Business owners know that when it comes to finances, there isn’t a one-size-fits-all solution to common financial problems. Finding cash for new projects, expanded product lines or upgrading equipment is challenging, and working with banks can be impersonal and intimidating – and for small businesses, who all have unique business models and cash flow projections, getting personal, one-on-one attention from financial institutions seems impossible.
But there is a simple, Pittsburgh-based solution: community crowdfinancing through Honeycomb Credit.
More than a dozen local businesses have worked with Honeycomb Credit to successfully raise funds for their growth projects, by borrowing directly from their customers, fans, and community. Projects have included: building an outdoor pavilion at Tall Pines Distillery, renovating Blue Sparrow’s new food bus, and helping Red Star Kombucha move to a new store location.
For business owners, the process starts with a personal meeting or phone call with Honeycomb to discuss their growth project and plans for the future. After the conversation, if a business decides that a crowdfinancing campaign is right for their project, then Honeycomb will take an in-depth look at the business’s operating history, financial documents, and the credit history of the owners.
For the Pittsburgh Pickle Company, their growth project was to raise funds to upgrade their pickling equipment, which would streamline their labor-intensive production process.
“Going over everything was incredibly easy,” says Will Patterson, co-owner of Pittsburgh Pickle Company. “They’ve got the right people to handle everything. They know what they’re doing, so if you don’t have a background in finance or anything like that, they will sit you down and give you a framework of the whole process, and say ‘This is what you’re looking at,’ and give you everything you need to make the right decision for you.”
One of the most unique parts of Honeycomb Credit is their flexible onboarding process. Honeycomb works with each small business owner to figure out a loan structure that is fair for both the business owner and the community members that will later invest in their campaign (anyone over the age of 18 can invest $100 or more in Honeycomb campaigns).
Honeycomb is typically able to offer several loan options to choose from, including varying term lengths (2-5 years), personal guaranty requirements, collateralization, and a 60-day payment-free period after the funds have been raised. This gives owners the opportunity to pick the deal that makes the most sense for their growing business.
“They’re just a really good company,” Patterson says. “They’re willing to work with you, to figure out how to make it successful for you.”
After the term sheet is signed, Honeycomb works closely with the business owner to prepare for their campaign launch, including sharing best practices on getting the word out, filing necessary paperwork, and offering a variety of personalized campaign creation and marketing services.
Once live, the campaign is where the magic of crowdfinancing happens. Customers, fans, and community members get to invest $100 or more directly into the growth project of their favorite small businesses.
The benefit is twofold: business owners are able to unlock fair capital that they need to grow, as well as build excitement in the community about their next big step. At the same time, anyone can contribute to the long-term success of their community, while earning an attractive rate of return. Many business owners have found that getting people invested in their success has strengthened their ties and turned some customers into their biggest cheerleaders—all benefits that getting a loan from a traditional bank or online lender can’t provide.
As the first business to launch a campaign on the Honeycomb platform, Naomi Homison of The Pittsburgh Juice Company says that the process of asking for funding publicly can be nerve-wracking. Homison was looking to raise between $35,000 and $40,000 to purchase a new juice delivery truck.
But with the personalized attention that she received from Honeycomb before, during, and after her campaign was funded, Homison says that it’s a process that she’d recommend to fellow business owners.
“Asking people for money means that you’re putting a lot of yourself out there,” she says. “But they did everything they could to make it easier, and to make me feel more comfortable. Working with Honeycomb was great.”
After successfully raising their maximum funding goal of $50,000, Pittsburgh Pickle Company purchased their new food processing equipment, while taking on more business than they ever have.
“The funding really allowed us to pull the trigger,” says Patterson. “I don’t know if we would’ve ever done co-packing without the loan, and now, co-packing could represent a very significant portion of our revenue stream.”
What’s more, many business owners have seen the benefits of working with Honeycomb Credit extending beyond the campaign, offering them opportunities to connect with both investors and other Honeycomb Credit alumni businesses.
“We’ve seen some amazing connections happen between our alumni businesses,” says George Cook, CEO and Co-Founder of Honeycomb Credit. “Several alumni businesses have partnered to make joint products, promote one another, and sell each others’ products. It’s been exciting to empower these small businesses to support one another.”
Pittsburgh Pickle Company co-owner John Patterson agrees. Pittsburgh Pickle Company recently collaborated with 5 Generation Bakers, another Honeycomb alumni business, to create the first-ever retail ready cinnamon pickle.
“They’re invested in the success of us, at the end of the day. They want us to succeed. It’s not about, oh, we made our thousands of dollars on them, now onto the next one. It really felt like they care about how we do.”
Interested in finding out how your business can launch a campaign with Honeycomb Credit? Find out more information here.
Want to invest in local businesses that are growing here in Pittsburgh? Check out the live campaigns on the Honeycomb platform here.
This post has been part of a sponsored collaboration between Honeycomb Credit and Good Food Pittsburgh’s advertising department.