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- Fintechs + SBA Loans
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Biden Hoping To Marry Fintechs & SBA 7(a)
If you want to be an entrepreneur you basically have two paths.
You can come up with the next Google and build it from scratch or you can buy one that already cash flows (i.e. passed the hardest part of entrepreneurship–i.e. market risk).
Buying a business is a fantastic way to create wealth.
And the Small Business Administration has been a key component in making capital available to would-be entrepreneurs.
Their 7(a) program is designed to fund the acquisition of a cash-flowing SMB. While rates and loan-to-value change from bank to bank, generally you're looking at 80% financing.
That's a pretty sweet deal if you think about it.
Buy a $1M business that spits off $250k in cash flow each year and you "only" need $200k down in the form of cash (equity) to buy it, which you either saved up or brought on investors to help with.
The other $750k? The government is financing via approved banks.
~50,000 of these types of loans get approved each year. That number might explode.
You see, an old rule meant that only about 14 non-banks could be approved to underwrite these kinds of loans.
Now, Biden's team is working on a proposal over at the SBA to change that old rule and expand the number of non-banks allowed. That means fintechs. Robinhood, M1, Stash, all your favorite money apps could start offering these types of loans.
Fintechs often help underserved communities in ways that traditional banks don't. The PPP loans from the start of the pandemic reached borrowers who would not typically receive those loans because of fintechs.
Not everyone supports this.
There's some research showing that a large portion of fraudulent loans were originated by fintechs. Ruh roh.
We'll be keeping an eye on this development. It could mean big things in 2023 as the number of small and medium sized businesses that will be changing hands rises as well.
A perfect tsunami of supply + capital.
A YouTube power couple that owns over 20 Airbnb short-term rentals may be calling it quits. Sort of.
Sara and Tony Robinson built a mini-empire with 22 Airbnbs across California and Tennessee, and livestreamed their journey. They've amassed 30,000 followers on YouTube and over 80,000 Instagram followers.
Combined across all their assets they pull about $1.3M in annual revenue. Sweet.
Now, they're looking to diversify.
The couple announced that given the increased competition on Airbnb, the stiffening regulations, and booking slowing down in general, their goal is to get 75% of their bookings via a personal website.
Here's how:
Email wifi capture
Influencer marketing
Paid social ads
Individual Instagram accounts for each property
More YouTube channels
Blogging
Business Insider goes deeper on this story. It's worth a read.
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