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Wednesday, March 30, 2016

How NYC startup is helping small businesses get loans from an unlikely source

For small businesses, cash flow is the lifeblood that keeps a company alive. But in the face of day-to-day expenses, faulty projects and late customer payments, sustainable capital can be hard to come by.
Cinch  wants to ensure that cash is always available to small businesses, especially when they need it most.
Founded in 2014 by Maya Komerov and Jack Elaad, the startup aims to empower small businesses by tapping into their customers’ future purchases. The platform works like this:
Using Cinch, business owners can pre-sell their goods and services under the stipulation that owners will pay back customers in full with store credit. With a model that depends on future sales, small businesses earn the capital they need to grow, without having to take out loans. The service is also a win for customers — in exchange for patience, they receive 100 percent store credit in addition to 15-30 percent bonus store credit.
While Cinch is a tool for helping business owners get off the ground, the company also helps small businesses in their customer acquisition. Cinch’s team of designers, copywriters and digital marketers help businesses by customizing an outreach campaign that is then executed across multiple channels. These campaigns are designed to motivate customers to buy credit at a store, incentivized by extra store credit in exchange for the commitment.
Once the campaign period finishes, all cash generated will be automatically deposited into the business’ account. Cinch takes a 5 percent cut of these earnings.
While other online lenders have been focused on providing small businesses with loans and lines of credit, Cinch is unique in its approach of utilizing customers directly to bring in capital. This eliminates a business’s liability to pay back business loans, allowing them to build quality products and establish a loyal customer base.
“It’s very hard to get loans for small businesses because of credit issues and we think this is not the best way for small businesses to get the cash they need,” said CEO Komerov. “The most important thing for us is to bring customers to businesses and make those businesses successful.”
Cinch announced this week the company has raised a $1.4 million round, led by Lool Ventures, Entree Capital and iAngels.

The company has been working out of ICONYC labs, a NY-based accelerator for Israeli startups. Cinch's research and development team is based in Tel Aviv, with its management and sales team based in New York.
A myriad of retail businesses are already using the platform, given the company’s close proximity to thousands of small businesses and the nation’s financial capital. These entities primarily include retail businesses, from coffee shops to beauty salons to yoga studios.

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