Did you ever wonder why so many small businesses must borrow money just to stay in business?   It's one thing to require capital for starting a business, but why year after year are existing, small  businesses in need of loans?   Are millions of business owners stupid or is there something wrong with the nation's basic economic structure?   

The Fundamentals of Lending and Borrowing:   A lender lending to a small business  is similar to the IRS in that the lender regularly takes money out of the business, but does absolutely nothing to manage the business or produce a profit.   The lender is, in essence, a free-loading, non-producing  business partner with his/her/its hand in the till, constantly demanding money.   The reason given for tapping the till is that capital  is require for a business to function, therefore the provider of capital needs to be compensated.   (We'll address the compensation issue in a moment.)

This Brings Up Questions Such As:   "Who has the money to loan to these small businesses?"  Where does the lender get the money it loans?   "What are the lending agreements."  "Who is really in control of the business, the lender or the business owner?"   "Is the business owner working for himself or is he a silent wage-slave of the lender?"   "What percentage of the profits go to the business owner and what percentage goes to the lender?"  "Is the system working as currently structured?"   "Is there / are there any better (more productive, more efficient) ways to fund small businesses?"    

Lender Identity:   The financial system that presently lends money to small businesses is the same dysfunctional  financial system that is at the heart of  the home foreclosure crisis.   The same principles that apply to home loans also apply to small business loans.

The present school of thought (the fundamental economic belief system those presently running our economic system **rs2 ) is that the only way to create money is by lending and borrowing.   The Federal reserve loans money to banks.   Banks loan money to each other and to borrowers such as small business owners. 

This system provides an essential service.   It puts money (the medium of exchange) into the economic system.   But this in NOT the only way and it is far from the fairest, most efficient, most functional, and least costly way.   

You might also note that the reason the economy is floundering is because huge quantities of money have been pulled out of the system.  (We'll examine that in a moment.)   

In order to resolve the economic crisis, the missing money must be put back into the hands of the people or it must be replaced with new money.   That was the publically implied purpose of the government's banking bailouts   The problem is that the tactics they used did exactly the opposite.   They took money from the people (taxpayer money) and gave that  money to the bankers (the super wealthy.)   The solution requires putting money into the pocket of the working class, not pulling it out.   

Fortunately, money can be put back in rather quickly, with relative ease an simplicity, and without taking anything away from the super-wealthy except their "cash cows." ^**tlc3    In other words, the financial crisis can be resolved by redirecting the flow of money that is now going out of the economy and into the bank accounts of the super-wealthy --  by redirecting that money into the pockets of working class.   That's what this website is all about.  

The Present System Doesn't Actually Create Money.   It creates the illusion of money.  When the federal Reserve loans money, it simply makes a ledger entry in its bookkeeping system and declares that to be money.   When banks borrow money from the Federal Reserve and then loan that money to small businesses, they too,  are lending non existent money.   This form of money is called "fiat money."  **m2    

The business owners work diligently to produce goods and services and then give/pay some of those goods and services to the lender (in the form of money) as payment for the use of the non-existent money.   This technique for milking the public for money  has been going on for so many years that it's considered normal and almost nobody questions the validity of the system.   

What Is Money?     In order for a political/ social  system to function, there must be a effective and convenient way for people to exchange goods and services.  The present  exchange system uses what we call money.   In a properly functioning monetary system, money is:  

1)     A convenient form of goods and services,  

2)     A safe, secure way to exchange goods and service, 

3)     Universally recognized and accepted by others,  

4)     Consistent, reliable, and dependable, 

5)     A medium of exchange,  

6)     A storage of wealth,  

7)     A measure of value,  

8)     A commodity which, in and of itself, has intrinsic value, 

9)     A  commodity which cannot be easily counterfeited,  

10)  A commodity which maintains its intrinsic value over time 
(doesn't rot, die, or otherwise deteriorate) 

11)  If exchanged in the form of receipts, (such as silver or gold certificates) the receipts must be transferable back into the original money at any time by anybody who chooses to do so.   

In Our Present System:   Fiat money fails miserably at being safe, secure, consistent, reliable and dependable.  It's inconsistent and unreliable as  a measure of value because its value relative to tangible goods and services keeps changing. ^**ggm3    It a very poor way to store one's wealth, it has no intrinsic value, can be easily counterfeited, and it's not transferable into real money.   Because it  flunks the above the requirements, this makes it a difficult, inefficient and rather poor medium of exchange.   

The financial industry is unique among business.   The financial industry is unique in that it's the only industry that can lend/sell you a non-existent product and charge you rent (interest) on the use of its product.   Rental business owners can't get customers to pay rent for the use on non-existent cars, or for the use of  non-existent tuxedos or non-existent bicycles?   How many people are going to go to a restaurant and pay for a non-existent dinner?  How many people are going to pay rent for the use of a non-existent house or a non-existent apartment?   

And at the same time, right now, anybody who owes money to a bank or to credit card company is paying his/her hard-earned money (transferring some of his/her goods and services) to the super-wealthy money lenders  for the use of non-existent (fiat)  money.       Again:  This technique for milking the public for money has been going on for so many years that it's considered normal and almost nobody questions the validity of the system.   Reference:

http://www.Money-God-Money.info/money-defined.html#55 

A economic system must have money in it to function.   If the money is removed the system fails.  If the eleven functions of money (listed above)  are seriously damaged or destroyed, the system fails.    

The next question to ask is:  "Is there a more efficient, more effective, more just and fair way to fund small businesses?   The answer is a resounding YES!   What is that way?  

The same county foundation structures suggested on the How to End the Home Foreclosure Crisis  page could be used to fund small businesses.    

Why use the foundation approach.   Because it's in everybody's best interest to have a healthy economy.   It's in everybody's best interest that the engine of the economy (the working class) be strong, healthy, vibrant, fully functional and fully functioning.   It's as basic and as essential as having a high-quality educational system, or a highway system or an electrical or a sewer system.    It's in everybody's best interest!   Anything the hampers or in any way interferes with a healthy economy is detrimental to everybody.  

Partnering non-profit foundations with traditional for-profit corporations to create the hybrid business structure is a huge improvement over the existing business structure.   It's so incredible easy to create and the benefits are so many and so powerful that the first response is that it's too god to be true.   The benefits and how to create this new structure are detailed at:

http://www.ThePeacefulRevolution.com#57