Small-Business Lender Treats Loyal Customers as Collateral

Called ZipCap, the private loan company enables small businesses to treat loyal customers as collateral — an asset which traditional lenders have never considered viable.

Small-Business Lender Treats Loyal Customers as Collateral

It's tough out there. The competition is fierce and the margins are thin, and if you're starting a new company, it's a real challenge getting the loans needed to launch your ideas into action. While Hillary Clinton said as much during her recent visit to Iowa, in which she declared her intention to make small-business loans more plentiful, one startup is already taking action.


Called ZipCap, the private loan company enables small businesses to treat loyal customers as collateral — an asset that traditional lenders have never considered viable. Here's how it works: A small eatery or shop will ask its patrons to commit to spending a certain amount at their business over a year. Those pledges are then tallied and used by ZipCap to determine what loan amount is appropriate — all at a low interest rate of 3.99 percent annually.

The New York Times reports on one Michigan eatery, Beezy's Cafe, which has signed up 130 customers to commit to spending $475 each over the course of the year. That's a value of $61,750 the restaurant can then use to borrow against. The owner of Beezy's, Ms. Bee Roll, says her customers' response is enthusiastic when she explains the business model:

"When I started explaining the pledge concept, people were like, ‘This is going to help you? Great, I’m in!’ It really makes it clear how vital their support is to us. There’s trust, and an ongoing relationship."

Estimating the number of loyal customers a business has is an optimistic way to value its income, but if the numbers turn out to be true, they could confirm the old business wisdom that keeping loyal customers is more important than creating new ones — because finding new customers is labor- and capital-intensive. 

When it comes to getting into the startup business, it's difficult to know whether you'll like the fast-paced, time-intensive commitment that building a new company requires. To help you know for sure, and to create 100,000 new jobs by 2025, Andrew Yang founded Venture for America, a fellowship program that places top college graduates in startups for two years in low-cost U.S. cities. If you think the startup world may be for you, check it out!

Marijuana addiction has risen in places where it's legal

While legalization has benefits, a new study suggests it may have one big drawback.

BSIP/Universal Images Group via Getty Images
Politics & Current Affairs
  • A new study finds that rates of marijuana use and addiction have gone up in states that have recently legalized the drug.
  • The problem was most severe for those over age of 26, with cases of addiction rising by a third.
  • The findings complicate the debate around legalization.
Keep reading Show less

The strange case of the dead-but-not-dead Tibetan monks

For some reason, the bodies of deceased monks stay "fresh" for a long time.

Credit: MICHEL/Adobe Stock
Surprising Science
  • The bodies of some Tibetan monks remain "fresh" after what appears to be their death.
  • Their fellow monks say they're not dead yet but in a deep, final meditative state called "thukdam."
  • Science has not found any evidence of lingering EEG activity after death in thukdam monks.
  • Keep reading Show less

    What do Olympic gymnasts and star-forming clouds have in common?

    When Olympic athletes perform dazzling feats of athletic prowess, they are using the same principles of physics that gave birth to stars and planets.

    Credit: sportpoint via Adobe Stock
    13-8
    • Much of the beauty of gymnastics comes from the physics principle called the conservation of angular momentum.
    • Conservation of angular momentum tells us that when a spinning object changes how its matter is distributed, it changes its rate of spin.
    • Conservation of angular momentum links the formation of planets in star-forming clouds to the beauty of a gymnast's spinning dismount from the uneven bars.
    Keep reading Show less
    Culture & Religion

    Of spies and wars: the secret history of tea

    How the British obsession with tea triggered wars, led to bizarre espionage, and changed the world — many times.

    Quantcast