CNote

CNote sells its own 30-month notes from $1 (the Flagship Fund, a Regulation A offering at 4%) and lends the money, unsecured, to 39 community development loan funds. Every annual and semiannual report since lending began in 2017 shows no charge-off, no late loan and no loan on nonaccrual. The notes are general obligations of a company whose disclosed cushion of equity and loss allowance is about 1.3% of its assets and which has lost money every year since 2016. Its lending produces a positive spread overall, because other notes cost less than the 4% Flagship coupon, but not enough to cover its operating costs, and the circular lets it reject or limit the quarterly withdrawals its site describes.