|Re: Financing||<– Date –> <– Thread –>|
|From: Buzz Burrell (buzzdiac.com)|
|Date: Thu, 21 May 1998 08:52:53 -0500|
A number of good points have been made regarding raising the money for Site Aquisition, Purchase and maybe Development. Establishing the terms of the financing at the time the money is put in is certainly a key attribute, no matter what method one uses. Probably the easiest method is to raise money by the Members making loans to the group. Advantages: 1. The terms of the financing will be in a Promissary Note, which is quite clear and non-debatable. 2. Unlike partially pre-paying for one's house, the Capital Accounts are easier to equalize when one has made a loan to the company. 3. As the project moves from high risk to lower risk, the interest paid on each loan can be reduced. 4. If there is difficulty raising money early on, setting a high interest rate will loosen some pockets. 5. People with more money can fund more of the community in a fair and balanced way. 6. If an early Member leaves, they will still be paid back their investment, which is also fair. (Note - Membership Fees are different than loans, and are usually not refundable). Also note that if the project fails, the loans will not be paid back. For that reason and more, it is important to have formed a legal entity befor doing any of the above. Buzz Burrell * * * Geneva Community 176 acres on the Little Thompson River 4439 Driftwood Pl Boulder, CO 80301 303.581.9875
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