Community Sourced Capital
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LAST UPDATED: June 27th, 2019
Community Sourced Capital is a social purpose corporation located in Washington State. They function as a crowdfunding platform focused on helping small businesses thrive in their community. Small businesses are able to appeal to their community for business loans. Community Source Capital utilizes a business’s personal connections as well as mission-aligned funders in a community who share their vision to help small businesses grow. 90% of small businesses who have used this crowdfunding platform have successfully reached their fundraising goal.
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The Good
- Model type
- Fund type
- Maximum allowed raise
- Deadlines
- Receiving funds
- Administrative work options
Model Type
Both Personal and Equity fundraising models are allowed. Businesses have two options of raising capital: Community Sourced Capital's online crowdfunding platform or a business community loan from compatible "mission-aligned" financial institutions. To qualify for a community loan, business owners must:- use $5,000-$50,000 to improve or start their business
- repay a loan in three years
- have a connection to people in their community who would loan them money
Fund Type
Community Sourced Capital offers an All or Nothing funding type. So if you don't meet your funding goal, you do not get any of the funds raised. Many crowdfunding sites offer a 'Keep What You Raised' funding type. For an Equity Loan model such as this, 'All or Nothing' makes sense to protect investors and loan providers. It also shields the business from owing money on an amount less than what they actually need to grow their company.Maximum Allowed Raise
The maximum loan amount that can be borrowed is $50,000. This can be limiting for those seeking to raise more than that amount. Most likely the limit is to protect small businesses from getting in way over their head, since this is a loan they have to repay.Deadlines
There are no standard deadlines. This means you determine the deadline for your own campaign upon signing up. Many crowdfunding sites set the deadline for you, but when you can set your own deadline, it increases the chances of meeting that goal.Receiving Funds
Another potential drawback to using Community Source Capital's platform is the length of time it may take to receive the funds raised. Many other crowdfunding platforms take as little as 24 hours to receive funding. Businesses may have to wait to begin putting their loan to good use in building their business. It can take up to one month in order for funds to be received once a campaign has finished.Administrative Work Options
Community Sourced Capital provides businesses with a free play-by-play toolkit and weekly check-ins to assist with "administrative issues", making the campaign feel simple and easy. They attribute this to their 90% fundraising success rate. They also walk new members through the process.The Bad
- Fees
Fees
While there are crowdfunding platforms that offer their platform free without up-front fees, Community Sourced Capital charges a one-time $250 fee to launch a campaign. They claim this allows their Team to assist you with getting started with setting up your campaign page. Other crowdfunding platforms will offer this at no cost. During the repayment of your community loan, a flat monthly membership fee of $50 is charged each month until the principal amount of the loan is repaid. The loans have 0% interest. The amount Community Source Capital requires as a part of their startup fee is substantially larger than many other crowdfunding platforms. Another drawback to using this platform is the loan structure. While the loan structure does provide some benefits to small businesses, it also means the funds raised using this sight must be paid back to the lenders over time (On top of the ongoing fees a business has to pay to Community Sourced Capital). Depending on how the business grows (or doesn't grow), this can be a liability.The Bottom Line
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