Comment by pitdesi | Hacker News Reader

Comment by pitdesi | Hacker News Reader

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Easier access to credit is a huge detriment to small businesses, in ways that we (startup-folks) don't think about... One example - the typical small business restaurant. It is a VERY different businesses than the startups that we create. You can't create a restaurant without any money, for example... You can bootstrap an online business by not paying yourself, but when you have to pay for a building and kitchen etc, things are much tougher.

Programs like this that leverage your dollars effectively are pretty useful - there are lot of people out there who want to start small businesses or hire someone seasonally etc that are just in a cash crunch... You have to hire someone before you get paid for their efforts, and you can't offer them equity.

What they're doing (in my understanding) is eliminating the default risk for lenders, so they are able to leverage the dollars 1 to 7. This is also common in the microfinance field. It makes a lot of sense. Also, SBUX is the best place I can think of to market this. I'm in line paying $5 for a coffee... can I give a dollar for small business? hell yeah. A question arises in my mind though, shouldn't I just pay $4 for a coffee at an actual small business?

We made an infographic on small business lending... it isn't our best, but it does have some useful stats (TL;DR - credit is a big problem for small businesses and loans are really hard to get): http://feefighters.com/blog/ff_infographic/the-truth-about-s...

> A question arises in my mind though, shouldn't I just pay $4 for a coffee at an actual small business?

Sure, assuming you actually prefer the coffee from the small business. Lots of people prefer Starbucks coffee.

The idea of big businesses funding local competition does seem absurd from a competitive standpoint-- but I think it could actually work out really well. If Starbucks still has the better coffee they will still get more business, meanwhile a healthier local economy will mean a bigger market for Starbucks. Especially vs. Dunkin Donuts or McDonalds, which currently beat Starbucks in lower-income markets.

Good point about spending $4 at a small business instead. That will help keep existing businesses alive but it will not solve the capital problem to start a small business.

Restaurants can be bootstrapped. A mobile vending unit costs ~20k. Add an extra 10k of permits, and basic inventory, and you could sell coffee somewhere near a transport hub. From there, you could add a few food items, build up savings, then lease a small restaurant.

The problem is, regulators can be very unfriendly to mobile vendors.

Restaurants can be bootstrapped for some limited values of "restaurant" and "bootstrap." You can also steer a car with your feet, but hands are a lot more effective.

I have seen this first hand, starting with worse conditions.

This guy ( http://www.expopyme.com.mx/vpabellon.php?cat=4&cid=33373... ) started selling ice cream in a bike like this ( http://www.yesh.com/blog/wp-content/uploads/2010/05/t-370.jp... ).

He sold to the local University for about 10 years, until he got money to rent a very small place in front of a hospital.

From there he continued growing and growing and now I know they have 3 good size shops in different parts of the city.

I know because my mother has been teaching in the local Univ. for 25 years and met this guy in the beginning.

>The problem is, regulators can be very unfriendly to mobile vendors.

I think at the end this is what matter the most. In my home town (well... in all Mexico in general), cycling ice-cream makers do not need to comply with a lot of laws (as long as nobody dies because of the ice cream...)

You can't create a restaurant without any money, for example..

Or customers.

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