Record Company Offers Business Microloans to Musicians

hundred dollar bills behind guitar strings
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.