You’re familiar with social media for many things. LinkedIn is great for networking, and Facebook is very helpful for marketing. Then, of course, there are sites like IndieGogo, GoFundMe and Kickstarter, but what if there was a social network that was designed to help with credit and securing small loans? Vouch is that new social network that takes the concept of social media and combines it with the power of crowdfunding to create a finance company that works with your social network.
Vouch works on the same principles as crowdfunding. You provide a network of people, they vouch for you by offering to pay back a small portion of your loan should you default, and your interest rate goes down. In an example on the Vouch website, a $4,000 loan would cost a person with poor credit, under a 600 credit score, $572 in interest in fees with an APR of 21.99 percent. However, if that same person provided nine people to vouch for them, that interest rate goes down to 12.99 percent, and the total amount paid in interest and fees is down to $367, saving the borrower $205.
“I think Vouch has the potential to fundamentally lower the cost of capital for all consumers,” offers Alex Rosen, Managing Director at San Francisco-based IDG, in a recent interview with Entrepreneur.com. “Vouch offers a unique consumer product that safely gives people much better rates on loans than they’ve ever had access to before.”
This type of credit system can really impact the small business owner as well. Whether you need a small loan to help with something in your business, or you need a way for consumers to be able to get small loans on their own to secure your products or services, there is a lot that this convenient type of funding can provide. Instead of posting another crowdsourcing campaign to raise funds for that new television screen for your bar, you can simply get a small loan through Vouch, and your supporters offer to sponsor that loan. When you pay back that loan, your sponsors pay nothing, and you’ve just saved a boatload of money. After all, with the prevalence of crowdfunding websites taking over social media feeds on a daily basis, a practical way to save money while using your support networks, without tapping into their pocketbooks, would be a very handy and profitable way to grow your business.
This article was written by Deborah Flomberg for Small Business Pulse