YOUR COMMUNITY. YOUR INVESTMENT.
Earn a Better Return
Banks typically lend your money at rates in excess of 10%, but only pay you 1% or less on the money you deposit with them. Cut out the middle-man and lend directly to the businesses in your neighborhood that matter to you.
Make an Impact
When you spend your money locally, 48% of your money stays local compared to less than 14% of purchases at chain stores. While buying local can have a big impact, just imagine what investing in local businesses can do to the bottom line of your community, from job creation, to supporting a diverse local tax base and sponsoring local sports teams and otherwise engaging in your community.
Help a local entrepreneur secure funding on better terms than a bank loan without having to sign over her personal assets.
Ignite a Spark
How It Works
Interested in lending money to a local business? Commit to loan money during the public offer period. No money changes hands until the campaign goal is reached.
Once a business reaches its funding goal, we’ll send you the paperwork that specifies your right to repayment and the terms of your loan. Once you electronically sign the documents, you will be asked to send us your loan amount, via check, wire or ACH.
After your payment is received and the loan closes, the business will make monthly repayments of principal and interest in accordance with the loan terms.
Who is eligible to support an intrastate Campaign?
Only legal residents of the State in which the business running the Campaign is located are eligible to participate. All persons who wish to invest in a Campaign will be required to certify as to their State of residency and provide supporting documentation. Businesses running a Campaign and Sparkmarket may take additional steps to verify an investor’s legal residency.
Do I have to create an investment account?
No. Unlike offerings made through broker/dealers or certain funding portals, Sparkmarket does not require you to create an investment account prior to committing to support a Campaign or investing in that Campaign. You will be required to create a Sparkmarket profile, but not an investment account.
How will I be notified of a Campaign?
Campaigns are open to the public (who are residents of the applicable State), but the business running the Campaign has control over access to the Campaign site. Thus, you may be invited to participate through a connection to the business, the business’ website, an advertisement, a social media contact, a mutual connection or any number of other methods. Once you certify as to your eligibility you can commit to support a Campaign through their Campaign page.
Am I buying a piece of the business in a Campaign?
No. Investors will not become equity owners in the business. You will be a “lender” to the business, and they will be a “borrower” of funds from the investors. Thus, you will have the rights of a creditor of the business, but not an equity investor.
How will I be communicated with during the Campaign?
You will be contacted by Sparkmarket only through the primary e-mail address that you provide when creating your profile. The business will have access to contact information for all investors who provide commitments and may contact you with additional eligibility questions as well.
Can I invest in a Campaign through an entity?
Yes, but that entity must also be organized in the State where the Campaign is eligible to conduct its offering. Also, there are certain restrictions related to ownership of that entity that must be verified. If you wish to invest in a Campaign through an entity, contact Sparkmarket for further instructions.
How much can I invest in a Campaign?
Businesses establish a maximum Campaign amount, and aggregate commitments will not be accepted above that amount. The business may also establish a maximum amount that any one investor may invest. If no maximum is provided, then investors will be limited to a maximum investment of $10,000, unless such investor qualifies as an “accredited investor” under rules established by the SEC, in which case there is no limit on individual investments.
How does a commitment work?
Sparkmarket’s campaign tools work on an investor “commitment” basis. Thus, persons who wish to be investors in a Campaign can “commit” to support that Campaign at the funding level they select. This will serve as their commitment to submit their investment funds if (but only if) the Campaign successfully reaches its minimum level of commitments. Until such time, investors are not required to submit any investment funds.
How do I complete my investment, and when do I have to submit my investment funds?
Once a Campaign reaches its minimum level of commitments, Sparkmarket will contact all persons who have committed to supporting the Campaign with instructions for signing the necessary deal documents and submitting their investment payment.
All investors must execute a copy of the Note Purchase Agreement and submit their payment to complete their investment.
All investment funds will be held in escrow until the Campaign escrow is closed.
Must Campaigns reach a minimum level of funding to close?
No. With that said, Sparkmarket requires all businesses to set a minimum level of commitments that must be received before the business can move to close the Campaign.
However, once the minimum commitment level is reached, all actual subscription funds collected may be used by the business as and when received, and there is no minimum level of investments needed to break the escrow and close the Campaign. Thus, once an investor submits its funds (and provided that the business accepts such subscription) funds will not be returned to the investor, even if the level of funds received is less than the level of commitments which were received in the Campaign.
Does a business have to accept my investment?
No. The decision to accept an investment from any individual investor is always left in the hands of the business itself. A business may choose to accept or reject your investment in its Campaign for any reason, or no reason.
What will I have once the Campaign is closed?
Once a Campaign is closed, investors will receive a copy of their personal Promissory Note executed by the business. All investors will then be considered “lenders” to the “borrower” business, and will be creditors of such business.
Are Notes issued in the Campaign transferable?
No. All Notes (the securities) issued in any Campaign using Sparkmarket’s tools will be non-transferable. Transfer may only occur in the sole and absolute discretion of the business issuing the Notes, and, in any event for a period of nine (9) months from the last sale of a Note in the offering, any permitted transfers must be made to persons who are a resident of the State in which the offering is being conducted.
How will the business communicate with me following the Campaign?
Following completion of a Campaign, a business has the responsibility to communicate with its investors directly, and they will have the contact information you provided to Sparkmarket. That communication may be about the Campaign, your Promissory Note and the payment related thereto, tax documentation requests, the business generally or other purposes.
Sparkmarket will not communicate with investors directly about any investments, but may communicate with investors and users of its services generally.
How and when will I get repaid?
Repayment of the principal and interest which the business owes you will be dictated by the terms chosen by the business and reflected in the Note Purchase Agreement and your individual Promissory Note. Generally, using Sparkmarket’s tools, a business will have a monthly repayment schedule of principal and interest.
What are the tax consequences and documentation aspects of my investment?
Sparkmarket is not a tax adviser to any business or investor, and you are encouraged to consult a competent tax professional regarding the tax consequences of your investment. Generally, businesses will be required to obtain a W-9 from each investor, and will be required to issue a Form 1099 annually to each investor reflecting any payments made on the loan.
If a business chose a “Spark” in their Campaign, when will I know if the Spark goal was reached, and what will I receive?
If the business has chosen to attach a special “Spark” incentive to their Campaign, they will be solely responsible to track its progress on such goals and communicate to its investors regarding it progress on that goal. Generally, if the goal is met, the investors will receive the incentive attached to the Spark directly from the business at or following the maturity of the loan.