How to find startups that need loans


I have some extra cash that I'd like to use to earn cash. Does the following proposal seem good, and if so, are there investor/borrower groups or online communities where I could find startups who need this type of funding?

  • Loan size: preferably no more than $25k-$50k per loan
  • Collateral: bank account or other liquid or tangible assets, with a first-priority security interest
  • Loan term: 1 month to 1 year
  • Interest rate: up to 10%
  • Personally guaranteed

Unlike so many angel investors, I don't want equity; I want my money back. I am an accredited investor.



asked Aug 16 '12 at 08:49
1,747 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans
  • If startups had the collateral for a loan, they would probably not need financing. – Frenchie 12 years ago
  • You can get better interest rates from a bank with personal guarantees. – Apollo Sinkevicius 12 years ago

1 Answer


If your primary goal is to make more money, then I'd say the following:

  • (As frenchie points out in the comments): startups with this kind of money in their bank account or other liquid assets, will not be the ones requiring such loans. You'd need to be more flexible on the collateral. In fact, small companies in need of small loans will most likely not have much to provide as collateral.
  • It is unlikely that any startup will pay back such a loan in 1 month. A more realistic time period would be 6-24 months.
  • What do you refer to with "personally guaranteed"?
  • Investing in startups is pretty risky. If your primary goal is to make money, you should ask for equity. That way one successful startup compensates for the two that fail completely and do not pay you back.

If you want to invest in startups, you might better look for an investment fund that does this for you. By investing in the investment fund you are still betting on startups, but you'll very much spread the risk of losing a large part of each loan if several startups fail to pay you back (there will be much more companies, so a few will not harm the fund too much).

Now, if your primary goal is not to make money but rather help out startups, you should checkout Kiva. There are currently 3,389 loans available to small startups and entrepreneurs mostly from developing countries. Average payback rate is 98.97%, so you'll in fact lose about 1% of your investment, but with that kind of money you have available you might make a huge impact on many people.

answered Aug 16 '12 at 17:12
192 points
  • Thanks. What would be ideal would be a startup that needs a short-term loan before a seed or Series A round closes. I'll take a look at Kiva, which I didn't know about- I appreciate the feedback. – User6492 12 years ago

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