WEST LOOP — When Da Lobsta's J Wolf decided to roll out a food truck earlier this year, he knew he wouldn't get much help from a traditional bank.
Instead, he turned to Bolstr, a West Loop-based crowd funding company that specializes in loans to local manufacturing and retail companies.
Through Bolstr, Wolf was able to raise $70,000 for his lobster roll truck in just under five days.
"It was great. When banks surely are going to say no to anybody these days, especially in my type of business. It was a great way to get a loan without all the red tape that a bank puts you through," Wolf said.
With Bolstr, investors typically agree to fund a business in exchange for a percentage of top line revenue until they reach a certain return on the investment.
When Wolf initially heard of Bolstr, the company was only helping to facilitate smaller loans from family and friends of small businesses — which, at the time, didn't make sense for Da Lobsta. However, since then, the federal JOBS Act has been altered, lifting an 80-year ban that previously limited the ability to advertise private offerings to investors.
Now, instead of relying only on a company's groups of friends and family for capital, Bolstr can reach out to accredited investors.
"Our marketplace is a gateway for those people to discover really interesting small businesses," said Bolstr co-founder Larry Baker.
"There's a large group of eight and a half million accredited investors — doctors and lawyers and consultants who never even knew their neighborhood coffee shop was raising capital," said Charlie Tribbett, his partner.
The two launched Bolstr in Chicago in 2011. Tribbett, who grew up in Chicago, met Baker in New York while the two were working as interns at J.P. Morgan.
Eventually, looking to introduce crowd funding for smaller businesses that weren't tech start-ups, they created their own site.
Since expanding Bolstr's business model, Tribbett and Baker — both 30 — have funded ventures for 10 local businesses, including Da Lobsta's food truck, Leatherbee Gin, Ipsento Coffee and others.
So far, Baker said, every business has been funded in less than a week.
It doesn't always work out. Earlier this year, Bolstr helped raise $40,000 for Bang Bang Pie Shop's planned expansion into Pilsen. However, shortly after raising the funds, husband-and-wife team Megan and Dave Miller broke away from the company and the funds were never used.
"It was a weird chain of events. Typically, if a business is raising funding, they're not on the verge of splitting up the partnership," Baker said. "If we knew in advance, we probably wouldn't have approved them."
The group also uses a kind of sliding scale repayment method that bases the loan repayment on the business' monthly sales. So, in hard-hitting months, companies pay less, while paying more in lucrative months.
For Da Lobsta's J Wolf — who's planning to launch his food truck by next month — the sliding scale has been a godsend.
"It’s definitely helpful," Wolf said. "For instance, let’s say we have another winter like we just had. It'd be hard to have a predetermined loan payback, so the fact that it fluctuates based on my sales is great."
For more neighborhood news, listen to DNAinfo Radio here: