Working for the Peace Corps in Bolivia many years ago, Elizabeth Gore saw how groups who lacked access to capital and business skills remained trapped in poverty.
When Gore had become a successful entrepreneur and investor years later, she and her friend Carolyn Rodz realized a dream by launching the website Hello Alice to help marginalized groups in the U.S. start their own businesses.
"From day one we focused on helping women, people of color, veterans — groups with no credit and narrow access to capital — start their own micro-businesses," Gore said.
Since launching in 2017 the site, named for the curiosity and confusion of "Alice's Adventures in Wonderland," has amassed 1 million users. Hello Alice provides small-business owners with free resources, recommendations and the opportunity to win grants of around $5,000 to $25,000 to improve their enterprises. Last year, Hello Alice gave out more than 2,100 grants totaling more than $16 million.
More than half of the site's users are Black, and a majority are also women, in part because the NAACP has had an advisory role from the outset, according to Gore.
"Our data shows 80% of small-business owners have no business credit score. Only 25% have ever applied for a business credit card and of those, most were denied," she said.
Hello Alice so far has earned most of its revenue via affiliate marketing and commissions, by matching users with resources including customized mentoring, networking, educational modules and links to business service providers and lenders that include Fundbox, Stearns Bank and CDC Small Business Finance Corp.
Now the startup is rolling out its first credit card, the Hello Alice Small Business Mastercard, which Gore hopes will become the site's primary revenue driver.
Issued in partnership with First National Bank of Omaha, the Hello Alice business card has no annual fee. Like many small-business cards, it offers 4x points for every $1 spent on business-related purchases like cell phone services and software, 3x points for office supplies and shipping purchases, 2x points on dining and rideshare services and 1x on everything else.
A unique twist to the Hello Alice credit card is the way it rewards users for completing educational milestones. Users can earn 150 points for creating a full profile on Hello Alice, 100 points for logging in regularly and 100 points for competing educational modules on topics like handling taxes and managing cash flow.
Hello Alice card customers also receive reminders about best practices for using a credit card and building credit, including tips for users to engage with the credit bureaus to make sure their on-time credit card payments are captured.
"For most of our users, their problem accessing capital isn't bad credit history, but no credit history," Gore said.
Customers who don't qualify for the traditional small-business credit card may apply for a secured version of the card, and after 11 months of on-time payments they are eligible to transition to an unsecured card. APRs range between 15.74% and 24.74% based on applicants' creditworthiness. Users get a $50 statement credit after spending $1,000 in the first three billing cycles.
"We worked hard to create a card that's equitable and has tools for financial health and business success built in," Gore said.
Machine learning is a key part of Hello Alice's growth formula.
"Data insights we use to shape offers change constantly," she said, noting that each Hello Alice small-business card applicant receives a credit card offer based on their risk profile with full transparency.
During the pandemic Hello Alice retooled its platform to automate many functions that previously were manual, including complying with the Payment Card Industry data security standards and other requirements.
"We've done a nearly complete platform rewrite to accommodate our growth plans while rolling out a significant set of new capabilities for our owners," said Kelsey Ruger, Hello Alice's vice president of product.
Offering grants to eligible Hello Alice users drives traffic to the Hello Alice website, and the company routinely partners with other companies to expand its reach.
Through October 14, Hello Alice users may apply to receive a $5,000 grant funded by Mastercard. Massachusetts-based Stacy's Pita Chips is also offering $15,000 grants through October 21 via Hello Alice to 10 women entrepreneurs in the food and beverage industries.
Since 2020, eBay's annual Up & Running grant program has awarded 50 notable eBay online sellers with $10,000 each in partnership with Hello Alice.
Several small-business owners who recently won $10,000 grants in the eBay program told American Banker they began by filling out a questionnaire on Hello Alice's site, which took about an hour. None of those contacted have applied for the Hello Alice credit card yet.
EBay seller Jaster Nyasulu, a Malawi-born immigrant who lives in Seattle, was laid off during the pandemic from a website where he assisted with development. He plans to use the $10,000 to buy inventory for his eBay shop that sells fitness braces to relieve elbow, knee and ankle pain.
"Getting capital to buy inventory is always my biggest challenge," Nyasulu said.
Jonathan Proulx of Alpine, Utah, won $10,000 that he said gave him the leeway to purchase a house with a workshop attached so he and his wife can more easily sort the thousands of equipment parts and accessories they buy and list on his eBay shop We Can Sell That.
"I needed to hire someone to help me move stuff, but getting more space solves that problem," Proulx said.
Adina Ringler, another $10,000 grant winner, runs Adina's Bridal eBay shop online in Northridge, California. Ringler said she'll use the money to hire a part-time worker during her busiest season.
"I'm also using Hello Alice to apply for other grants," Ringler said, noting that she's also tapped into some of the site's educational resources for businesses.
Hello Alice, based in Houston, has raised more than $22 million in venture-capital funding since its launch. With 64 full-time employees, the company hopes to extend $70 million in grants to business owners by 2025, focusing on the aforementioned marginalized groups plus LGBTQ+ entrepreneurs and those with disabilities operating small businesses with under 50 employees.
"For any small business, our data shows that in the first 24 months it's difficult to get a loan or a line of credit and we want to close that gap," Gore said.
