Story excerpt provided by The Plain Dealer
Written by Alison Grant
The way Todd Federman sees it, SoMoLend is like a sharp dating site for small businesses.
Federman, executive director of a Cleveland investment fund that recently sunk $250,000 into the Cincinnati-based website, is convinced SoMoLend has a recipe for filling a big gap in financing for emerging and existing small companies.
SoMoLend, which connects businesses with willing lenders, will soon tap into crowdfunding. The new way to finance small businesses was signed into law by President Obama this month.
SoMoLend is thought to be Ohio's only crowdfunding portal to date. Candace Klein went live with the business in 2010.
The loans flowing through SoMoLend so far are from accredited institutions such as banks. Once the JOBS Act is vetted by the Securities and Exchange Commission and kicks in -- probably early next year -- Klein hopes to attract a wide pool of individual lenders.
She opened SoMoLend after her micro-lending company, Bad Girl Ventures, received requests for financing from 570 women-owned companies but was able to fund only 27 of them.
"What I saw was a huge need for access to capital that was not being filled," said Klein, 31, who called the JOBS Act "one of the most important pieces of legislation we'll see in my generation."
Like SoMoLend's Klein, JumpStart Executive Director Ray Leach sees an intense demand for business launch money. JumpStart helps tech companies in the incubation phase, when they have no revenue and aren't likely to have any for three to five years.
The Cleveland nonprofit received about 800 requests for help from Northeast Ohio startups in 2010. Of those, about 450 were tech companies. And out of that group, 63 received funding from JumpStart or another source.
"From a national point of view, 80 percent of all new jobs created in the U.S. economy are being created by firms that are five years old or younger," said Leach, who helped work on crowdfunding language in the law and was in the Rose Garden when Obama signed the bill.
Read the complete article >