How can you build efficient Urban communities, homes, and businesses?

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Business Financing

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What if a bank/investor could be enticed into working in low-income areas with some sort of standard loan/investment. I'm thinking of a loan/investment that would have no collateral (low-income people don't have much, if anything, to give in collateral anyways), but would increase the potential. Just throwing numbers out as an example so don't get too attached to them, imagine an investment loan to a low-income individual to allow them to start a business where the individual collects the first $30,000 of profit but only collects 10% of any profit over that. So, if the individual can get their business to $1M/year profit, for instance, they would collect $30,000 + $97,000 (10% of $970,000) for a total of $127,000/year. The investor would make $873,000/year (90% of $970,000). Now if the company only made $40,000/year, the individual would collect $30,000 + $1,000 (10% of $10,000) for $31,000/year while the investor would make $9,000/year (90% of $10,000). And if the business only profited $15,000/year, the individual would get all $15,000 and the investor would get $0.

Like I said, don't get too caught up in the numbers, pay more attention to what I'm trying to accomplish with the structure. Low-income people cannot get loans because they have no collateral and little income. This creates extra risk for the investor. To lower that risk would often be expensive, but to raise the potential for the investor costs nothing. Unfortunately, that means the low-income individual's (the one with the great idea) potential earnings goes way down, but many of these people would gladly accept lower potential max earnings for the opportunity.

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