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Revolving Funds

November 20, 2016

I have referred to the concept of a "revolving fund" in my Society Pages especially in reference to developing a housing project for low-income people... and in the creating of small businesses. At the time that I put those ideas together I thought of such a fund in terms of a government funded project. Now, I realize that it ideally should be funded by investors.

One of my ideas was to create small restaurants in office buildings... even apartment buildings... determined by potential customers. For every 100 residents or workers, there would be an available cafe that would offer healthy breakfasts, lunches, and snacks. Each shop might best be a partnership. The concept was to provide a livable income for the shop owners, and provide a needed service.

One of the impacts of such an idea is that corporate restaurants like McDonalds, which sells stock to investors, would see their stock diminish in earnings. It could even put those unhealthy food providers out of business. People would choose good food at competitive prices... and begin to see hamburger joints as less desirable. And so... it occurred to me that the revolving fund should be an investor funded project... perhaps even with a guaranteed and static earning rate.

With a static earning rate, there is no incentive to force businesses to reduce quality in order to fulfill a mandate of profitability. A static earning rate is consistent with a person's savings account in a bank... predictable and dependable and safe. A bank would normally invest those monies in corporations and Wall Street businesses... and in risky and complicated ventures... whether a bank depositor might agree with such investments or not. With a fund that is designated solely to the purpose of loaning money to small businesses... control goes back to the depositor.

A template would have to be shaped that set standards for the operation of such funds... with such limitations as established salaries for Fund Managers... with guidelines for the franchises over which the fund resides. For instance, with a restaurant revolving fund... potential franchisees would have to fulfill a quick study management course and food handling course. There would be consultants that owners could contact for help. In other words, the template would ensure that the participants do not threaten the solidity of the fund.

A revolving fund would be given parameters that protected all who are involved in it. It would not be a wild cowboy operation... profit for the sake of profit. It would be organized with the intent of giving small businesses a chance to work out their kinks... perfect their own ideas... but... overseen by the fund managers to prevent default.

As the fund would essentially be a fiduciary it might also be overseen by regulatory agencies to protect all involved... and perhaps even have those funds guaranteed... although there would be little risk involved as the loans would be so diffuse across the fund. A failure would be salvaged quickly and recovery could be inconsequential to the whole of the fund.

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