A backer can be a friend, family member, advisor, or customer who believes in an entrepreneur and their business. We require that business owners recruit at least two outside backers for their Able Growth and Refi loan. Spouses and children can participate as backers, but can’t contribute to the required minimum backer amount.
A backer can’t be people without a valid U.S. bank account; people not legally domiciled in the U.S.; the business entity; anyone with whom we are legally prevented from doing business with; and anyone who we suspect presents a risk of money laundering or other illegal activities.
Friends and Family loans are funded 100% from backers. Growth loans require at least two outside backers. Refi loans require only one backer, which can be the business owner. Each Able loan can have a maximum of nine backers.
Most borrowers need to raise at least 10% of their total loan amount, and then we fund the remaining percent of capital. Borrowers may choose to raise more than 10% from backers, which lowers their overall interest rate. Able may also require some riskier borrowers to raise more than 10% from backers.
The minimum backer funded amount per business is $1,000 and there is a 50% threshold—no single backer can fund more than 50% of total capital.
Backers can charge the same interest rate as Able, or choose to go as low as 2%.
Absolutely, you can fund as many as five businesses per year through Able.
Every business that is approved for an Able Growth and Refi loan has gone through our underwriting process, which involves a credit check on the owner(s), and a thorough review of the business’s financials. Able does not vet Friends and Family loan candidates.
Able collects all the backer money then disburses it together with the Able money. (We do it this way to deter fraud).
Able collects one payment on behalf of Able and all backers, then makes payment to the backers.
Once the borrower has raised all their backers, it typically takes a little less than a week to fund.
You will receive interest-only payments until Able is paid back in full, which typically occurs when the loan reaches 75-90% of its term. At this time, you will then begin receiving principal and interest payments. Backers are paid back in full with interest when the loan reaches maturity.
By insisting that Able gets paid first, we can significantly decrease our risk. This gets passed onto the borrower in the form of lower interest rates.
Backers are subordinated to Able, who is senior in the Able loan structure. This means backers take first loss before Able if a borrower defaults. If default occurs before the loan term ends, backers get to keep the interest accrued to-date but lose your principal amount. Your personal credit is never impacted throughout the process.