We’re all about freelancers here (you may have guessed by the name), and helping freelancers become as successful as possible. Once that success has arrived, you’ll either go one of two directions.
Firstly, you might want to turn all your hard work into a business – this means re-investing money you’ve made or seeking outside investment. Secondly, you might just want to rest on your laurels and watch the huge stacks of cash grow around you, until you’re swimming – Scrooge McDuck style – in a literal sea of your own wealth.
Whichever path you take (we’d recommend the former rather than the latter - paper cuts are horrible things) you may want to explore the new and exciting world of micro-lending – but in subtly different ways. Lets explore the first option to begin with – in the past if a sole trader was to incorporate their assets into a company and expand, they would take out a bank loan, but recently the trend has been towards seeking out individual investors who can both lend you their money and help grow your business – we’re calling this “The Dragons Den Effect”. If your core business is good enough your investor might even just want to take a chunk of your company instead of getting any cold, hard cash back.
But what if you can’t find an investor? What if you’re a hopeless romantic, blew £10,000 on an engagement ring for your sweetheart, and now can’t get a loan from the bank? Micro-lending may be able to help. Micro-lending is crowd-sourced finance – you take little bits of money from lots of people to form one big loan. New service Quakle is providing a service to allow people to post requests for loans, what they want to do with them, their credit rating (obtained the traditional way) and their reputation (based on their repayments and activities on the site itself). Then people browse the site and contribute a couple of pounds until you reach your target, you then have an amount of time (specified by you but within reasonable parameters) to repay the loan and interest – thus financing your business and making all of your micro-investors a couple of pennies in the process.
Now lets look at micro-lending from the other side. What if you took the Scrooge McDuck route I suggested earlier, and now find yourself with a successful enterprise and buckets of cash to throw around? Charitable organisation Kiva has applied the micro-lending model to people who need financial aid in the third world. Obviously our weighty first-world currencies go that much further in the third world, so you can lend in small amounts and make a bit of money back on your investment. A quick example from the site is that of Lito Garopil Jr., a bike messenger who needs a loan of $125 for tools to repair his motorbike. You, as a lender, can either give him the whole amount, or form a $25 chunk of the whole loan – obviously the more you lend, the more you get back.
So there you have it. Micro-lending – a new form of community giving that wouldn’t be possible without the internet, enabling you to not only get access to loans should you need them, but also to help others if and when you so desire. Makes you feel all warm and fuzzy, doesn’t it?
UPDATE – Caron Margarete in the comments has pointed us to Profounder.com – a purely business-based micro-lending site run by the founders of Kiva – it seems to be in private beta but is definitely one to watch – perfect for funding your small business!
