Braintree program offers tiny loans for big needs

One of the first loan recipients of Braintree Business Development Center’s Appleseed Microfinance program was the owner of an energy transmission device company. He had bootstrapped his startup with $25,000 in credit card debt, so he tapped Braintree’s new revolving loan program, officially launched in September, to reduce his interest rates.“We were able to free up that capital so he could hire another person and move into a new product launch,” says Bob Cohen, Braintree CEO and director of business assistance. Appleseed loans are $1,000 to $35,000 and available to Northeast Ohio companies with 50 employees or fewer. The money can be used for equipment, inventory, business debt restructuring, working capital or short-term projects. These loans fill a niche in the current risk-averse banking climate, Cohen says. “It’s costing banks as much to administer a $100,000 loan as $25,000, so those small loans aren’t as attractive.”Of course, there are strings attached. Here are the highlights: Jobs, jobs, jobs. Braintree partially funded the loan program through a U.S. Department of Agriculture grant, so loans it makes must be to companies that will create jobs or retain jobs. “We have to report [to the USDA] how many jobs we were able to save or grow,” Cohen says. Tech companies preferred. Because Braintree is a technology incubator, high-tech companies would have an advantage in securing a loan, but the funds are open to businesses in all industries. Credit worthy? These are loans, not grants. Braintree requires a credit report, collateral and interviews with the business owner before it will approve the financing. Community impact. The program will last as long as companies keep repaying the money. So if a company defaults on its loan, there will be less to lend to the next business. “So far, we’ve done a pretty good job,” Cohen says.

Braintree program offers tiny loans for big needs
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