investing in small business

Small Investing in Small Businesses with SMBX

investing in small business

I really enjoy investing my money. Unfortunately, I don’t have a lot of extra money to invest. Therefore, I have to find ways to invest just small amounts. I also really enjoy supporting small businesses, especially local ones. So, earlier this year, when I heard about the app Small Business Bond (SMBX), I decided to check it out. And you know what? It’s been a good experience!

What is Small Business Bond (SMBX)?

SMBX is a platform where you can invest in bonds for specific small businesses. Bonds are essentially like loans. However, a small business might not be able to quality for a loan from a big banking institution. Bonds are an alternative option. In this case, a whole bunch of us regular people fund the bond. Then the small business gets to use that money. They repay that money with a little bit of interest. So, I find that it’s an easy way to support small businesses while also getting a bit of return on my investment.

Note: This post may contain affiliate links, which means if you buy from my link I might make a small commission. This does not affect the price you pay. See the full affiliate disclosure here.

Crowdsourcing Funding in a Mature Way

One of the things that I really like about this form of investing is that you get to hear the story of the business. In this way, it feels a little bit like Kickstarter or Patreon. However, it also feels more solid, since the app is giving out bonds and you’re getting a percentage back rather than some amorphous “reward” like through those other platforms.

Don’t get me wrong. I love Patreon and have used it and several other platforms to crowdsource funding myself. But I also want to invest my money in ways that do me good as well as supporting the creators. In other words, it’s cool to pay a little money to support a musician I like. And yet, what I get is a CD, and I don’t really need that. SMBX helps me to feel like I’m still contributing to things that I care about while also getting actual cash back.

Some of the Businesses Getting Money Through SMBX

In addition to my work as a writer, I’ve done a lot of work in the craft sector. Specifically, I work with knit and crochet designers. I’ve also written blogs and books about crochet as therapy. So yarn is obviously a passion of mine. Therefore, the small business I contributed most of my investment to was AndeanSun. They’re a Florida-based small family business that raised over $60,000 on SMBX to help grow their line of amazingly soft alpaca yarn.

But there are plenty of different types of small businesses to support through SMBX. Personally, I like to support local businesses as much as possible. Therefore, my other investments have gone to San Francisco businesses. When you go to the app’s Marketplace, you can see the businesses that are seeking bonds. Then you can filter by location, interest rate, bond length, and whether or not they’re backed by collateral.

Right now some of the businesses I see seeking help include:

  • Restaurants
  • Building contractors
  • Photographers
  • Laundry services
  • Financial services
  • Computer services

In other words, you can find the small businesses whose stories appeal to you and support them.

Making Money As An SMBX Investor

I have only contributed a small amount of money through SMBX. If I had more to invest I would. However, one of the things that I like about the platform is that you can buy shares in $10 increments. Therefore, if I only have $10 or $20 extra dollars, then I can still put it to work for me. And for the businesses that need it.

You see up front what your return will be. Most of mine are at 8%, although the range starts at 6%. The bond length is typically 60 months, although some are as low as 36 months. So, for example, might give $100 (ten shares) to a business. I eventually get that $100 back along with 8% more in interest. I receive those repayments (payment plus interest) every month for the duration of the 60 months.

Since I’m not contributing a lot of money at this time, it’s not as though I’m making a ton of money. But I do get that money every month. And I feel really good about where it’s gone. So for me, that’s a win-win.

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