randallbenston at yahoo.c
06-02-2002, 05:51 PM
Re: high risk capital pool:
As an ex-bank president I'd like to suggest that, if
you are intending to leverage commercial bank lending,
you should consider two issues:
1) Do not burden the banks with heavy regulations to
follow, and especially avoid contingencies beyond the
bank's reasonable control that could result in the
withdrawl of the collaral or collateral guarantee
2) Consider seed capital that can be loaned on its
own without being contingent on other loans being
granted. If you are only going to extend 25% of the
debt, that means that a business is precluded from
accessing your program if they are not already
commercial bank quality risk. Venture capital, which
you are emulating, gets involved BEFORE the company is
credit-worthy.
I've given a lot of thought to this issue, so please
feel free to contact me directly if I can be of any
assistance.
Randall Benston
randall@FundingForAll.com
--- For more information
<COMMUNITYDEVELOPMENTBANKING-L@cornell.edu> wrote:
> COMMUNITYDEVELOPMENTBANKING-L Digest 91
>
> Topics covered in this issue include:
>
> 1) Re: high risk capital pool
> by Wmefcs@aol.com
>
>
----------------------------------------------------------------------
> From: Wmefcs@aol.com
> Message-ID: <99.274bec84.2a2a1913@aol.com>
> Date: Sat, 1 Jun 2002 08:33:23 EDT
> Subject: Re: high risk capital pool
> To: communitydevelopmentbanking-L@cornell.edu
> MIME-Version: 1.0
> Content-Type: text/plain; charset="US-ASCII"
> Content-Transfer-Encoding: 7bit
>
> Greetings colleagues,
>
> The Western Massachusetts Enterprise Fund is
> exploring the creation of a high
> risk capital pool. The high risk capital pool would
> be used to enhance an
> amortized small business loan by providing an
> additional (smaller, about 25%
> of financing) flexible (longer-term interest only),
> uncollaterized loan. Our
> goal is to reach more businesses who face severe
> collateral issues and who
> have potential for high growth. We see this as a
> debt product with near
> equity type risk.
>
> We don't want to recreate the wheel. If anyone has
> anything like this or can
> provide some sage advice, it would be greatly
> appreciated.
>
> Thank you!
>
> Chris Sikes
> Executive Director
> Western Massachusetts Enterprise Fund
>
> ------------------------------
>
> End of COMMUNITYDEVELOPMENTBANKING-L Digest 91
> **********************************************
>
=====
Randall Craig Benston
randallbenston@yahoo.com
954-560-3392
954-360-9519 (FAX)
__________________________________________________
Do You Yahoo!?
Yahoo! - Official partner of 2002 FIFA World Cup
http://fifaworldcup.yahoo.com
This post transferred from the cdb-l mailing list
As an ex-bank president I'd like to suggest that, if
you are intending to leverage commercial bank lending,
you should consider two issues:
1) Do not burden the banks with heavy regulations to
follow, and especially avoid contingencies beyond the
bank's reasonable control that could result in the
withdrawl of the collaral or collateral guarantee
2) Consider seed capital that can be loaned on its
own without being contingent on other loans being
granted. If you are only going to extend 25% of the
debt, that means that a business is precluded from
accessing your program if they are not already
commercial bank quality risk. Venture capital, which
you are emulating, gets involved BEFORE the company is
credit-worthy.
I've given a lot of thought to this issue, so please
feel free to contact me directly if I can be of any
assistance.
Randall Benston
randall@FundingForAll.com
--- For more information
<COMMUNITYDEVELOPMENTBANKING-L@cornell.edu> wrote:
> COMMUNITYDEVELOPMENTBANKING-L Digest 91
>
> Topics covered in this issue include:
>
> 1) Re: high risk capital pool
> by Wmefcs@aol.com
>
>
----------------------------------------------------------------------
> From: Wmefcs@aol.com
> Message-ID: <99.274bec84.2a2a1913@aol.com>
> Date: Sat, 1 Jun 2002 08:33:23 EDT
> Subject: Re: high risk capital pool
> To: communitydevelopmentbanking-L@cornell.edu
> MIME-Version: 1.0
> Content-Type: text/plain; charset="US-ASCII"
> Content-Transfer-Encoding: 7bit
>
> Greetings colleagues,
>
> The Western Massachusetts Enterprise Fund is
> exploring the creation of a high
> risk capital pool. The high risk capital pool would
> be used to enhance an
> amortized small business loan by providing an
> additional (smaller, about 25%
> of financing) flexible (longer-term interest only),
> uncollaterized loan. Our
> goal is to reach more businesses who face severe
> collateral issues and who
> have potential for high growth. We see this as a
> debt product with near
> equity type risk.
>
> We don't want to recreate the wheel. If anyone has
> anything like this or can
> provide some sage advice, it would be greatly
> appreciated.
>
> Thank you!
>
> Chris Sikes
> Executive Director
> Western Massachusetts Enterprise Fund
>
> ------------------------------
>
> End of COMMUNITYDEVELOPMENTBANKING-L Digest 91
> **********************************************
>
=====
Randall Craig Benston
randallbenston@yahoo.com
954-560-3392
954-360-9519 (FAX)
__________________________________________________
Do You Yahoo!?
Yahoo! - Official partner of 2002 FIFA World Cup
http://fifaworldcup.yahoo.com
This post transferred from the cdb-l mailing list