Community and Economic Development as an Investment-Grade Portfolio: The "Assemblage Model"

Preface: Purpose and Use of Funds;

We will apply monies raised through this pre-development offering to do 3 things;

1. Pay all expenses involved with developing “AND Direct’s ‘Impact SBIC’ organizational requirements and application.”
2. Pay all expenses involved with developing the organizational requirements of the “Credit Union’s Charter Application and Commitments” as well as its brick and mortar establishment.
3. Pay all expenses in the development and marketing of the “Private Placement Memorandum.”

The resulting structure of the Private Placement allows us to mitigate default risk through SBA guarantees. The structure also mitigates unsystematic risk through the sponsored lending institution’s ability to increase the investment funds available through a loan (scale). More investment funds allow for an increased diversification of the portfolio (scope).

The Hypothetical Investment Portfolio

The proposed portfolio that AND Direct (as an "Impact SBIC") and/or the Greater Cleveland Cooperative Federal Credit Union (as a CDFI) would be investing in or lending to will be a diversified set of small businesses within the Education, Communications, Agriculture, Manufacturing, Housing, Energy and Healthcare industries. This mitigates unsystematic risk. To mitigate default risk, these companies must be members of either a cooperative or a trade association which guarantees through executed contracts, pre-purchase of a minimum 80% of each individual company's production or service capacity.

Portfolio Qualifications

Each company, to be considered for inclusion into the investment portfolio must be;

1. A viable company (feasible business, operations, marketing and financial plan),
2. Incorporated and organized as a for-profit entity,
3. Have executed business contracts matching financing requirements, and
4. An active member of and in good standing with a designated cooperative or trade association

Each cooperative or trade association, as an Advisory Board member to AND Direct, and GCCFCU must;

1. Have complete "Sector Coverage," or feasible plan to achieve "Sector Coverage,
2. Have a feasible "Sector Market Plan" based on standard "econometrics,"
3. Have Community Development Entity “CDE-ompliant” Bylaws, and
4. Have executed Member Subscriptions, which include Service Level Agreements (Purchase Agreements)

The Advisory Board as a collective (the presiding Board of NLEH, Inc. through its Executive Director) must deliver to the Fund Sponsor (AND Direct), the following;

1. A complete Marketing Plan for all sectors
2. Commiserate Financing Requirements
3. Updated Operating Agreement or "Collective Agreement" (aggregate Member Subscriptions and Service Level Agreements)

Funding Mechanism(s);

AND Direct will lend to NLEH, Inc, which will lend to the individual cooperatives and trade associations. The cooperatives and trade associations will then issue convertible debt instruments to individual portfolio companies. This funding structure and mechanism mitigates default risk and maintains CDE, SBIC and CDFI missions though community oversight, market analysis and pre-approved econometrics.

Reporting;

All financial and market data will be collected from all parties just-in-time (JIT) or on-demand for reporting to oversight and governing bodies as well as for public records, such as

1. SEC,
2. IRS and the
3. Treasury Department (CDFI compliance)

The financial and market data must be formatted to conform to standard econometric used by the oversight and governing bodies. There will also be available to the public, the economic and community impact outcomes in a format easy to read on the websites of AND Direct, NLEH and GCCFCU under the heading "Impact Reports."

Summary

The purpose of the investment and funding structure is to develop an investment-grade fund that accomplishes on the sponsor's collective mission of community and economic development while delivering to partners and other investors a competitive return.

For Credit Union and Investment Fund Proposal, read plan at http://anddirect.net/services/investments

To donate, go to; http://igg.me/at/8SGY2yZp3CE