StreetShares Small Business Loans
StreetShares is a unique concept built around providing loans to small businesses. The idea is that individual investors can support local, in most cases, veteran run businesses as they grow. The concept is pretty simple. As an investor, you provide a 1-year Loan to Streetshares. They, in turn, loan that money to small businesses at an interest that is higher than they pay you. In this case, the investor receives 5% – almost 2x a bank CD. I can only assume the loans to small businesses are at a rate around 10%, but that’s only a guess.
In this post, I cover the website, features for investors, investing process, my experience so far, and provide links to get started borrowing or investing through LendingClub.
StreetShares Investor Account
I started investing through StreetShares in May of 2019. My initial investment was small, only $100. I wanted to explore the platform and learn how the process worked. If you’re looking for a fun, engaging investment experience, this is not it. StreetShares is best compared to a 1-year CD paying a 5% APR.
Above is a screenshot from my account. As you can see, I deposited $100 in May of 2019. A year later, I withdrew $105. There was no interaction between myself and StreetShares during that year. I simply made my deposit and waited for the anniversary date to withdraw the funds. The anniversary date is the only wrinkle in the process. Once you deposit your funds, you cannot withdraw the funds or accumulated interest without paying a 1% early withdraw penalty. Once you hit your anniversary date, you are given a two week period in which to withdraw your funds. If you miss this period, your funds will be reinvested for a 3-year period.
Investing is very straightforward. In the previous screenshot, you’ll see a “Buy Bonds” button. When you’re ready to invest, just click that button, enter your bank info and input the amount you’d like to invest. Like many websites, StreetShares uses Plaid to facilitate the transfer. It’s an easy, seamless process. In 3-5 business days, the funds will be withdrawn from your bank and deposited with StreetShares. That’s it. You can check-in from time to time to view statements, but there is not much else to do. Wait for your anniversary date and then withdraw your funds. Pretty easy.
StreetShares is a young company, founded in 2013. As a young startup, they are focused on revenue growth more than profitability. That means their financial situation is not as strong as a more mature bank or loan servicer.
Like most start-ups, StreetShares loses money on an annual basis. In 2019, they lost over $5 million. That does not mean they have lost investor money. It only means they have spent more money than they brought in through origination fees, interest income, loan revenue and so on. This is not unusual.
StreetShares has raised several rounds of venture capital including a recent $5 million round. This financial allows StreetShares to pay operating expenses as well as grow their services through platform improvements, hiring and marketing initiatives.
While StreetShares is a risky than your standard CD, it provides an easy investment process and pays a respectable 5% APR. It’s not really clear if I’m buying into specific loans or bonds that feed into a pool of loans, but the securities are filed with the SEC. So, it’s definitely securities of some type. I encourage your to conduct your own due diligence prior to making any investments.
Join me on StreetShares
Interested in joining me on StreetShares? That’s great! The links below will get you started if you want to borrow or invest through the website.
As discussed above, StreetShares is a unique and easy investment option outside the mainstream. I’m looking forward to investing along side you. The link above will get you started.
While I don’t cover the borrowing side of StreetShares in this post, it’s obviously an important part of the process allowing me to invest in borrowers like you. As a veteran myself, I get a little extra enjoyment out of supporting investors grow their business. Click the link above to get started. Hopefully, I’ll be able to invest in your loan.
The statements in this post are my opinion and reflect my personal experience investing on StreetShares. I cannot, and do not, guarantee that your results will be similar. Please, invest carefully and understand that your investment may lose value.
I do not receive compensation from StreetShares for writing or maintaining this post. However, I do receive a referral bonus if you use the link above to open an account to invest or borrow.
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