StreetShares. P2P lending to veterans and goverment contractors.

Streetshares, is a peer to peer lender based in the USA providing financial solutions to business. They have a particular focus on business founded by veterans. They offer bonds to to investors which yield 5%. Peter Somerville, director of investor relations at StreetShares, explains the opportunities for investors at StreetShares.

Can you tell us more about the founders of StreetShares?

StreetShares was founded in late 2013 by Mark Rockefeller and Mickey Konson, two military veterans with experience in finance and small business lending. Mark and Mickey saw that traditional banks were abandoning small business lending, and shady online lenders were taking advantage of small business owners. StreetShares was founded to provide a superior experience to entrepreneurs and investors, and treat the military and veteran community with the integrity and respect they deserve.

What are the most common businesses that military veterans tend to open?

StreetShares is veteran-founded and veteran-run. While we are proud to serve nearly any small business or individual investor in the United States, we are especially happy to work with our fellow veterans.

Fantastic veteran-run businesses can be found in every location and industry – with 2.5 million veteran-owned small businesses in the U.S., there’s probably one in your neighbourhood, supporting jobs and spreading economic opportunity.

What are the general terms of the loans offered: Loan amount, APR, Loan term and Funding time?

StreetShares simple term loans and lines of credit are available in amounts from $2,000 to $100,000, on a term of 3 to 36 months. When a small business owner applies for funding at StreetShares.com, we take the time to underwrite each business, to understand their financial health and offer financial solutions tailored to the needs of that business.

One advantage for borrowers that StreetShares offers, is the ability to pay early without incurring any penalties. What is the % of your borrowers that make use of this option?

Part of the StreetShares commitment to treating small business owners with superior service is offering financing with zero prepayment penalties. Today, the pace of small business is faster than ever and entrepreneurs need to stay flexible. While other online lenders prefer to trap their customers with burdensome penalties for paying back a loan early, StreetShares customers can keep their options open as new opportunities arise. The vast majority of our business borrowers stick to the payment schedule in their loan agreement, but appreciate the peace of mind that comes with StreetShares funding.

What are your primary criteria to evaluate the creditworthiness of a borrower? 

Our primary criteria for loans and lines of credit are the financial health and credit of the business. When business owners apply for funding in 10 minutes or less on StreetShares.com, we are able to gather a lot of information about revenue, expenses, cash flow, and their financial outlook. We also ask each business owner to provide a personal guarantee so that our individual investors know they’re committed to success together.

For government contract funding, the primary factors are having the contract with the government on hand, and the business’s ability to execute on that contract.

What are StreetShares requirements for business loans? 

StreetShares works with most areas and industries. Our ideal business has been in operation for more than a year and has at least $25,000 in revenue. We are placing a special focus on businesses with government contracts, an area where many veteran businesses operate. There are only a few industries where we aren’t able to lend such as housing construction and transportation.

Are there specific situations or business categories where StreetShares offers special advantages to?

As a veteran-owned and veteran-run organization, we understand the integrity of veterans and offer special programs for veteran business owners. StreetShares can provide a business loan or line of credit funding to most industries and areas, and we are placing a special focus on government contractor financing. Many veterans turn from uniformed service to providing superior products and services to our government. StreetShares provides the best financial products anywhere to small and growing government contractors, from mobilization funding to invoice financing.

Since StreetShares can only lend to established businesses, we created a nonprofit, the StreetShares Foundation, to assist young and startup businesses. The StreetShares Foundation’s mission is to inspire, educate and support veteran small business owners with tools to succeed including a $10,000 veteran business grant awarded to exceptional business owners.

Who can open an investor account on StreetShares? 

Any U.S. citizen or permanent resident can sign up on StreetShares.com for a free Veteran Business Bonds account. StreetShares has secured SEC approval to offer all Americans the opportunity to invest in veteran business loans, with no limits on “accredited investors.”

What has been the average ROI in 2015 and 2016 for investors after fees?

Veteran Business Bonds return a fixed interest rate of 5% per year. Investors can get started in amounts from just $25 up to $100,000. Money invested is spread across our entire portfolio of loans.

When is the interest paid?

Interest accrues for our investors every day at a 5% annual rate. So each day you can see your investment grow. Veteran Business Bonds are a one-year investment, so the full 5% is reached after a full year’s investment.

Do you observe a difference in default rates between community-based lending among military veterans and more commercial loans?

StreetShares business borrowers, whether veterans or not, have built a great track record for repaying their loans on time. This is partly due to the underwriting work we do up front in making sure loans are properly fitted to each business. But the StreetShares community plays a big role too – borrowers know their payments aren’t going to be a mysterious Wall Street pool of money, but to individual investors, a majority of whom are veterans. Veteran business owners do an especially great job on this, and it’s inspiring to see them grow. We feature many of their stories on the StreetShares blog.

Does StreetShares have a higher demand for capital to be borrowed or capital available to be lent?

In the past few months, word has been getting around about Veteran Business Bonds, so we are working hard to keep up with the investor demand. This is why we cap Veteran Business Bonds accounts at $100,000 per investor.

Do investors need to pay fees to use StreetShares?

There is no fee to become an investor member. The only fee an investor would see is if they need to access their money before the one-year investment is up, in which case we apply a 1% early withdrawal fee.

What will change for StreetShares in next 2 years?

StreetShares provides financial solutions for America’s Heroes and their communities. That includes 21 million American veterans, plus their family members and supporters. In less than three years StreetShares has built a community of more than 36,000 members, but we’ve just scratched the surface. A recent study found that 25% of Iraq and Afghanistan veterans plan to start their own business in the next decade. At the same time, 70% of millennials have less than $1,000 in personal savings. StreetShares believes these young veterans represent a new Greatest Generation, and we’re working hard to address their financial needs now and in the future.

For more information please visit: Streetshares
We thank Peter Somerville for the interview.