A start-up that makes loans based on customers’ devotion

This article by Stacy Cowley introduces ZipCap, fledgling start-up in San Diego with a new lending model it calls ‘‘loyalty capital.’ its first guinea pig was Beezy’s Cafe. The aim is to offer small retailers like restaurants, boutiques and service providers access to low-interest loans financed by investors with a vested interest in supporting a local economy. To be eligible for loans, companies must have been in business for at least two years in the same location and must enroll at least 100 Inner Circle members. ‘‘When a customer feels as though they have contributed to the success of a business, they have a greater bond to that business and are more compelled to visit.’’ ZipCap’s unusual lending model, Mr. Malter said.

Read an excerpt of the article written by Stacy Cowley:

To the residents of Ypsilanti, Mich., Beezy’s Cafe looks like a thriving business. The six-year-old restaurant and coffeehouse draws crowds for breakfast and lunch, employs 16 people, has a trail of glowing Yelp reviews for its ‘‘hippy vibe’’ and ‘‘super friendly’’ staff, and recently extended its hours to serve dinner on Fridays and Saturdays. But to banks, it’s a risky venture with little appeal. Beezy’s is only intermittently profitable, and most of the cash it generates goes straight back into keeping it running. Bee Roll, the cafe’s founder and owner, has no collateral to offer for a loan or credit line: She rents her home and leases the restaurant’s space and some of its equipment. ...read more