The Hill Capital Corp is a new company that hopes to raise $20 million to be loaned to businesses that need $250,000 to $2 million to grow their business and can't get it from banks.
The founding members are local to St. Paul and led by the James J. Hill Center. This is part of the extension of services of the James J. Hill Library, which is on a downward slope due to the internet and the nature of the current crop of entrepreneurs, and their needs. They are officed at the James J. Hill Center.
This post is not a source for official information about this offering. They have a website http://www.hillcapitalcorp.com/ for all official communications, and where you can download their prospectus. They are not yet taking money, but hope to be by September 2016. They hope to raise $15 million from accredited investors and $5 million from 5000 shares to be sold to the public.
They will be loaning all the money out except for a few salaries for the staff that will administer the funds and help the board of directors select candidates for funding. They hope to be a business development company, where they will distribute over 90% of earnings back to the shareholders and pay no corporate taxes. They do not plan to operate like a for-profit company where they would take fees out of the money first, or pay significant percentages to staff in commissions, etc. They plan to be a low overhead operation.
They liken their efforts to an entrepreneurial barn-raising, where neighbors come together to help the neighborhood. This is not for startups, but for businesses who have been in business for over a year with profit and positive cash flow and need to expand.
They plan to offer significant managerial support, both by the staff of the company and through arrangements with volunteer organizations and others, like the Small Business Development Centers, SCORE, and many other organizations.
The actual funding will take the form of preferred stock, loans, or other equity arrangements, on a case-by-case basis. They hope to be able to accurately value the investments at least quarterly to allow for reasonable information for investors to value the stock of the Hill Capital Corp. to allow for sale by the investors. There will be no lockup periods for investors, but there also is no plan to list on any stock exchange, so it may not be a liquid investment, and may take some time to sell.
This post is based on a presentation by Patrick E. Donohue to the St. Paul SCORE Chapter on 10 May 2016, and on the prospectus dated February 1, 2016.
Sunday, May 15, 2016
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