Short Enterprises and partners commit to launching SourceFunding.org, the nations first low-cost, financing platform catering to SMEs with a social-impact, mission-driven, or workforce development focus. It is anticipated that this new national financial technology platform, will deploy $100 million in financing by June 2018 utilizing an innovative common application process and matchmaking algorithm to more rapidly facilitate and streamline access to low-cost financing alternatives available through the 14,000 community banks and credit unions in the United States. The partners will ensure that 50 percent of the low-cost financing deployed by SourceFunding.org is received by female entrepreneurs and business owners.
Short Enterprises will serve as the lead on this commitment and will provide expertise in the planning and implementation of SourceFunding.org in collaboration with university partners. Short Enterprises will also provide proven expertise in platform development, fundraising, and in formulating and implementing the platforms customer acquisition strategy. Additional support will be provided in the form of technical assistance for platform users, stakeholder engagement, platform refinement, and platform management. Short Enterprises will also continue to coordinate efforts with partners at Locus, Greensky, GT, & Upstate Studios who are providing expertise in brand development, brand management, communications, social media marketing, and analytics.
Partners at Syracuse Universitys S.I. Newhouse School of Public Communications are providing their expertise in the development and implementation of a comprehensive customer acquisition campaign for the platform with a specifically tailored and targeted outreach strategy to engage and support female entrepreneurs seeking access low-cost financing. Partners at Newhouse will also assist in the development and implementation of communications strategies that will help identify and engage the key constituencies and stakeholders necessary for the platform to thrive. Additional assistance includes the development and implementation of a strategic communications campaign to engage prospective investors that will help fund the development of the platform.
Partners at Syracuse Universitys Martin J. Whitman School of Management will provide logistical support throughout the overall planning and implementation of the Commitment. This will include the planning and implementation of a vetting process for users of the platform. Partners at the Whitman School are also spearheading the development and implementation of a sponsorship and investor recruitment strategy for the platform in order to raise the additional funds required for the commitment.
Partners at the Global Social Enterprise Institute assisted in the conception and planning of this commitment and spearheaded the pre-development and regional pilot phase of the SourceFunding.org financial technology platform. The Institute will continue to provide strategic consulting support and expertise in engaging commitment partners and in the development and implementation of the customer acquisition strategy.
Partners at Ashoka assisted in the conception and planning of this Commitment as part of the Ashoka U Commons and will provide its expertise and consulting support throughout the development and deployment of the platform. Ashoka U Commons will also assist in facilitating introductions within its international university network to potential partners for the platform. Ashoka U Commons will also assist in helping to raise awareness of the SourceFunding.org platform within its global network.
Partners at Hatch, LLC, assisted in the conception and planning of this commitment and will continue to provide expertise and consulting support throughout the development and deployment of the platform. Additional support will include providing expertise in fundraising, investor recruitment, partnership development, stakeholder engagement, business model refinement, and financial analysis and forecasting.
Partners at Le Moyne College assisted in the conception and planning of this commitment and during the pre-development phase of the platform by providing faculty expertise and student support. Le Moyne College also provided seed capital and space to house the project during the conception and planning of this commitment. Le Moyne College will continue to provide logistical and consulting support and provide workspace throughout the overall implementation of the commitment. Additional support will include assistance with fundraising, partnership development, and also raising awareness of the platform within the global Jesuit university network.
-Phase 1 fundraising complete for development of SourceFunding.org -platform (July/August)
-Begin construction of web platform for SourceFunding.org (July/August)
-Begin phase two collaboration with Newhouse School/Maxwell School --Public Diplomacy Program relating to customer acquisition campaign development (August)
-Begin implementing strategic communications campaign for platform (August 2016 - June 2018)
-Platform construction complete, begin testing and refinement of platform (November/December)
-National deployment of fully operational SourceFunding.org platform (January)
-Begin facilitating low-cost financing to SMEs with goal of $4.7 million/month (January)
-Begin implementation of customer acquisition campaign for platform (January)
-Successful completion of Commitment (December)
Although the U.S. federal interest rate remains at a historically low level more than six years after the financial crisis, a major barrier to growth cited by small and medium sized enterprises (SMEs) continues to be access to low-cost financing. This is especially true for organizations with a social-impact, mission-driven, or workforce development related focus.
SMEs spend an average of 33 hours on application paperwork for each bank loan (source: Federal Reserve Bank of New York), with a 13 percent approval rate overall by the largest banks. In addition, each submitted loan application negatively impacts the applicants credit score, which disincentivizes multiple applications. As such, only 34 percent of SMEs indicate that they were able to procure all of the funding they needed the last time they went to a financial institution (source: National Federation of Independent Businesses). Receiving only 4 percent of the total dollar value of all small business loans in the United States, female business owners in particular face significant challenges in accessing bank financing (Journal of Small Business & Entrepreneurship).
As a result of these challenges in the traditional small business financing system, SMEs are turning to online lending platforms in record numbers (source: Intuit). Online lending platforms deliver a more streamlined and expedited application and approval process by utilizing technology and innovative algorithms, this comes at a tremendous cost to the borrower in the form of significantly higher and sometimes predatory interest rates. This is because online lending platforms bypass the more competitive low-cost financing options available to applicants seeing as they dont tap into the over 14,000 community banks and credit unions in the U.S. While loans by community-based lenders may yield a return of 5 to 7 percent, many alternative lending platforms charge yields ranging from 30 to 120 percent of the loan value (source: Forbes).
Community banks are more likely to make loans to SMEs, with a 48 percent approval rate overall. They are also more likely to be interested in providing financing to organizations that have a social-impact, mission-driven, or workforce development focus (source: Harvard Business School).
With former U.S. Treasury Secretary Summers predicting that online lenders will capture over 70 percent of the small business lending market, there is a substantial and growing need for a consolidated common application and "matchmaking" platform that will allow SMEs to (1) identify the community banks and credit unions most interested in providing financing without negatively impacting the applicants credit score, and (2) access those lower-cost financing alternatives available in a streamlined process.