first of its kind to solve the issue of access to capital, using debt securities instead of traditional lending structures. It connects investors with hardworking business owners providing access to the same returns as banks and private equity firms.
"Small businesses deserve to have access to the same financing options available to their large corporate counterparts. Our platform does just that, using a securities-based lending model that allows business owners to conveniently apply online and use the power of their community relationships," says Tabitha Creighton, CEO and co-founder of InvestNextDoor. "This is a long overdue opportunity for retail and institutional investors, as well as the small business owners who can now access new sources of borrowed capital at competitive rates never available to them before."
Small business debt-financing needs in Canada are increasing and doubled from 2007-2011 as big banks appear to be pulling back from small business lending, leaving a credit gap of at least $3B annually. At the same time, recent research suggests there is $75B in consumer cash sitting on the market sidelines, looking for something in which to invest.
InvestNextDoor has created a patent-pending benchmark rating model that creates transparency and aligns to global securities indices. Using data from credit agencies that maintain some of the largest databases of commercial financial obligations in Canada and the United States, InvestNextDoor applies the first algorithm of its kind for evaluating publicly accessible small business debt securities. A four-step due diligence process during underwriting allows them to evaluate a borrower's credit and assign a benchmark interest rate in less than 24 hours.
How it Works
- Businesses apply to borrow using a simple online application.
- The company's underwriting and benchmark pricing model are applied and businesses are informed of approval decision within 24 hours.
- Investors review and make offers of investment.
- Repayments are monthly, with fixed amounts comprised of principal and interest, and are handled through the company's SAAS platform.
Meridian, the largest credit union in Ontario, has become the first community banking partner. "Small businesses account for more than 90 per cent of companies in Canada and play a large role in job creation so their success has a major impact on the economy," says Bill Whyte, SVP and Chief of Member Services with Meridian. "By working with InvestNextDoor, Meridian is able to support our small business Members with access to additional capital, and investors with unique opportunities that support their communities."
Supporting economic growth in communities is a priority for both InvestNextDoor and Meridian. By making the investing process easy, people can now invest in local community businesses they want to support.
"Our business is evolving both investment models and small business lending, by taking a page from Bay Street and making it applicable and accessible to small businesses," says Creighton. "This solves the issue of access and supply, using technology as an efficient way to transform lending. It's a win-win-win situation because when businesses prosper, so do investors and the communities."
The company is in the process of registering as an Exempt Market Dealer. Until it receives its registration, it will focus on supporting community education and outreach, to educate businesses and investors about issues surrounding small business credit.
InvestNextDoor's mission is to democratize small business borrowing, by making investment in small business an accessible and cost-effective choice for everyone. Focusing on communities amplifies the economic effects of consumer investment in small businesses by keeping more of the benefits of the borrowing lifecycle within a given community. For more information please visit: https://investnextdoor.ca/.
SOURCE InvestNextDoor Canada
Image with caption: "InvestNextDoor Canada (CNW Group/InvestNextDoor Canada)". Image available at: http://photos.newswire.ca/images/download/20160229_C7963_PHOTO_EN_630057.jpg
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