Small businesses are the drivers of our local economy, but they aren’t getting the credit they deserve from big banks, so Honeycomb Credit is activating the community to fill the funding gap through a crowd financing platform. Honeycomb lets locally owned small businesses borrow expansion loans from their own loyal customers, fans, and community members. Let’s hear from founder George Cook about the company, why it was founded and how it’s making an impact. Here’s what he had to say:
PTC: Give us a little snippet of your background and what inspired you to found Honeycomb?
George Cook: My family has been in the community banking industry for 130 years. I spent time in the family business and became fascinated with small business lending. While doing some financial services consulting, I realized that community banks were vanishing at an alarming as the larger banks acquire them at a rate of one per day! It hit me that small businesses rely on locally minded lenders who understand their needs, but as big banks consolidated and retreated, only predatory lenders were stepping in to fill that void. So, while in grad school, my co-founder and I set out to reverse that trend and to create a community banking model that works for the 21st Century. That’s how Honeycomb Credit was born.
PTC: Give us the basics on how Honeycomb works.
Cook: Honeycomb is a platform that lets locally owned small businesses borrow directly from their own loyal customers, fans, and community members. Honeycomb fills the funding gap for awesome small businesses, while simultaneously letting everyday people invest in their own communities.
The whole process is straightforward. A business reaches out when they have a project in mind – whether opening a new location, buying a food truck, purchasing equipment, or even refinancing expensive credit card debt – and they submit an application. If approved, we work with them to launch a campaign and share it with their customers and fans. Those customers can visit the page, learn about the project, and start investing for as little as $100. After the campaign succeeds, the business makes monthly repayments on the loan and customers can earn back their principal plus a competitive interest rate of 6-14%.
PTC: How are small businesses reacting to Honeycomb Credit? Seems like a great option for many people!
Cook: In my experience, business owners have been really excited about Honeycomb. It allows them to circumvent the increasingly onerous bureaucracy of most banks and the growing number of predatory online lenders. But even more importantly than saving time and money, Honeycomb is enabling small businesses to engage with their customers in a way that was once unthinkable. By getting their customers and community members literally invested in their business, they are turning those customers into superfans who will be cheerleaders for the business every step of the way.
PTC: So how do you plan to scale and grow Honeycomb?
Cook: Honeycomb was created to solve the funding gap that exists for Main Street businesses, and we have seen that this gap is most acute in the Mid-Atlantic and Rust Belt. We are
incredibly proud that Pittsburgh is our home, and we are beginning to use our success here as our launch pad to create opportunities for businesses across the region, and eventually across the country.
We recently launched in Cleveland, OH where we hired a fantastic City Manager to bring Honeycomb to the market. We’ve been really pleased with our reception in Northeast Ohio and we are learning how important it is to have a representative on the ground who can truly understand the unique dynamics of the entrepreneurial ecosystem in a city. In the coming months we will continue to roll out in new markets with a focus on Detroit and Philadelphia.
PTC: Besides disrupting old-school financial models, what do you do for fun? Especially in the summer?
Cook: I love to hike. Whether it’s just up the road in the Laurel Highlands or escaping for a couple of weeks to Patagonia, I find a good hike to be the best way to clear the mind and come at problems from a fresh perspective. If you see me around town this summer, you will likely find me walking with a cane because of a recent hiking accident in Arizona. But trust me, that won’t keep me off the mountain for long!