Answer: By investing in Takoma Notes, you’re lending money to OTBA that OTBA will then lend to an identified Takoma business. The first business to receive the proceeds of Takoma Notes will be MAD Fitness, a fitness studio located in Takoma Junction.
Question: Will I get my investment back? Will I earn interest back?
Answer: Yes and yes — as long as MAD Fitness pays OTBA back. (OTBA has no obligation to repay the Notes if it does not get repaid by MAD Fitness or its owners.)
Question: What happens if MAD Fitness does not pay OTBA back or otherwise defaults or goes bankrupt?
Answer: The co-owner of the gym (Sue Immerman) has personally guaranteed the loan, so OTBA would look to her personally to repay the loan and could take legal recourse if she did not. OTBA would pass on to you whatever it managed to collect from Ms. Immerman within four years of the date the Notes are issued.
Question: How much interest is OTBA paying on the Notes?
Answer: The Notes have a stated annual interest rate of 3%, which is the same rate that OTBA is charging MAD Fitness. Assuming MAD Fitness sticks to its repayment schedule, OTBA will make repayments on the Notes monthly. The repayments will consist of both a principal and interest, so that your entire Note is fully paid off by the end of the 3-year term. (If MAD Fitness departs from its repayment schedule, OTBA will make repayments whenever it receives payments from MAD Fitness.)
Question: What did OTBA review to screen its proposed loan to MAD Fitness?
Answer: As part of its application, OTBA did credit and background checks and obtained and reviewed financial statements for MAD Fitness, financial statements for the owners, financial projections for MAD Fitness, a business plan, and tax returns for the owners.
Question: What will MAD Fitness use the money for?
Answer: Equipment purchase and business expansion including a better layout of the existing space to better accommodate offering both private personal training sessions simultaneously with group classes.
Still have more questions? Contact Takoma Notes co-creator and chairperson of the OTBA Economic Restructuring Committee, Preston Quesenberry: firstname.lastname@example.org