Social microlender offers commercial paper to small businesses

short term loan

The private microfinancing site 40Billion.com offers commercial paper, traditionally a tool for large corporations, to small businesses. Image: CC The Truth About/Flickr

The online private microlending and social networking company 40Billion.com announced new short-term loan options for small businesses Monday. Using unsecured promissory notes, commonly called commercial paper, small and medium-sized businesses can finance opportunities through 40Billion.com for up to nine months. A week earlier, the microlender launched integrated social networking tools, enabling its members to use LinkedIn and Facebook accounts to help raise money.

A new short-term loan option

Commercial paper has been used for more than a century, mostly by large corporations wanting to raise quick, cheap working capital. Now 40Billion.com is offering the commercial paper option to small and medium-sized businesses that wish to borrow from $5,000 to $1 million for up to 270 days. Commercial paper is an unsecured promissory note to meet short-term financing and cash flow needs. In certain situations, commercial paper can be an affordable alternative to a traditional bank line of credit.

Why commercial paper?

According to 40Billion.com, commercial paper offers several advantages over traditional bank loans. Commercial paper is unsecured, meaning it doesn’t create a lien on the borrower’s assets. The discount rate is negotiated through 40Billion.com with investors seeking to diversify and earn a quick return. Businesses with strong Social Business Rating System (SBRS) scores and good relationships can get affordable rates. SBRS is 40Billion.com’s proprietary rating system that evaluates businesses on criteria other than traditional credit scores. The broad range of maturity, from 15 days to 270 days, provides flexibility for a variety of short-term cash needs such as payroll, inventory and marketing.

Social network financing

Founded in 2008, Atlanta, Ga.,-based 40Billion.com claims to have facilitated more than $30 million in loans between investors and entrepreneurs.The company said it helps its members find new customers and financing resources via social networking. 40Billion.com users can log in with LinkedIn or Facebook. The financing site automatically displays the users profile from either of those social networks. Users can also import contacts from e-mail programs. The integrated social networking tools in 40Billion.com also suggest new contacts that members may know through past associations or similar interests.

Sources

Information Week

News Wire Today

40Billion.com

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