Win-win: Patreon offers creators micro-loans in a bid to grow user base

Patreon has announced it will offer non-equity advance loans to creators, in a bid to drive up its user base and keep success stories on-site.

Popular with YouTubers, writers, artists and podcasters, Patreon allows creators to receive once-off monetary support from their fans.

Fans also have the option to pay a subscription to creators’ accounts in exchange for different tiers of rewards. Patreon then skims a percentage off the revenue.

However, similar to services such as Shopify, the Patreon Capital program will mean it fronts money to startups and creators for expenses such as production costs, and in return takes a portion of future earnings and a fee.

According to vice president of finance Carlos Cabrero, Patreon is better placed than traditional financers to tailor loans depending on creators’ history of engagement and earnings.

“Patreon has access to all the data about … everything needed to forecast their earnings and retention, without a creator even needing to submit an application,” he said.

“This would be essentially impossible for a bank to replicate.”

Patreon will also benefit by addressing its need to retain users on its platform even after success.

“The reality is Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business,” founder and chief executive Jack Conte said in an interview.

“We will have to re-examine how we charge for new services as we put them out,” he added.

The program has reportedly been trialled with about a dozen creators already.

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