How to Approach Friends & Family Backers

  • By Heather Miller
  • Published 2/11/2015

Able helps entrepreneurs grow their small business through a collaborative loan involving Backers — those friends and family who are willing to help fund your Able loan. Three to five Backers fund 25% of the total loan amount, which unlocks the remaining 75% from Able, and lets us lend to you at lower rates than other lenders.

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Asking friends and family for money is awkward for most, especially if you have asked before to get your business off the ground. But with Able, the pitch to ask for money from people in your community dramatically changes. Why? Because when Backers contribute to your Able loan they automatically begin earning interest as you make loan payments that equates to a 10x better return than your average savings account. Not only is their investment helping you unlock three times more money from Able, but we manage the loan on everyone’s behalf so that loan terms are clear. This avoids the clunkiness that comes with typical friends and family lending (read more about that here.)

Tips to Identify Your Backers:

  • Distinguish at least three Backers (a maximum of five) to collectively fund 25% of your loan.
  • Is there someone who has asked to get involved in your business, or that you want to get involved? Backers can be a mix of close friends, family members, previous investors, customers or fans of you and your business. Non-family members have to equal or exceed the number of family members.
  • The minimum individual Backer contribution is $1,000 and there is a 50% threshold — no single Backer can give more than 50% of total Backer capital.

Tips When Asking Your Backers:

  • Determine how much money you’re going to request from each Backer before you begin the conversation.
  • Schedule time to speak with your Backers in-person, or schedule a phone call.
  • Share the personal reasons why you’re asking him or her to contribute: Did they inspire you to start your business? Do they love the product/service you have to offer, or act as a referral source? Do you turn to them for business advice?
  • Explain how their investment will be used in your business.
  • Communicate to your Backers that for every $1 they contribute to your loan, Able will match with $3.
  • Depending on the rate of your Able loan, let your Backers know that they will earn anywhere from 8-16%, and that monthly interest payments will be automatically deposited into their account. See a sample repayment schedule here.
  • Explain that Able brings transparency to friends and family investing. Assure Backers that as long as you don’t default, they will be paid back in full with interest.

Be sure to take a moment to reflect on how awesome it is to not be in the middle of a consuming bank loan process and how you have a pool of people in your life that are rooting for your success. We want to change how friends and family collaboratively help your business succeed. When you lend and borrow in a community, everyone wins.

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