Evan Malter has been a small business owner serving small business owners. Now he is innovating ways to help them finance their growth. His new venture, ZipCap, provides 12-month term loans to small businesses which can get 100 or more customers to pledge to spend a minimum amount during the year. The amount of the loan is based on the total amount pledged, and it's early days to know whether this concept will work.
Based on my experience with small business owners, I do think this idea has good prospects. New owners often get freaked out about short-term profitability, which is understandable--sometimes their home is collateral for the startup capital! If ZipCap can get the owner thinking about customer retention at least as much as they do about monthly net margin, benefits will accrue all around.
Entrepreneurs' Tank: ZipCap Turns Customer Loyalty into a Line of Credit, 2015-June-24
“There has been very little friction with making the commitment as far as following through – we have found significant enhanced loyalty. Customers are more engaged than they would be without the commitment. It is a binding contract that they have agreed to, but even more important – they feel obligated (a social pressure) to follow through. Its important to note these are local businesses in their communities that they love going to. It almost takes more effort to default on the commitment than it does to follow through. It is also self fulfilling — we are engaging these customers in new ways that strengthens their bond and makes them want to come back”.