Profession of Business Lender Act,
and Entrepreneurs' Credit Union
Climate Migrants will Need Professional Business Lending
The consensus among many university graduate students, who have capability to search for first-hand climate research, and time to read and debate its merit, is that it is realistically now too late to expect governments to agree to prevent run-away climate warming that will result in coastal cities flooding, crops in the lower latitudes failing due to heat/drought, and a half billion hungry migrants soon moving as far north as they perceive food growing to be possible.
All Canadian federal political leaders and premiers also acknowledge the seriousness. Recently I was near a conversation with Peter Kent, Conservative MP and former news journalist, who said that it is now too late to prevent climate change and we need to focus on adaptation. I think both prevention and adaptation need to have our focus.
Weird things could happen, for example the Saudi prince might realize it will be too hot for camels outdoors at his oasis, grow up, and lead the US president and billionaires to convert the petroleum industry to 100% durable plastics products instead of just wasting it by burning it, make chemicals to add to the ocean to correct acidification, and incentivize agriculture to change from intermittent living roots mono-cropping agronomy to continuous living roots agronomy to maximize sequestration of atmospheric carbon dioxide. Or the Yellowstone mega-volcano might erupt to cool down the planet. More likely is Gwynne Dyer's prediction that a rogue country will unilaterally add sulfur to jet fuel to make our air nasty in an effort to reflect the sun's radiation with erratic unpredictability and possibly frost occurring here in July.
We certainly need to prepare for an uncontrollable entry of a million climate migrant families per month. They will be broke, hungry, yet energetic. But our financial industry currently lacks the mature professionalism essential for our economy to enable refugees to create productive enterprises to sustain themselves. Without reform of all business lending, and replacement of most of its old leadership, to better serve immigrants and all of us, only anarchy can be predicted.
Climate refugees will need agile working
capital to create enterprises, or anarchistic
invasion/conquest/Syria shall result.
"Profession of Business Lender Act"
Please convince the secret tribes' candidates,
or by Mon noon dare to run as Independent.
The Profession of Business Lender Act - new
Code of Ethics.
Obligation to serve all clients for the client's best interest and in the interest of the public.
All lending to business must be under the direction of a Professional Lender bound by the Act.
Prohibition from working as a lender would be the penalty for malpractice.
(This empowers professional lenders to resist unethical directives from management.)
Small Business Lending Practices Act - new
Prohibition against spousal guarantee requirements if a business loan is secured by real estate having an assessed value exceeding loan by 50%.
Distinct real estate properties are to always have distinct mortgages, not bundled, to enable borrower to forfeit some property at borrower's discretion.
Option for the borrower to extend time for principal repayment, if >200% secured by non-depreciating real estate (the underlying bare land, such as farmland or residential lot), for principal amounts up to $1 million, paying only interest at floating market rates, until cessation of active business up to age 75, with full repayment then occurring from the first proceeds of sale of land.
Option for the borrower to reschedule principal repayments to occur upon receipt of sales revenue, at a minimum of 5% of sales, if the loan is secured by real estate. A cost-based service fee would enable this change of terms, and the interest rate would change to variable at market rates.
Chartered banks must offer lending to all applicants without discrimination, including without discrimination against small loan size (by implementing a flat service charge per document equally applying to customers of all loan sizes). Character traits, other than fraudulence, cannot be used to discriminate and deny lending up to $100,000 if the loan security is >200% in the form of non-depreciating real estate.
Credit Union Act, and Manitoba Agricultural Services Corp Act - amendment
President and Vice Presidents are to be elected by all long-term professional-level employees, with all of them as eligible candidates, via confidential preference-ranked ballot.
This will reduce of risk of bullies and psychopaths attaining powerful control over the lives of business persons, via non-democratic rise to authority positions. Currently, newly elected or appointed directors cannot possibly fully learn the true character of existing executives due to only brief meeting encounters, whereas other staff within a financial institution know their peers well.
Just as all have a right to life, so all should have a right to a livelihood to enable life.
Whenever businesses and public sector fail to offer enough employment opportunities, then individuals must resort to creating their own livelihoods.
The creation of every new livelihood requires capital to acquire the essential tools for the livelihood. Thus all should have the right of opportunity to rent the use of capital (pay interest for a loan) to create a livelihood.
I would like to work with the Minister of Finance to create “Entrepreneurs’ Credit Union of Manitoba”, to reduce poverty by enabling opportunity for many persons to create their own livelihoods.
By: Grant Rigby March 16, 2016
Entrepreneurs’ Credit Union of Manitoba
ECU would only provide government guaranteed business fund investments, and secured business loans with accounting, to members. No other services.
Members must be individuals who are Canadian citizens and Manitoba residents. Each member who has a minimum $1000 loan or investment with ECU, gets one vote.
Investments into the ECU business fund are guaranteed by Manitoba government, and secured to Manitoba government with real estate.
Investments are paid back out of the fund, with accrued interest, when loans to borrowers are repaid into the fund. The oldest investments are paid out first, and all investments paid out within 10 years.
Investors may resell their investments earlier to other members via an internal ECU market.
Loan funds are dispersed to borrowers via certified cheques for genuine business capital purchases and operating expenses. Payments from the loan for employee wages must follow local wages, and payments to the borrower must not exceed the minimum wage rate until the business is profitable.
Loans are repaid when profitability is achieved, at a fixed rate such as 25% of annual net profit. The borrower’s business transaction accounts are to be maintained at another credit union, and statement copies sent directly to ECU each month to enable ECU to provide accounting services for the borrower, determining profitability and thus amount of loan repayment, plus gst, pst, and income tax reports.
The investors’ and borrowers’ interest rates are determined via an ECU internal open market for capital, which receives offers of interest rate by individuals proposing to deposit into the fund, and offers of interest rate by individuals proposing to borrow from the fund. ECU’s internal marketplace for determining the interest rate for capital, shall thus function to attract competitive investment offers and borrowing offers, and then ration the lowest rate offers from investors to the highest rate offers from borrowers. This enables potential borrowers to offer interest rates as high as may be necessary to attract investors into the fund.
All interest rates are quoted as a fixed premium to the overnight Bank of Canada rate and vary daily with it, but cannot exceed a 10% rate premium above the B of C rate.
Discrimination amongst borrowers by ECU on any basis other than integrity pertaining to the business, is prohibited. Neither credit scores nor past business records are to be considered. No spousal guarantee.
The maximum loan cannot exceed the average investment cost in Manitoba for the creation of each full-time, median earnings level livelihood, if that data is known, otherwise a maximum such as $100,000.
If interest rate offers from borrowers are equal, then the smallest loan request will be funded first.
To enable wide participation, the smallest investment offer will be accepted first if interest rate offers are equivalent. Individual investors are limited to a maximum of 10% of the total fund.
As security for each loan, a joint title ownership interest in real estate must be registered to Manitoba government, until the loan with interest is repaid. The borrower need not be the owner of the real estate provided as security (example: an older friend or charitable agency). The real estate could range from the underlying property value of an old city house to farmland. Government as loan guarantor determines its value as potentially long term security. In the case of the loan not being fully repaid within 10 years, then government would purchase from ECU the residual owing to enable investors to be repaid, with government recovering its cost plus accruing interest later from the proceeds of the first voluntary sale of the real estate or its sale upon its owner’s death. The borrower would not be forgiven, however, and must continue to repay the loan at 25% of net business profits until paid off or the real estate is sold, however the interest rate premium over the Bank of Canada rate might be lowered to satisfy the Manitoba government’s requirement.
Banks abandoned lending to Entrepreneurs and Small Farms
In 1994, at least one major chartered bank changed the terms of its loans to existing small business customers. It ceased to value finished goods inventory as collateral for loans. Additional new security was demanded of many small firms across Canada and their operating loans required to be paid down, preventing their growth and destroying their credit record as non-compliant, whereas they had been in compliance prior to the bank changing its terms. Only businesses which could show past profitability would be accepted for new loans, which meant that start-up businesses that did not have immediate profitability plus real estate for mortgage security, would no longer be served. Local loans officers were essentially demoted to the role of data entry clerks into computer decision protocols, preventing their independent judgement of proposals from small business. Entrepreneurial business focused on developing new processes and products were thus shunned because profits would not be immediate. Until the mid 1990’s Canada and US had been equivalent in rate of productivity growth, but Canada fell behind the US in productivity growth following our banks ceasing to lend to energetic entrepreneurial small business in Canada.
The local loans representatives were also required to generate $4000 - 6000 revenue from interest each week, or be dismissed, and thus incentivized to discontinue loans to small borrowers and increase loans to large borrowers to achieve paper work efficiency. Small loans became desk clutter.
Small borrowing farmers and fishermen were then further discriminated against. The chartered bank continued to accept their annual income tax reports of cash basis expenses and income, together with proper accrual adjustments for opening and ending inventory, receivables and payables to achieve accrued accounting accuracy. But if their bank debt was less than $100,000, they were classified as small businesses, not farmers, and their reports were redirected to the bank’s computer for small business analysis. But small businesses must report already-accrued statements to Revenue Canada for income tax, whereas farmers and fishermen are allowed to report not-accrued cash statements of only cash income and cash expenses. The small business analysis program thus had no spots to enter opening and ending inventories, receivables and payables, so that data from small debt farmers and fishermen was discarded by the bank prior to assessment. The bank thus did not follow standard accounting practices in its review of farmer and fisher annual reports, and thus calculated false results every year. Whenever a farm incurred more cash expenses in a calendar year than cash receipts due to the timing of sales, then the bank’s computer falsely calculated a loss, despite whether using proper accrual adjustments would have concluded a truthful profit. Local loans representatives were then instructed to not renew loans to small debt farmers for whom the computer had wrongly calculated a loss.
That is how the bank succeeded in discontinuing operating credit and equipment loans service for many small farms and consolidated its loans to mostly large debt operations in the farming sector. Equipment manufacturers could no longer sell efficient small machines so switched to complex large machines only. Small farms that could not access adequate operating or equipment loans were unable to produce high crop yields, became uncompetitive and many forced to give up. That is how the Canadian Prairies was emptied of small farms, land consolidated into large farm corporations and small towns harmed during the last two decades.
Written by Grant Rigby, copyright March 16, 2016