YBP Microloan Program
After learning that our arrangement with the City of Austin prevented us from taking out conventional loans because of our lack of collateral, YBP kicked off a microloan program to raise the rest of our projected construction costs. We asked supporters of YBP’s mission and who had some cash in the bank to loan it to YBP and literally build community in the form of our new headquarters. The terms were to repay the loan within five years, and give a better deal than you can get from a savings account at the bank with 3% interest. We raised $100,000 through microloans with a five-year term of repayment. Astoundingly, we were able to fully pay back our debts within just over two years after the Webberville shop’s grand opening. Repayment was further expedited by the generous decision many of our microloaners made to waive interest.
This process has placed YBP in what we believe to be a unique position for a community bike shop, and rarified circumstances for community organizations in general. The combination of long-term space security and debt-free books means that the doors are wide open to all kinds of possibilities for enriching and expanding our programming. We hope that our experience can act as a model for others. While we are no longer in need of microloans, we’re leaving our microloan information posted here as a resource for other organizations.
How to Participate
- Do you want to get 3% interest on the cash you loan to Yellow Bike for the construction of their new headquarters to be repaid no later than 5 years?
- Read about the details of the program below and view our sample contract online.
- Are we good for it? Check out our profit and loss statements for 2008 and 2009. What you will find is that we are a lean machine that runs on volunteers, donations, and a passion for empowering people to use bicycles for transportation. In 2008 we turned a net income of 100k and for 2009 to date we have a net income of 30k. At this rate we expect to be able to payback our microlenders in 3 years.
- Can’t wait to participate? Sign-up on our online microlending form to let us know who you are and how much you are willing to lend. A Yellow Bike representative will contact you and arrange the signing of the contract and exchange of payment. To keep our books as simple as possible, we’re limiting these loans to a minimum of $1000.
- Please note that our loan is still under negotiation and that we are finalizing our microlending contracts. Once the lease is signed and our contract is finalized we will contact those who pledged loans to sign and transfer funds. If you are interested but still have questions please sign up using our online microlending form and a Yellow Bike representative will call you. The signup does not obligate you to participate.
We are kicking off a micro loan program to finance the last $93,000 of the total $270,000 of construction costs on our new headquarters facility. Wheatsville, using a similar program, raised over $715,000 from 160 investors for the expansion of their store. The Yellow Bike facility will be built on City land and at the end of the 100 year lease, that we signed into effect on 9/9/2009, the building will be turned over to the City. Conventional bank loans require collateral that is unavailable in this arrangement as the City will own the facility at the end of the lease, thus requiring us to look for alternative borrowing mechanisms.
The microloan program is a win-win arrangement that will benefit both the lender and The Yellow Bike Project. On one hand, most saving accounts right now are earning much less than 3% interest. On the other hand, even if we could get a conventional lender for Yellow Bike, the interest that they would charge is upwards of 8%. This program allows us to give a better interest rate to our lenders than they would get parking their money in a bank account, and we spend less money paying interest on a loan – freeing up more money to fund programs and supplies. This is about communities coming together to create solutions.
If you are interested in participating, you can preview the draft contract online and then sign-up for the microloan program online. A Yellow Bike representative will then contact you and arrange the signing of the contract and exchange of payment. Thanks for considering an investment in Yellow Bike. To keep our books as simple as possible, we’re limiting these loans to a minimum of $1000. If you’d like to help out, but can’t swing a loan at the moment, you can always make a smaller donation here.
To learn more you can read about our new headquarters.