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Beezy’s Café in Ypsilanti Playing ‘Guinea Pig’ in Small Business Loan Experiment

A new start-up lending company is focusing on restaurant customer loyalty as grounds for giving loans.

Beezy's Cafe.
Beezy's Cafe.
Alex Mandrila/Facebook

Some may know Beezy's Café in Ypsilanti as a great brunch spot, but a recent New York Times piece is focusing on the restaurant's participation in a new lending experiment. Restaurant businesses are risky endeavors and as many restaurant owners and workers will tell you it's more an industry of passion than a moneymaker.

The Times' Stacy Cowley writes:

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. Nearly everything in the cafe — including the eclectic local art on its walls — is scavenged, borrowed or bartered.

Beezy's is counting on a stream of loyal customers to show start-up lending company ZipCap it has the ability to repay a loan. ZipCap refers to this as "loyalty capital." Small business owners like Beezy's recruit "Inner Circle" customers who promise to spend a $475 over a year. Beezy's can then borrow money against the pledges. Bee Roll was able to sign up 130 Inner Circle members and take out a $10,000 loan.

"I want access to cheap money so I can keep doing great things for the community," Roll tells the Times. "When I started explaining the pledge concept, people were like, ‘This is going to help you? Great, I'm in!' It really makes it clear how vital their support is to us. There's trust, and an ongoing relationship."

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