Able Start: the newest offering from the world’s first collaborative lender

  • By The Able Team
  • Published 10/5/2015

Able started out as a platform with a single product: a collaborative loan that allows small business owners to amplify funds they borrow from their friends and family with low-interest capital from Able.

Now comes our next evolution: A new product that democratizes the Able platform even further so as to better serve more small business owners.

Able Start (currently in beta) allows credible entrepreneurs with viable business plans to use the Able platform to raise 100% of their funds through custom loan agreements with their friends, family and fans. Founders keep all of their equity and set their own terms and interest rates.

With Able Start, we not only provide the clear, binding legal contracts, the custom loan documents with transparent repayment schedules, and comprehensive servicing of the loan, but also the critical consultation on how to structure a loan that positions all parties for success, and the professional advice on how to make the ask.

Innovating Through Feedback

A product creates feedback from its users. If you listen closely enough, and act responsively, the feedback will evolve the company, almost on its own. Able Start was born in response to the needs of our Borrowers and developed through insights generated by our Able Network.

As one person said: “I have a solid business plan. I have a great pitch. And I have a sister. Now, I just need to figure out how to ask her for money.” We turned to the small business owners in the Able Network for their take. The answer? It’s often a terrible experience.

Almost every one of Able’s existing Borrowers borrowed money from friends and family early in their business trajectory, before their first loan with us. Speaking with them, we learned that the initial outreach was one of the most difficult steps they had in founding their business. We learned that founders didn’t know what terms to set or how to handle payments. They were afraid of alienating friends and family members at a time when they most needed their support. They had no official way to propose the loan in a way that inspired confidence. Finally, once their backers said yes it was expensive! The professional loan documents often cost them up to $5,000. Worse still, they had to service the loan themselves.

Several came to dread Christmas, when family members were more interested in repayment checks than gifts. Another had her guard up going out to see a movie for fear of bumping into friends to whom she owed money. Some had no legal documents - just a handshake - and, for at least one Borrower, the lack of a contract turned into a nightmare that nearly crippled the business when things got sticky.

Converting Backers While Protecting Relationships

No one wants to turn their friends and family into debt collectors. So, with Able Startwe’re taking the uncertainty and guesswork out of what can be an awkward - and sometimes messy - interaction, so that entrepreneurs can protect their most important relationships and focus on their business. Able manages payments so the entrepreneur doesn’t have to. (Every month, automated ACH withdrawals pull from the Borrower’s bank account and deposit to every Backer’s’ account. )

Because I had supportive friends and fans, Able was the perfect way for me to grow my business. - Haley G. • Owner of Shag Salon • Austin, TX

There’s pure financial value here, too. We believe Able Start will help entrepreneurs convert potential Backers more easily - and for larger loan amounts. The entrepreneur uses Able Start’s custom loan calculator (currently in beta), as well as the broader Able platform, and the advice of our expert team to refine a tailored proposal. When Backers are presented with a clean interface, an informative repayment schedule that shows the return on their money, the peace of mind of built-in servicing and the Able stamp of approval, they are more likely to say yes - and to take the entrepreneur’s thoughtful approach as another reason to believe in them.

In early conversations, we’ve seen that Able Start appeals to founders because it also provides a pathway to unlock more funding as the business grows. Businesses that generate more than $50,000 in annual revenue over more than six months become eligible to graduate to our original product, Able Growth, in which Able would fund up to 75% of a second loan.

We know that when you’re starting a business, connections matter. That’s why we give owners using Able Start access to the Able Network.

Disrupting A Big Market

Able Start isn’t just a product driven by anecdote. The majority of entrepreneurs use personal sources of capital to fund their startups. 57% use savings and credit, while a whopping 38% use money from friends and family. At an average investment of $23,000, this accounts for over $60BB per year. (The Hartford’s 2014 Small Business Success Study)

The Earliest of Entrepreneurs

Today, we launch the beta version of Able Start. We’re opening the conversation by talking with millennials. 56% of them say they want to start their own business - and many are naturally in their earliest stages. Like their more established counterparts, they are negatively impacted by the credit crisis and lack access to the funds they need to turn smart ideas into reality.

Our Co-Founder, Evan Baehr, whose new book, Get Backed, is forthcoming from Harvard Press, is currently at the Forbes 30under30 Conference, providing pro bono fundraising strategy sessions to these budding small business owners and deepening our knowledge of millennial entrepreneurs by conducting interviews about their experiences borrowing from - and lending to - friends and family. As our first visitors to the product get started with our beta custom loan calculator, we’ll be sharing some millennial insights in an #AbleStart mini-series on Twitter @AbleLending.

As part of the Able Start launch, we are excited to generate the learning and insights that will help us refine the product and better serve the entrepreneurs who will join and grow the Fortune Five Million - the five million small businesses that employ more than half of our nation’s workforce. Which, to us, feels like five million reasons to keep asking, keep listening, and keep evolving.

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