Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Apr 25, 2013

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One record company has begun offering business microloans to musicians.

Threadhead Records, based in Los Angeles, Calif., was built with a focus on helping New Orleans continue to recover after the devastation brought by Hurricane Katrina.

The company offers business microloans to musicians to fund the creation of their art. However, a portion of the interest repaid on these business microloans is donated to New Orleans’ charities.

Chris Joseph, the “Head Honcho” and Fundraising Coordinator for the company, told that while the maximum amount that artists can borrow is $18,000, the typical amount is near $5,000. 

Joseph did note, however, that he understood musicians do not always live glamorous or financially-vibrant lives. As a result, Threadhead works with borrowers in order to develop repayment plans if payments begin to fall short or behind.

Joseph explained how the record company’s financing works.

“If you’re a musician and borrow $10,000 you pay back $10,000 plus ten percent,” he said. “Half of that ten goes to a charity of the musician’s choice. The other half goes to pay our administrative costs. So that would be $500 to Threadhead and $500 to charity.”

Despite the good nature lending practices of the record company, borrowing artists are still required to repay their business microloan.

“They can pay back from album sales, or live shows,” said Joseph. “We require payback no matter what.”

Thus far, around 40 artists have created 55 albums which were funded using Threadhead’s business microloans. Even more promising has been the lack of defaults.

“No one has defaulted,” said Joseph. “Some have paid back completely and some have paid back in 6 months. Some have paid back longer. Everyone will pay back eventually. We got into this to help musicians.”

Joseph detailed that artists are able to sell their finished albums through a number of channels. Aside from selling albums at stores and performances, they can also sell their art through Amazon, iTunes, Spotify, and Bandcamp.