Cooperative Banking as the Catalyst for Community and Economic Development FAQ's

Greater Cleveland Cooperative Federal Credit Union (Co-sponsored by NLEH, Inc.) FAQ’s

Q. Why is owning and controlling a bank so important?

A. Because having access to capital is the best way to enfranchise yourself. Without access to capital, you cannot turn your plans into institutions, businesses or acquire the “means of production” or raw materials necessary to produce or deliver services to the market.

Q. Why is a “Cooperative Bank” the best form of bank for low income, underserved areas or new markets?

A. Because a “Cooperative Bank” lowers the “Cost of Capital,” meaning that the interest rate and profit margin normal banks add to the principle a borrower may borrow, is lowered or eliminated, thus making the total debt less. This makes all loans issued by the bank easier and quicker to pay off, which increases a small businesses success rate. Additionally, a “Cooperative Bank” distributes any profits it makes to its depositors/members. Further, “Cooperative Banks” are missioned to prioritize the financial and economic needs of its membership.

Q. Why should I support the Greater Cleveland Cooperative Federal Credit Union? It will not be located in my area.

A. There are several reason why supporting this particular “Cooperative Bank”/credit union is worthwhile to local and non-local residents;

1.       Intrinsic Good. It is a good cause and a not-for-profit business that will help low income and underserved persons build wealth.

2.       Personal Savings Plan. Any donation $25 and over receives either a non-member (non-resident) or a membership deposit certificate which can be redeemed for the opening of a savings account of equivalent value.

3.       Competitive Investment. Investment in the “Pre-Small Business Development and Investment Fund” is a short-term, higher interest loan with a double principle payoff.

4.       Rhizomic Growth. This project and business unit is an economic kernel that will grow by funding the duplication of itself in other low income and underserved areas across the country. The respective parts of; a Cooperative Bank, a Small Business Investment Company and a Risk-Mitigated Fund, while autonomous, will work as one economic unit to jump start development in even the most economically depressed areas. This is because capacity-building, technical and financial support is built into the business model and therefore it facilitates any individual or group anywhere, willing to serve their community and their own economic  interests through entrepreneurship. So although this project may not START in your area, because of you support, this project will soon BE in your area.

"IN ORDER TO 'PULL YOURSELF UP BY YOUR BOOTSTRAPS' ONE FIRST NEEDS BOOTS."

Please click the link to find out how you can support this project (Donate, Invest or Volunteer); http://anddirect.net/current-events/community-and-economic-development-as-a-private-placement-memorandum-type-investment-vehicle/

AND Direct, LLC as Small Business Investment Company for Fund Development and Management: FAQ's

AND Direct, LLC as Business Development or Small Business Investment Company (SBIC) FAQ’s

Q. What is a Small Business Investment Company (SBIC)?

A. An SBIC is a Small Business Administration designation for “a privately-owned investment company that is licensed by the Small Business Administration (SBA). Small Business Investment Companies (SBICs) supply small businesses with financing in both the equity and debt arenas.” The SBA guarantees the loans and investments of the SBIC and in some cases allows them to leverage their capital at 3:1.

Q. Why is being designated as an SBIC important to the project and business plan?

A. There are important reasons and for seeking an SBIC designation, all of which have the purpose of creating a more competitive offering and expanding the capital base for investments;

     1. SBIC’s private capital can be leveraged or borrowed against (from the SBA) up to 3 times the amount. This means more money to invest in the community's small businesses.

     2. SBIC’s investments (loans or stock purchases) are guaranteed against default or bankruptcy. These guarantees lower risk and gives investor/partners security, which makes our offering more competitive and private capital easier to raise.

     3. SBIC’s, because they invest in low income, underserved areas and new markets, qualify as Community Development Financial Institutions or Community Development Entities (CDE’s) and can thus offer investors/partners tax credits or deductions, like Low-Income Housing Tax Credits (LIHTC), New Markets Tax Credits (NMTC) Business Energy Investment Tax Credits (BEITC), ect. These tax credits and deductions increase the effective rate of return for investor/partners which makes our offering more competitive and private capital easier to raise.

Q. Besides being a vehicle for attracting and leveraging capital, what does an SBIC do?

A. An SBIC is essentially a business development, investment and fund management firm. The 1st function of the SBIC is to DEVELOP an "Investment strategy." The “Investment Strategy” is the methodology and plan for Fund construction and management;

     1. Identifying the types of businesses to include (Industry and Sector)

     2. Establishing the company-level requirements for inclusion

     3. Risk mitigation

          a. Unsystematic (Diversification)

          b. Default (Aggregate and Individual Risk, Market Planning)

The 2nd function of the SBIC is to MARKET the “Investment Strategy” to potential investor/partners. This means developing a Private Placement Memorandum (PPM) or “the Offering.” This PPM will outline the “Investment Strategy,” highlight the expertise and track record of the Fund Manager and emphasize the security, rates of return, terms and any other value-add or investor services, so as to attract interest and ultimately secure capital.

The 3rd function of the SBIC is to EXECUTE the “Investment Strategy” and actively MANAGE the fund, so that all purposes, requirements and operational compliance issue are met while delivering ROI to the investor/partners.

"Our communities need impactful projects like these to re-enfranchise themselves, and AND Direct, LLC hopes to be "their Partner In The New Economy." 

Please click the link to find out how you can support this project (Donate, Invest or Volunteer); http://anddirect.net/current-events/community-and-economic-development-as-a-private-placement-memorandum-type-investment-vehicle/