CNote Review 2026: What Backs the Flagship Fund's 4% Notes, and How You Get Your Money Back
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.
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What the data actually shows - TL;DR
CNote is an impact-investing company that borrows from investors and lends to community development financial institutions (CDFIs). Three questions frame the Flagship Fund, the part anyone can buy.
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What you hold: a 30-month note of CNote Group, Inc. paying 4%, with nothing due until maturity. It is an unsecured general obligation of CNote. Accredited investors' Regulation D notes are different: they are repaid only from the loans they fund, and the two kinds of notes share loan repayments in proportion.
What backs it: unsecured, uninsured loans to 39 CDFI loan funds at 1.5% to 4.8%, with no charge-off or late payment in nine years of filings, and behind that a company with $820,122 of equity against $71.1 million of assets at the end of 2025. The company's own risk factor puts its loss allowance and equity at 'only approximately 1.3%' of assets; losses on loans funded by the payment-dependent Regulation D notes pass to those holders, so the cushion matters most for the loans CNote carries on its own account. CNote has lost money every year since it was founded: its lending earns a positive spread, but not enough to cover its costs.
How you get out: at maturity. CNote currently offers quarterly withdrawals, but the notes give only a right to request up to 10% of principal on 30 days' notice, which 'The Company may reject or limit ... depending on available funds'. CNote can also repay the notes early whenever it chooses.
CNote's disclosed cushion at December 31, 2025, in its own risk factor: a $106,455 loss allowance and $820,122 of equity against $71,135,165 of assets. The allowance is an accounting estimate, not a separate cash reserve, and it covers only the loans CNote carries on its own account (about $10.6 million); losses on loans funded by payment-dependent Regulation D notes pass to those holders. CNote warns that larger losses could leave it unable to repay noteholders in full.
Loan charge-offs reported in every annual and semiannual report since CNote began lending in 2017; all loans 'contractually current' at December 31, 2025. In 2025 borrowers repaid $18.6 million of loans and $9.7 million of matured principal and interest was renewed at then-prevailing rates; the company says it 'has yet to endure a major adverse phase in the credit cycle'.
CNote's net interest income in 2025, before its loss provision: lending earns a positive spread overall because notes cost about 2.35% on average (accredited and institutional notes pay less than the 4% Flagship coupon) against about 3.5% earned on loans (AltStreet arithmetic). The spread does not cover $3.8 million of operating costs.
The most a holder can ask to withdraw each quarter, on 30 days' notice, and the company 'may reject or limit such requests depending on available funds'. The site describes current practice as quarterly access of '$20,000 or 10% ..., whichever is greater', under 'management discretion'; that is more than the notes entitle a holder to.
CDFI loan funds borrowing at December 31, 2025, across 519 loans of $42,000 to $2,750,000 at 1.5% to 4.8%. CNote has lent $168 million to 48 borrowers since inception. No filing names the borrowers or gives a largest-borrower share.
CNote's net loss in 2025, its tenth consecutive loss year; the accumulated deficit was $15.5 million. The first half of 2026 was near break-even (a $106,141 loss, unaudited). Service fees, mainly from Impact Cash, its deposit-placement service, were $1.54 million in 2025: more than net interest income, less than gross interest income.
Company figures are from CNote Group's audited 1-K reports and unaudited 1-SA reports, in dollars as filed. Average loan yield and note cost are AltStreet arithmetic: interest income or expense divided by the average of opening and closing balances. The Regulation A notes outstanding (roughly $6 million to $9 million through early 2026) come from the cover data of the Form 1-A filings; the annual reports do not state them. Site statements are quoted as captured on October 31, 2026.
Quick Verdict
Is this platform right for you?
CNote's loan book has a clean record: every filing for nine years shows the loans current and no loss, no filing reports a missed payment on the notes, and the circular is candid about the risks. What a Flagship investor lends to, though, is CNote itself, a company with equity of about 1% of its assets that has lost money every year because its positive lending spread does not cover its costs, and whose notes give only a right to request early withdrawals. The site describes the notes and their liquidity more favorably than the circular does.
Best for
- Investors who want their savings lent to community lenders, can leave the money for 30 months, and accept the issuer's thin capital.
Avoid if
- You may need the money before maturity.
- You want a secured, insured or guaranteed product.
- You would rely on the site's description of liquidity rather than the circular's.
Top strengths
- No loan charge-off, late payment or nonaccrual in nine years of audited filings, across 39 borrowers.
- $1 minimum, no fees and no commissions.
- An offering circular that states the 1.3% cushion, the unsecured loans and the untested credit cycle plainly.
Key limitations
- Unsecured general obligations of a company with $820,122 of equity and a loss every year since 2016.
- Quarterly withdrawals are requests CNote may reject or limit; CNote can call the notes.
- The lending spread does not cover operating costs; the company relies on fee revenue, grants and outside equity.
- No borrower names or concentration data, and a site that calls the Flagship notes non-recourse and presents current liquidity practice as a minimum.
Compare Before Deciding
Where CNote fits against alternatives
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Quick Answers
What most investors want to know first
The highest-signal facts first: minimums, liquidity reality, K-1 timing, and whether distributions are actually part of the experience.
Liquidity
No market; transfers need CNote's written consent, which it may withhold.
K-1 Timing
Not applicable; Form 1099-INT.
Distributions
30 months after issue, or with a granted quarterly withdrawal.
Overview
Platform Overview
A concise read on what the platform is, how the structure works, and where the practical friction shows up for real investors.
CNote Group, Inc. is a Delaware public benefit corporation founded in 2016 by Catherine Berman (CEO) and Yuliya Tarasava (COO), based in Oakland, California. It raises money by selling its own promissory notes and lends the proceeds to community finance organizations, which in practice are CDFI loan funds. The Flagship Fund is the note product for everyone: Regulation A Tier 2 notes for non-accredited investors (limited to 10% of income or net worth) and a Regulation D private placement for accredited investors.
The Wisdom Fund (60-month notes, $100,000 minimum) and ImpactFlex (theme-directed notes, $100,000 or $1,000,000 minimum) are for accredited investors. Separately, Impact Cash places corporate, foundation and wealthy individual deposits in insured accounts at community banks and credit unions through Northern Trust as custodian, for a fee. CNote itself is not a certified CDFI, not a registered investment adviser and not a broker-dealer; it sells the notes directly with no commissions.
It has since filed four offering statements, each for up to about $50 million of notes. Assets grew to $110.1 million in 2021, when part of the deposit business still sat on its balance sheet, and were $71.1 million at the end of 2025 and $80.5 million at June 30, 2026. Impact Cash, launched as the Promise Account, moved deposits off the balance sheet into insured accounts at partner institutions and now produces most of CNote's fee revenue.
CNote raised a $7.25 million Series A in 2022 led by the American Family Insurance Institute and reopened it for $1.08 million in February 2025. It has had about 11 employees since 2025.
What you buy
A $1.00 note of CNote Group, Inc. at 4% for 30 months (Flagship Fund, Regulation A); principal and interest due at maturity; unsecured, not guaranteed; transfer only with CNote's consent.
Who can buy
Anyone from $1, with non-accredited investors limited to 10% of the greater of income or net worth; accredited investors buy Regulation D notes, and the Wisdom Fund and ImpactFlex at $100,000 or more.
What backs it
Unsecured, uninsured loans to 39 CDFI loan funds (519 loans, $42,000 to $2,750,000, 1.5% to 4.8%, maturities 30 to 96 months), a 1% loss reserve on part of the book, and CNote's equity of $820,122.
Withdrawals
Quarterly requests of up to 10% of principal on 30 days' notice, which CNote may reject or limit; CNote may repay the notes at any time.
Fees
None to noteholders and no commissions; CNote earns the spread between loan and note rates. Impact Cash clients pay fees that in general do not exceed 1% of deposits.
Reporting
Audited annual reports (dbbmckennon) and unaudited semiannual reports on EDGAR; quarterly and annual impact reports on the site.
Company
Delaware public benefit corporation, Oakland; Certified B Corporation (company claim); co-founders hold 73.4% of the vote; not a registered adviser, broker-dealer or certified CDFI.
Visual Summary
CNote Group, Inc. by year
From the audited 1-K reports (June 2026 from the unaudited 1-SA). Notes payable are the gross principal owed to all noteholders; the Regulation A coupon is the rate on new Flagship notes at year end.
2021
Total assets
$110.1M
Notes payable
$107.1M
Equity
$2.08M
Net loss
$1.64M
Flagship rate
2.0%
2022
Total assets
$107.3M
Notes payable
$99.3M
Equity
$6.78M
Net loss
$2.44M
Flagship rate
3.0%
2023
Total assets
$83.2M
Notes payable
$79.6M
Equity
$3.10M
Net loss
$3.78M
Flagship rate
4%
2024
Total assets
$79.0M
Notes payable
$77.4M
Equity
$0.76M
Net loss
$2.47M
Flagship rate
4%
2025
Total assets
$71.1M
Notes payable
$69.1M
Equity
$0.82M
Net loss
$1.16M
Flagship rate
4%
June 30, 2026
Total assets
$80.5M
Notes payable
$78.4M
Equity
$0.77M
Net loss
$0.11M (six months)
Flagship rate
4%
Investor Operations
The practical questions investors actually care about: when tax documents arrive, how cash distributions work, and whether capital can be exited before the underlying asset is sold.
Tax Documents
K-1 Timing
What to expect
Not applicable; Form 1099-INT.
Cash Flow
Distributions
Frequency
At maturity.
Timing
30 months after issue, or with a granted quarterly withdrawal.
Consistency
No filing reports a missed payment or default on the notes; the filings do not separately report note maturities paid. Rates on new notes have ranged from 2.0% to 4% since 2017.
Liquidity
Exit Reality
Holding period
30-month term; quarterly requests of up to 10% at CNote's discretion.
Exit options
- Hold to maturity.
- Request a quarterly withdrawal of up to 10% of principal.
Secondary market
No market; transfers need CNote's written consent, which it may withhold.
Investment Structures
Flagship Fund, Regulation A (non-accredited and accredited)
$1.00 notes at 4% (new notes 1% to 7% by supplement), 30-month term, nothing due until maturity, quarterly requests of up to 10% that CNote may reject or limit, callable at any time, unsecured general obligations, $1 minimum, no fees or commissions; up to $50,000,000 under File 024-12790, qualified August 17, 2026.
Flagship Fund, Regulation D (accredited)
Adjustable-rate promissory notes under Rule 506(c), 'structured as non-recourse promissory notes' repaid pro rata from the loans they fund. Form D filings report $35.8 million sold to 118 investors across eight 2024 to 2026 offerings, including one $8,000,000 note to a single investor in April 2026.
Wisdom Fund and ImpactFlex (accredited)
Wisdom Fund: 60-month notes, $100,000 minimum, no early withdrawal, 'potential 4%' (the 2023 impact report said 3%). ImpactFlex: theme-directed notes at 'a potential 1-4%', $100,000 for three themes and $1,000,000 for others; no current offering document is linked.
Impact Cash and Climate Cash (deposits)
Placement of FDIC- or NCUA-insured deposits at community banks and credit unions through Northern Trust as custodian, up to $100 million insured per client; $1,000,000 minimum for individuals; withdrawals 'available on demand, subject to potential early withdrawal penalties'; fees that in general do not exceed 1% of deposits. Not a security.
Risk
Risk Structure
This is where the marketplace pitch gives way to the actual operating reality: delayed exits, limited disclosure, fee drag, and path-dependent outcomes.
Claim
Regulation A notes are unsecured general obligations of CNote, ranking behind any secured lender CNote may later have; Regulation D notes are repaid only from their loans.
Cushion
Disclosed loss allowance and equity about 1.3% of assets at December 31, 2025; equity $820,122. Losses on loans funded by payment-dependent Regulation D notes pass to those holders.
Collateral
None: loans to CDFIs are unsecured and uninsured, full recourse to the borrowers.
Liquidity
30-month notes; quarterly requests of up to 10% at CNote's discretion; no market; callable by CNote.
Operator
Losses every year since 2016; going-concern emphasis in five of nine audits (FY2017 to FY2020 and FY2023); dependent on fee revenue and outside equity.
A thin cushion behind the general-obligation notes
CNote's disclosed loss allowance and equity are about 1.3% of its assets; the allowance is an accounting estimate covering the loans CNote carries on its own account.
Why it matters
Flagship holders are general creditors of a company with little equity; CNote itself warns that losses above the cushion could leave it unable to repay noteholders in full.
Mitigation / verification
Read the equity line and the loan loss reserve in each 1-K and 1-SA, and ask CNote how a shortfall would be shared between Regulation A and Regulation D holders.
A clean record not yet tested by a downturn
No charge-off or late loan in nine years of filings; renewals at maturity are routine and some interest is added to principal.
Why it matters
The filings do not separate voluntary renewals from extensions, and the record has not been through a severe credit downturn.
Mitigation / verification
Ask CNote how renewals are underwritten, and watch repayments, renewals and capitalized interest in each cash flow statement.
Withdrawals are requests
CNote currently offers quarterly withdrawals, but the circular lets it reject or limit requests depending on available funds; the site's 'at a minimum' 10% is not a contractual right.
Why it matters
If many holders ask at once, or loans renew rather than repay, money may stay in for the full 30 months.
Mitigation / verification
Invest only money you can leave for the full term, and rely on the circular's wording, not the site's.
Costs depend on the rest of the business
Lending earns a positive spread overall, but it has never covered CNote's operating costs, and the 4% Flagship coupon is above the loan book's average yield.
Why it matters
The notes are serviced by a company that relies on Impact Cash fees, grants and outside equity to cover its expenses.
Mitigation / verification
Watch Impact Cash fee revenue, cash and equity in the semiannual reports.
ASRisk signals to watch
- Any charge-off, past-due or nonaccrual loan, or a rise in renewals and capitalized interest, in the 1-K or 1-SA.
- Equity falling toward zero, or a going-concern paragraph returning to the audit.
- A supplement cutting the Flagship rate, or any statement that withdrawal requests were limited.
- Impact Cash service fees, the main support for operating costs.
- A Form 253G final circular or Form D notices filling the gaps in the filing record.
Regulatory & Legal Posture
Security Status
The Flagship notes are offered under Regulation A Tier 2 (File 024-12790, qualified August 17, 2026) and Rule 506(c); CNote files annual and semiannual reports with the SEC but is not an Exchange Act reporting company.
CNote sells its notes directly through mycnote.com 'without the use of a placement agent, broker, or underwriter', and all 13 of its Form D filings report $0 in commissions. It is not registered as an investment adviser or broker-dealer (IAPD and BrokerCheck show no record) and is not on the CDFI Fund's certified list; its borrowers are. In 2017 SEC staff asked why CDFI loans were not securities under the Investment Company Act and whether CNote acted as a conduit for the CDFIs; CNote answered, and the staff did not comment further on EDGAR. CNote Lending, LLC holds, per the filings, a California Finance Lenders license.
- Enforcement: AltStreet located no SEC, FINRA or CFPB action against CNote Group, CNote Lending or the named officers and directors in AltStreet's enforcement tables, IAPD, BrokerCheck or CFPB enforcement. NMLS and state securities regulators could not be searched.
- Courts: CourtListener returned no case naming CNote; searches for individual officers and directors were not completed because of the service's request limit. The filings state there is no pending or threatened litigation.
- SEC staff letters: 2017 (website protection claims removed; Investment Company Act, broker-dealer and conduit questions); 2020 to 2021 (loan-level disclosure, rate changes, automatic renewal, the funding-request closing contingency); 2023 (continuous offering, rollover as a new sale, the 10% investor limit).
- Filing record: no final offering circular (253G) appears for the 2023 or 2026 offering statements; no Form D appears for note sales between January 2020 and January 2024, a period in which the filings report accredited-investor note sales and cite Section 4(a)(2).
Disclosure Quality
Good in the circular and annual reports, which state the thin cushion, the unsecured loans and the untested credit cycle plainly; weaker on borrower concentration and Regulation A volumes, and inconsistent on the site.
Custody Model
Note proceeds are CNote's own funds, held at its bank and lent to CDFIs; investors fund accounts through Dwolla. Impact Cash deposits sit in insured accounts at partner institutions with Northern Trust as custodian.
Regulatory Backing
Regulation A disclosure and SEC review of each offering statement; state lending law for CNote Lending. The notes are not FDIC-insured and are not guaranteed by any party; Impact Cash deposits carry FDIC or NCUA insurance at the partner institutions, subject to their limits.
Tax Treatment
Reporting
Form 1099-INT for interest over $10 (the site's e-delivery page).
Annually.
Income Character
Questions to put to the firm and a tax adviser
Interest on the notes accrues during the 30-month term and is paid at maturity or with a withdrawal. Whether it is reported as it accrues or when paid, and how renewed notes are treated, are questions for CNote and a tax adviser; the site and filings do not explain them.
Limitation
AltStreet is not a tax adviser and did not open an account.
Special Considerations
- Whether interest is taxable as it accrues even though nothing is paid until maturity.
- Whether the notes can be held in a self-directed IRA (a site post discusses self-directed IRAs).
- How a renewal into a new note at maturity is treated.
Account Suitability
Taxable
The default; interest is ordinary income.
Roth IRA
Not addressed by the firm beyond a general post on self-directed IRAs.
Traditional IRA
Not addressed by the firm beyond a general post on self-directed IRAs.
HSA
Not applicable.
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AltStreet Data Layer
What the data actually shows
Nine years of audited statements show a clean loan book, a thin capital base and a business that depends on fees beyond lending.
Little equity behind the notes
Equity $820,122 against $71.1 million of assets at December 31, 2025 (1.2%), and $772,609 against $80.5 million at June 30, 2026 (1.0%).
What this means
Regulation A holders are general creditors of a company whose own capital would absorb very little loss.
No loan losses; repayments and renewals
No charge-off since 2017; in 2025, $18.6 million repaid and $9.7 million of matured principal and interest renewed, with $303,820 of interest capitalized.
What this means
The record is clean but has not been tested by a downturn, and the filings do not separate voluntary renewals from extensions.
A loss every year
Net losses from 2016 to 2025, $1.16 million in 2025; accumulated deficit $15.5 million; H1 2026 near break-even, unaudited.
What this means
The notes depend on a company still funding itself with fees, grants and outside equity.
A positive spread that does not cover costs
Net interest income $850,249 in 2025: loans earned about 3.5% and notes cost about 2.35% on average, with the Flagship coupon at 4% (AltStreet arithmetic).
What this means
A Flagship dollar lent at the book's average yield would earn CNote less than it costs; the blend is positive because other notes pay less, and the yield on new loans is not disclosed.
Data as of 2026-06-30 . AltStreet review evidence layer . Public-source analysis
Full datasetDecision Fit
Investor Fit
Who this works for, who it does not, and what level of patience and complexity tolerance the platform really demands.
Impact-focused savers who can leave money for 30 months
A $1 minimum, no fees and a clean nine-year loan record, issued by a company with little equity that has discretion over early withdrawals.
Investors who need their money back on a schedule
Nothing is due until maturity and quarterly requests can be refused or limited.
Investors comparing it with insured savings
The notes are unsecured and uninsured, behind a disclosed 1.3% cushion; Impact Cash is the insured product, at a $1,000,000 minimum.
Tradeoffs
Key Tradeoffs
The attraction of pre-IPO access is real, but every benefit comes bundled with a corresponding liquidity, transparency, or pricing cost.
Return
Paid by a company whose positive lending spread has never covered its costs.
Credit
Unsecured loans and no severe downturn in the record.
Access
Withdrawals at CNote's discretion; a 30-month commitment in practice.
Avoid
Who This Is Not For
This section should be read as a filter, not an afterthought. If you need income, simplicity, or near-term access to capital, the structure is working against you.
Anyone who needs the money within 30 months
Quarterly withdrawals are requests CNote may reject or limit.
Investors looking for an insured or secured product
The notes are unsecured general obligations backed by unsecured loans and a thin cushion.
Editorial View
AltStreet Perspective
The compressed version of the review: what matters, what marketing tends to obscure, and how we would frame the platform for a serious allocator.
Verdict
A note is only as good as the balance sheet behind it, and CNote's is thin. Its loan record is clean and its borrowers are spread across 39 lenders. But the Flagship holder is a general creditor of a company that has never earned a profit, whose lending spread is positive but does not cover its costs, and which decides whether early withdrawals are paid. The open questions are whether the record holds through a credit downturn, how renewals are underwritten, and how a shortfall would be shared between Regulation A and Regulation D holders.
Positioning
Among retail note issuers AltStreet covers: on security, CNote's loans are unsecured, while Iron Bridge lends against first liens; on payment record, no CNote filing reports a missed payment, while Worthy's programs stopped paying; on concentration, CNote's largest single loan ($2.75 million) is about 4% of its book (borrower-level concentration is not disclosed), while Compound Real Estate Bonds had 64% of one portfolio in a single loan; on capital, CNote's equity is about 1% of its assets. Its borrowers are CDFI loan funds, which, unlike CDFI banks and credit unions, are not supervised as depository institutions.
The Bottom Line
Impact notes from $1 at 4%, with a clean nine-year record of unsecured loans to community lenders, issued by a company with little capital of its own.
Action
Next Steps
If you still want to engage after reading the review, these are the practical next moves that reduce avoidable mistakes.
Read the current offering circular (File 024-12790), especially the risk factors and 'Securities Being Offered', rather than the site's summaries.
Check the latest 1-K and 1-SA for equity, the loss reserve, renewals and capitalized interest.
Ask CNote whether any withdrawal request has been refused or limited, and how a shortfall would be shared between Regulation A and Regulation D holders.
Ask which borrowers hold the largest loans and what share of the book they represent.
Size the investment to money you can leave for the full 30 months.
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Deal Intelligence →Appendix
Sources, Disclosures, and Supporting Context
The lower section is structured like a report appendix: relationship context first, adjacent reading second, and evidence last.
Report Appendix
Disclosure
Relationship and compensation context
+
Report Appendix
Disclosure
Relationship and compensation context
Report Appendix
Related Resources
Adjacent platform comparisons, frameworks, and category links
+
Report Appendix
Related Resources
Adjacent platform comparisons, frameworks, and category links
Further Reading
Related Resources
Adjacent frameworks and reviews that help place the platform in a broader allocation or due-diligence context.
Similar Platform Reviews
- Compound Real Estate Bonds Review
Retail bonds from $500 backed by real estate loans.
- Worthy Review
Retail bonds from $10 whose programs stopped paying.
- Iron Bridge Mortgage Fund Review
Regulation A notes backed by first-lien real estate loans.
- Percent Review
Private credit deals for accredited investors.
Report Appendix
Evidence & Methodology
16 cited passages on file; sources, scope, and how the review was assembled
+
Report Appendix
Evidence & Methodology
16 cited passages on file; sources, scope, and how the review was assembled
Evidence on file
16 supporting passages on file for CNote and its offerings from 7 source documents, 4 discrepancies flagged. Each passage records the metric it supports, the value read from the document, the page, and the verbatim text where the document has it. Terminal subscribers read the passages; open them in the terminal.
- Cited passages
- 16
- Source documents
- 7
- Analyst verified
- 0
- Discrepancies flagged
- 4
ASReview Evidence
Methodology
Every document in all 96 CNote Group EDGAR filings; 52 mycnote.com pages with the circulars, PPMs and impact reports linked there; 29 Wayback captures from 2017 to 2026; registers, enforcement tables and court records.
Scope
CNote's note products, with the Regulation A Flagship Fund as the focus; Impact Cash as a separate deposit service. The logged-in app, the 2025 impact report and some state registers could not be read.
Key Findings
- *Circular: 'our loan loss reserve and equity capital represent only approximately 1.3% of our total assets.'
- *Circular: 'The Company may reject or limit such requests depending on available funds.'
- *Circular: 'They represent general, unsecured obligations of the Company.'
- *Company to SEC staff, 2017: 'The Company is obligated to repay the Regulation A investors specified and agreed interest rates, regardless of whether CDFIs repay the amounts loaned to them.'
- *1-K for 2025: CNote 'has yet to endure a major adverse phase in the credit cycle.'
Primary Source Pages
Comparable Platforms
- Compound Real Estate Bonds
Retail bonds backed by a concentrated real estate loan book.
- Iron Bridge Mortgage Fund
Regulation A notes backed by secured first-lien loans.
FAQ
Frequently Asked Questions
High-intent search questions answered directly, without making users hunt through the full review.
Is CNote legit?
Yes. CNote Group, Inc. is a Delaware public benefit corporation that sells its notes under SEC Regulation A, files audited annual reports and semiannual reports on EDGAR, and has reported no loan loss in nine years. AltStreet located no enforcement action against the company or its officers. Legitimate is not the same as low-risk: the notes are unsecured obligations of a company with very little equity that has lost money every year.
Is CNote safe?
The notes are not insured or guaranteed. They are unsecured general obligations of CNote, backed by unsecured loans to 39 community development loan funds. No loan has been charged off since 2017, but CNote's disclosed cushion of loss allowance and equity is only about 1.3% of its assets, and it warns that larger losses could leave it unable to repay noteholders in full. CNote's Impact Cash product is FDIC- or NCUA-insured, but it is a separate deposit service with a $1,000,000 minimum for individuals.
Can I withdraw my money from CNote?
The notes run 30 months and nothing is due until maturity. CNote currently offers quarterly withdrawals: you can request up to 10% of your principal on 30 days' notice, and the site describes up to $20,000 or 10%, at management's discretion. The offering circular says 'The Company may reject or limit such requests depending on available funds,' so early withdrawal is a request, not a right.
What does the CNote Flagship Fund pay?
New Flagship notes pay 4% a year, paid with principal at the 30-month maturity. CNote can set new notes anywhere from 1% to 7% by filing a supplement; the rate was 2.0% to 3.0% from 2021 to 2023. There are no fees, and the minimum is $1.
How does CNote make money?
From the spread between what its community lenders pay (1.5% to 4.8%) and what it pays noteholders, from fees on Impact Cash deposits it places for clients (in general up to 1% of deposits), and from grants and consulting. Its lending earns a positive spread but has never covered its costs; CNote has lost money every year and has raised at least $14.68 million of outside equity and convertible capital.