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BRIDGE LOANS
BRIDGE LOANS TO FINANCE START-UP ORGANIZATIONS
COMMUNITY DEVELOPMENT REVOLVING FUNDING ORGANIZATION
CORRESPONDENCE (reverse order)
BRIDGE LOAN FOR COMMUNITY REVOLVING FUND START-UP
October 9, 2008
JASON MILLER CORPORATION
Re: Loans at 3% interest
We are interested in setting up a community-based, revolving loan/equity fund to aid local renewable energy producers to bring their products to market. This equilty fund will be a revolving fund by which those previously funded ventures, which are successful, will aid in funding later arriving ventures to "sprout".
I will be working with the President of the Chamber of Commerce of Linn and Benton Counties, Oregon, to develop this type of funding, which falls into the category of community economic stimulus funding, but with emphasis on energy production. See the accompaning article, HOW TO FINANCE A START-UP BIOFUEL PLANT.
I am a retired attorney with over 40 years of law practice in California and have researched Oregon law for a more convenient type of mico- and mini-funding securities for equites in small community-based businesses. Thus far I have found no suitable type of security. My research has led me to the UK, BC and Aus where such type of security instruments are available. My project for the next year is to draft appropriate proposed legislation and, with the help of the community, lobby it through the legal process.
In order to achieve this goal, the best way is to start a small, revolving local fund, initially as a mico- and mini-loan fund, and then add the mico- and mini equity fund when we are able to sell securities.
Plan A for payback:
Your loan will be paid back by those who wish to (initially) loan funds to the community development entity we will organize, and later purchase securities.
Plan B for payback:
At anytime, we can always comply with the public offering regulations and issue shares (corporation) or certificates of participation (limited partnership). Our approach is to draw funds from the broad base of our citizens in Benton and Linn Counties (not exclusive) in smaller amounts, say between $100 and $1000 per person. One of our models is KIVA which is world-wide and has a very successful record of repayment of mico-loans to entrepreneures in developing countries (97% repayment). See: www.kiva.org
What is needed now is some "bridge financing" so we have some working capital with which to build the community revolving fund, provide for management, and to help create the legislation necessary for community development revolving loan/equity funding of renewable energy businesses. If you can help in this process, please let us know how and on what terms we can do business. Your company's participation would help develop a new source of funding through equity participation in local energy producers.
Best regards,
Jim Miller
ATTACHMENT:
HOW TO FINANCE A START-UP BIOFUEL PLANT
-- And you thought raising start-up capital in ordinary times was tough.
By Jim Miller
The prospect of funding start-up biofuel plants is dim. As to the Federal Government under Bush, grants to companies in swing states or states which his administration want to reward, take precedence. Next comes the technology. There is plenty of money for ethanol plants, but little for biodiesel, mostly based on seed oil. So far as I can tell, no federal money is being spent on algal oil research. There is federal funding of genetic manipulation of algae, most of which will duplicate what has already been researched by NREL from 1975 through 1995. Montana State University received a 5 million dollar grant to study algae which grow in high temperature water, such in pools of hot water in Yellowstone National park, which Prof. Keith Cooksie studied in the 1980's. The algae used for biodiesel shut down if the water temperature reaches 85 degrees F. However Cooksie's research has taken on a new life – algae for its oil. (1)
A Tyson poultry operation in Louisiana animal fat as feedstock for the new biodiesel plant. Financing was a combination of private and State of Louisiana bond funding:
Oregon has a similar fund to support loans to energy companies. My take on it is the Oregon Energy Loan Program is not in any way entrepreneurial, but has standard, hard-nosed banker qualifications and tough loan conditions. If the venture qualifies, a 1:1 equity to debt ratio is required, and must be secured by adequate collateral. So the issue is how to raise equity capital. The prospects in today's capital market are very dim.
There is another approach which has not been tried in the U.S., but is a resounding success in the United Kingdom. Oregon would have to adopt similar security laws which would favor community social investing. The UK system is based on community social investing by local citizens whose funding supports local causes, mostly charity in nature, but also some entrepreneurial ones. There is substantial political support for creating sustainable energy policies. Representative is the report, Toward Sustainable Energy Tariffs, by the U.K. think tank, the National Consumer Council.
In Ireland, a group of farmers and fuel users created a huge network of plants which process giant grass and woody waste mass into pellets for stoves and furnaces. Regional co-operatives of farmers grow Miscanthus giganita, which is an annual crop. This grass grows to fourteen feet high. This project covers all of Ireland and is intended to make Ireland independent of foreign oil, at least as to heating requirements. We can learn from this group, the Green Energy Growers Association, (2) how to finance algal oil production. These pellets could also become the feedstock for syngas and biochar. The South East Region has an implementation plan for sustainable heating.
In Peru, a similar startup has the backing of the Peruvian Government.
Governments of many other nations are heavily involved in supporting basic research, development of pilot plants and full-scale production facilities for biofuels. Since most U.S. state governments are not interested in the equity side, we will have to raise the equity ourselves as “locavores”, use the funding for local biofuel operations on a community-wide basis or a region-wide basis. Hence, we need the State of Oregon to adopt securities legislation which empower local communities to raise local equity capital, using KIVA as a model for fundraising. We are NOT talking about donations to a 501.c.3, but investment grade stocks and bonds which assume the risks of equity ownership, but also offer financial rewards, and more importantly, freedom from the avarice of Big Oil and OPEC.
British Columbia, Ca, also has legislation which permit community social investments in private and public entities.
Here is the steps we need to take:
.
END NOTES
(1)
MSU researcher finds renewed interest in turning algae into fuel
http://www.montana.edu/cpa/news/nwview.php?article=5461
This view was created by staining a green alga
“Cooksey is one of many U.S. scientists who studied the feasibility of turning algal oil into biodiesel in the 1980s. The U.S. Department of Energy, through its Aquatics Species program, funded their research. Cooksey's lab made a number of discoveries. Scientific journals published his findings.
Funding dried up, however, and the scientists went on to other things.
"Rumor had it that big oil got in the way," Cooksey said. "They didn't want competition so the project was dropped."
Cooksey "sort of" retired as a research professor in 2003. He now directs the Department of Defense's EPSCoR program for Montana. A few months ago, however, Cooksey started getting phone calls and e-mails from researchers and others who read about his algal work on the Internet or had seen it referenced in scientific journals. Companies tried to hire him as a consultant. He was invited to attend conferences. He ran into several scientists who had been his friendly competitors in the old days. They all said, "If only."
"It's a very strange feeling," said Cooksey, now 72. "You don't usually have people bending your ear on what you did 20 years ago. Science doesn't work that way, but in this case, it did."
The revived interest in microalgae stems from the conflict in the Middle East and the resulting focus on alternative fuels, Cooksey said.
"Our lab was one of three or four in the world doing research that nobody was really interested in," Cooksey said. "Now, suddenly lots of people are interested in it."
Still interested in pursuing algal fuel, Cooksey said his lab in the 1980s figured out how to increase oil production from algae. It developed a system that screened algae for their oil content and greatly reduced the sample size needed for their research. It developed a stain for algae, called Nile Red. When treated with the stain, the algae became fluorescent under certain conditions, making it easier to measure their oil content.”
(2) Green Energy Growers Association
“Over the last 5 years there has been a corresponding increase in investment across Europe in renewable technologies such as wind, hydro and solar. These renewable sources of power are extremely important for Ireland’s fuel security, they are however only part of the broader portfolio that must be addressed.
Bio-Energy
In simplest terms – Bio-Energy is energy derived from the processing of agricultural crops, and wastes into carbon neutral finished fuels as a replacement for existing fossil-based fuels.
Risk Analysis – Bio-Energy’s biggest challenge
One of the key challenges that has historically faced the bio-energy sector is that of risk analysis for investment purposes. In the past it has been an extremely valid concern when consideration is given to the many elements affecting bio-energy development: climate, crop suitability, yield, existing infrastructure, landbase, competition from other land uses, tradition, input and labour costs, geographical considerations, subsidies, EU regulations, viability of processed fuels, demand.
The GEGA National Framework
The GEGA National Framework addresses all of the issues affecting bio-energy and provides a solid foundation for investment in the sector.” GEGA – Sector – Industry
COMMUNITY DEVELOPMENT REVOLVING FUNDING ORGANIZATION
CORRESPONDENCE (reverse order)
BRIDGE LOAN FOR COMMUNITY REVOLVING FUND START-UP
October 9, 2008
JASON MILLER CORPORATION
Re: Loans at 3% interest
We are interested in setting up a community-based, revolving loan/equity fund to aid local renewable energy producers to bring their products to market. This equilty fund will be a revolving fund by which those previously funded ventures, which are successful, will aid in funding later arriving ventures to "sprout".
I will be working with the President of the Chamber of Commerce of Linn and Benton Counties, Oregon, to develop this type of funding, which falls into the category of community economic stimulus funding, but with emphasis on energy production. See the accompaning article, HOW TO FINANCE A START-UP BIOFUEL PLANT.
I am a retired attorney with over 40 years of law practice in California and have researched Oregon law for a more convenient type of mico- and mini-funding securities for equites in small community-based businesses. Thus far I have found no suitable type of security. My research has led me to the UK, BC and Aus where such type of security instruments are available. My project for the next year is to draft appropriate proposed legislation and, with the help of the community, lobby it through the legal process.
In order to achieve this goal, the best way is to start a small, revolving local fund, initially as a mico- and mini-loan fund, and then add the mico- and mini equity fund when we are able to sell securities.
Plan A for payback:
Your loan will be paid back by those who wish to (initially) loan funds to the community development entity we will organize, and later purchase securities.
Plan B for payback:
At anytime, we can always comply with the public offering regulations and issue shares (corporation) or certificates of participation (limited partnership). Our approach is to draw funds from the broad base of our citizens in Benton and Linn Counties (not exclusive) in smaller amounts, say between $100 and $1000 per person. One of our models is KIVA which is world-wide and has a very successful record of repayment of mico-loans to entrepreneures in developing countries (97% repayment). See: www.kiva.org
What is needed now is some "bridge financing" so we have some working capital with which to build the community revolving fund, provide for management, and to help create the legislation necessary for community development revolving loan/equity funding of renewable energy businesses. If you can help in this process, please let us know how and on what terms we can do business. Your company's participation would help develop a new source of funding through equity participation in local energy producers.
Best regards,
Jim Miller
ATTACHMENT:
HOW TO FINANCE A START-UP BIOFUEL PLANT
-- And you thought raising start-up capital in ordinary times was tough.
By Jim Miller
The prospect of funding start-up biofuel plants is dim. As to the Federal Government under Bush, grants to companies in swing states or states which his administration want to reward, take precedence. Next comes the technology. There is plenty of money for ethanol plants, but little for biodiesel, mostly based on seed oil. So far as I can tell, no federal money is being spent on algal oil research. There is federal funding of genetic manipulation of algae, most of which will duplicate what has already been researched by NREL from 1975 through 1995. Montana State University received a 5 million dollar grant to study algae which grow in high temperature water, such in pools of hot water in Yellowstone National park, which Prof. Keith Cooksie studied in the 1980's. The algae used for biodiesel shut down if the water temperature reaches 85 degrees F. However Cooksie's research has taken on a new life – algae for its oil. (1)
A Tyson poultry operation in Louisiana animal fat as feedstock for the new biodiesel plant. Financing was a combination of private and State of Louisiana bond funding:
“The projected cost of the new plant is $138 million. Capital funding is expected to include $100 million in Gulf Opportunity Zone Bonds previously approved by the Louisiana State Bond Commission. The balance of $38 million is being funded through equity contributions in the form of cash commitments in equal proportions from Tyson and Syntroleum.” http://www.biobasednews.com/node/18448
Oregon has a similar fund to support loans to energy companies. My take on it is the Oregon Energy Loan Program is not in any way entrepreneurial, but has standard, hard-nosed banker qualifications and tough loan conditions. If the venture qualifies, a 1:1 equity to debt ratio is required, and must be secured by adequate collateral. So the issue is how to raise equity capital. The prospects in today's capital market are very dim.
There is another approach which has not been tried in the U.S., but is a resounding success in the United Kingdom. Oregon would have to adopt similar security laws which would favor community social investing. The UK system is based on community social investing by local citizens whose funding supports local causes, mostly charity in nature, but also some entrepreneurial ones. There is substantial political support for creating sustainable energy policies. Representative is the report, Toward Sustainable Energy Tariffs, by the U.K. think tank, the National Consumer Council.
In Ireland, a group of farmers and fuel users created a huge network of plants which process giant grass and woody waste mass into pellets for stoves and furnaces. Regional co-operatives of farmers grow Miscanthus giganita, which is an annual crop. This grass grows to fourteen feet high. This project covers all of Ireland and is intended to make Ireland independent of foreign oil, at least as to heating requirements. We can learn from this group, the Green Energy Growers Association, (2) how to finance algal oil production. These pellets could also become the feedstock for syngas and biochar. The South East Region has an implementation plan for sustainable heating.
In Peru, a similar startup has the backing of the Peruvian Government.
“SamoaFiber Holdings (SFH) is obtaining the needed Peruvian governmental approvals to further its bio-oil operations in Eastern Peru, which entail using the cana brava, an indigenous plant, that would both provide much needed electrical energy and support the country's economy.According to Dr. Alan Garcia Perez, whom Vasquez said was interested in building a bio-oil production plant in Loreto, "the cana brava plant (SamoaFiber) can turn 80 percent of its biomass into bio-oil, a product that will be exported bringing revenue to the country.”
SamoaFiber to Produce Bio-Oil in Peruvian Amazon Region
http://www.renewableenergyworld.com/rea/news/story?id=47168
Governments of many other nations are heavily involved in supporting basic research, development of pilot plants and full-scale production facilities for biofuels. Since most U.S. state governments are not interested in the equity side, we will have to raise the equity ourselves as “locavores”, use the funding for local biofuel operations on a community-wide basis or a region-wide basis. Hence, we need the State of Oregon to adopt securities legislation which empower local communities to raise local equity capital, using KIVA as a model for fundraising. We are NOT talking about donations to a 501.c.3, but investment grade stocks and bonds which assume the risks of equity ownership, but also offer financial rewards, and more importantly, freedom from the avarice of Big Oil and OPEC.
British Columbia, Ca, also has legislation which permit community social investments in private and public entities.
Here is the steps we need to take:
.
- Form a committee to study micro-equity, community social investment laws and drive the “best fit” for a new Oregon securities law which permit micro-investing for community NPO's and private, startup biofuel companies. My background of 40 years of law practice, with corporate and securities law experience qualifies me as the chair and principal drafter of the new legislation. Micro finance projects can be found on the American Express website. A good example is the New Hampshire Community Loan Fund.
- Engage a qualified corporation law and securities law attorney, who is a member of the Oregon State Bar, to oversee the compliance with State and SEC regulations.
- Engage a qualified CPA who is also and IT expert to assess the needs for accounting practices which allow for unqualified audit opinions and comply with Generally Accepted Accounting Practices applied on a consistent basis. Our model will likely be that of KIVA's micro-loan program. [www.kiva.org ]
- Vet the draft proposed legislation with the Oregon State Bar's Environmental Law and Policy Section, seek comments and political support for the legislation.
- Engage community groups, companies, institutions in support of the legislation. Gathering support will also insure an audience of potential investors, when we have a securities offering to make.
- Engage Oregon legislative representatives in sponsoring the companion bills in the Oregon House and Senate, who will steer the bills to passage.
- Lobby the Administration and the Legislature. Use online solicitation of support. A good example is The Online Fundraising Blog.
- Solicit business ventures which are community based and which offer renewable, sustainable energy sources which are environmentally renewable, sustainble energy sources which are environmentally competent, especially those with small carbon footprints.
- Vet the business and help the promoters develop business plans.
- Draft and have securities counsel and our CPA review and approve the disclosure documents and subscription agreement.
- Complete the necessary filings with the security regulators, which then become effective.
- Setup the accounting software and staff the IT operation. FundAdmin will handle all of the legal, accounting and outreach on behalf of many ventures, similar to KIVA.org.
- Use online network to solicit funds in small increments, using PayPal as one of the funding conduits. Generate the funds for both the pool and the specific ventures, from a menu. Assign one or more “mentors” of the FundAdmin, to monitor each venture.
- Monitor the cash flow, production, sales, and venture administration to make sure the system works and the investors and not ripped-off. Report results on the FundAdmin website. Make sure all records are filed and taxes paid in a timely manner.
- The FundAdmin should charge for its services to cover expenses plus a 100% mark-up which goes into a revolving equity/loan fund, which can be used as cash flow for pre-startup needs for ventures, such as product testing. Another use of the funds would be to commission studies and pilot plants involving renewable energy.
END NOTES
(1)
MSU researcher finds renewed interest in turning algae into fuel
http://www.montana.edu/cpa/news/nwview.php?article=5461
This view was created by staining a green alga
with Nile Red. The yellow areas represent oil
droplets. The red areas are the parts of the cell
that hold chlorophyll. (Photo courtesy of
Keith Cooksey).
“Cooksey is one of many U.S. scientists who studied the feasibility of turning algal oil into biodiesel in the 1980s. The U.S. Department of Energy, through its Aquatics Species program, funded their research. Cooksey's lab made a number of discoveries. Scientific journals published his findings.
Funding dried up, however, and the scientists went on to other things.
"Rumor had it that big oil got in the way," Cooksey said. "They didn't want competition so the project was dropped."
Cooksey "sort of" retired as a research professor in 2003. He now directs the Department of Defense's EPSCoR program for Montana. A few months ago, however, Cooksey started getting phone calls and e-mails from researchers and others who read about his algal work on the Internet or had seen it referenced in scientific journals. Companies tried to hire him as a consultant. He was invited to attend conferences. He ran into several scientists who had been his friendly competitors in the old days. They all said, "If only."
"It's a very strange feeling," said Cooksey, now 72. "You don't usually have people bending your ear on what you did 20 years ago. Science doesn't work that way, but in this case, it did."
The revived interest in microalgae stems from the conflict in the Middle East and the resulting focus on alternative fuels, Cooksey said.
"Our lab was one of three or four in the world doing research that nobody was really interested in," Cooksey said. "Now, suddenly lots of people are interested in it."
Still interested in pursuing algal fuel, Cooksey said his lab in the 1980s figured out how to increase oil production from algae. It developed a system that screened algae for their oil content and greatly reduced the sample size needed for their research. It developed a stain for algae, called Nile Red. When treated with the stain, the algae became fluorescent under certain conditions, making it easier to measure their oil content.”
(2) Green Energy Growers Association
“Over the last 5 years there has been a corresponding increase in investment across Europe in renewable technologies such as wind, hydro and solar. These renewable sources of power are extremely important for Ireland’s fuel security, they are however only part of the broader portfolio that must be addressed.
Bio-Energy
In simplest terms – Bio-Energy is energy derived from the processing of agricultural crops, and wastes into carbon neutral finished fuels as a replacement for existing fossil-based fuels.
Risk Analysis – Bio-Energy’s biggest challenge
One of the key challenges that has historically faced the bio-energy sector is that of risk analysis for investment purposes. In the past it has been an extremely valid concern when consideration is given to the many elements affecting bio-energy development: climate, crop suitability, yield, existing infrastructure, landbase, competition from other land uses, tradition, input and labour costs, geographical considerations, subsidies, EU regulations, viability of processed fuels, demand.
The GEGA National Framework
The GEGA National Framework addresses all of the issues affecting bio-energy and provides a solid foundation for investment in the sector.” GEGA – Sector – Industry
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