In brief: Patreon, the US-based membership platform that helps people financially support the work of creatives across a variety of categories, has launched a new program offering microloans to content creators.
Patreon Capital is an alternative financing service that provides cash advances to creators in exchange for "a slightly greater sum of their future income generated on Patreon." In other words, it's a loan with interest, although just how much interest is attached wasn't mentioned.
Brooklyn-based podcast collective and production studio Multitude tapped Patreon Capital for a cash advance of around $75,000 according to a recent report from Hot Pod. The team has two years to pay the money back and had to put up future Patreon revenues from another Multitude show as collateral in the event they can't pay.
Patreon believes it is in a better position than a bank to make a decision regarding a loan because they have a creator's entire history on the platform at their disposal. They know about your earnings history and how engaged you are with your supporters. Decisions one way or another could come quick, and that would be helpful if time is of the essence.
Patreon Capital also gives the platform another stream of revenue which, when running a business, is critical. But is this really there to benefit the consumer? I suppose that depends on what school of thought you subscribe to.
Aside from purchasing a home, I'm personally averse to the idea of borrowing money. As the saying goes, the borrower is slave to the lender. In the example stated above, Multitude was able to put up future revenue from another podcast as collateral. But what about other creators that may only have a single channel up on Patreon? Will they have to put it up as collateral? What happens if a creator misses a payment or two - will Patreon take down their account, further impacting their ability to earn a living?
Masthead credit: Tip jar by nutcd32. Delinquent loan by Vitalii Vodolazskyi.