HubSpot creates $3m loan fund to help marketing agencies boost hiring

Dina Rudick/Globe Staff
Dina Rudick/Globe Staff

HubSpot makes its money by selling marketing and sales software. To keep that business growing, it’s also starting to act a little bit like a bank.

On Tuesday, HubSpot said it would spend $3 million to start a loan fund for marketing agencies that sell HubSpot software to their own clients.

The money is earmarked for helping those smaller marketing agencies hire more employees, and the loans are only available for the agencies that generate higher levels of sales for HubSpot, compared to their peers.

But for those who qualify, the loans can be a pretty sweet deal. Each of the $300,000 loans are interest-free for the first year, and agencies can continue to avoid interest for the remaining two years of the loan’s term if they hit certain sales targets.

HubSpot said it could withhold commission payments if those sales targets aren’t hit, but wouldn’t disclose the interest rates that might be charged. Agencies that miss their targets would have the ability to “catch up” to those numbers and make the loan interest-free again, HubSpot said.

The idea of a large company carving off some of its revenue to help smaller partners grow isn’t entirely new. But it’s typically structured as a shared marketing expense, such as bankrolling a conference, HubSpot chief executive Brian Halligan said.

By offering loans specifically for staff growth, HubSpot thinks it can fill a hole in the traditional small-business lending market.

“It’s hard for these agencies to borrow. They don’t have the cash flows,” Halligan said. “There’s no collateral. It’s all people.”

HubSpot’s own growth depends on those marketing agencies prospering and continuing to sell subscriptions to its software. In its most recent annual report, HubSpot said that marketing agencies and their clients represented 44 percent of its customers and 34 percent of its nearly $116 million annual revenue.

HubSpot is also planning to grow its own staff. The Cambridge-based company had about 890 employees as of March 31, and it plans to add “hundreds” more this year, chief technology officer Dharmesh Shah said.