* How much money are you hoping to raise through Community Lenders?
Based on our experience opening the first store, the advantages of having an existing store, and the current financial climate, Rebecca and Jessica estimate we'll need about $200,000 to start up a first-class bookstore on Flatbush. Some of this may come from institutional loans or lines of credit, so we're hoping to raise some percentage of the amount with community lender loans.
* Why don't you just use Kickstarter or IndieGoGo?
While many bookstores and other institutions we respect have used these fundraising tools, they are donation models, not lender models. We don't want you to give us money (we're not a nonprofit); we want to repay your loan as a viable business.
* What do you mean by "investing in the community"?
While we expect to give our lenders a good return on their investment, making money isn't the only benefit to becoming a Community Lender. Lenders can also feel satisfied that they have a part in bringing something good and tangible to the neighborhood of Prospect Lefferts Gardens. An independent bookstore is a community gathering place, a resource for readers and writers of all kinds, a place to encounter literature and ideas as well as conversations with neighbors. And it's a benefit to the local economy:
that independent businesses recirculate 3 to 4 times as much revenue into the local economy as national chains.
* Why is there a minimum loan amount?
Because we're a small operation, administering many, many small loans would become a burden in terms of staff time and resources. Having a minimum loan of $1000 means that we're dealing with a smaller number of somewhat larger loans. Interested lenders are welcome to pool their resources and share the interest profits, though there must be a single person/entity to sign the loan documents.
* Why is there a range for the interest rate?
The maximum and minimum rates for the loan reflect the Applicable Federal Rate (AFR) - the minimum interest rate for a legal loan - and the prime rate. The interest rates offered range from 2.5% (just above the current AFR) to 4% (just above the current prime). This allows each lender to choose if they'd like to make a loan that is more philanthropic (less interest for Greenlight to repay) or geared toward a larger return on investment.
* Why do repayments start after a year?
The first year is typically the most challenging one for any business, especially retail: there are many expenses, and the business is still growing its customer base. Building in a year's grace period gives the new bookstore a chance to get on its feet before loan payments kick in, and gives it the best chance of success.
* How does the discount work?
Once you become a Community Lender, we set you up in our computer system with a hard-coded 30% discount (you'll also get an access code to get your discount for online orders.) It's the same discount our employees get: as a Community Lender, you're part of the team.
* Can I see a business plan for the new store?
Yes! Our business plan for the new location will be finalized later this month; we're happy to share it by request.