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Bow Truss Owner's Lending Portal Turns Customers Into Investors

 Bow Truss founder Phil Tadros is starting a crowdfunding platform to help small food businesses raise capital.
Bow Truss founder Phil Tadros is starting a crowdfunding platform to help small food businesses raise capital.
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Facebook/Bow Truss Coffee Roasters

CHICAGO — When Bow Truss Coffee Roasters owner Phil Tadros needed a $30,000 loan to open his River North cafe, he turned to what he considered the most obvious place: his customers.

Through a crowd-sourced lending platform called LendSquare, Tadros got the money, opened the shop in 2013 and made good on the loan, paying Bow Truss fans back with interest and perks like customized coffee roasts.

He did it again in 2014, this time raising $300,000 from customers to help fund a new roasting facility.

Now, Tadros wants to do the same for other small food and drink companies looking to expand.

The 36-year-old entrepreneur, whose fast-growing Bow Truss portfolio includes eight locations and 13 more slated to open in the next 18 months, is getting ready to launch Funded Foods, a crowdfunding portal that picks up where the now-defunct LendSquare left off.

It'll be one of the state's first portals since the federal JOBS act was tweaked to allow companies to seek capital from anyone, not just accredited investors (those with an annual income of at least $250,000 or $1 million in assets), according to Tadros' attorney, Anthony Zeoli.

The focus is on solely on food-related startups — “really great, high-quality, specialty foods, but also scalable,” Tadros said — that banks might otherwise ignore.

“The banking world does not give small businesses loans. That’s a fact. Mom-and-pop shops, even Bow Truss, we’re not bankable, which is ridiculous because we prove over and over again that we pay our bills,” Tadros said.

Through the Funded Foods platform, non-accredited investors will be able to invest up to $5,000 a year per business, with a 7 to 12 percent return. Accredited investors can put forth a maximum of $4 million per business annually.

“Your customers become the bank,” Tadros said. “This is a specific niche of people investing in brands that they’re comfortable with, that they know, that they’ve seen grow."

The process will happen in a few simple clicks, he said. Individuals will log in to the Funded Foods site and choose their investment status and loan amount, which goes out essentially as a wire transfer. Payment will be automatic as well, credited directly into people’s bank accounts monthly.

“The general public doesn’t even think about investing in their small businesses because they don’t know how to. Nobody’s ever said, ‘Hey, keep us going, keep us growing,’ in a very simple way. No one knew they could get involved, and no one knew they could make a return doing it," Tadros said.

Tadros aims to have the Funded Foods site go live in June. He’s starting with three of his own companies — Bow Truss, The Budlong Pickle and Chicken Shop and Aquanaut Brewing — but he said he has “a handful of exciting brands that we’re proud to add to it. We’re waiting to prove ourselves first.”

He declined to name specific businesses but said he welcomes other coffee companies to the Funded Foods portal.

“We love competition and at the end of the day, there’s plenty of room for quality,” he said. “Craft and quality is coming back, and so it’s really important to help support that."

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