Credit

The Lifeblood of Business

For the most up-to-date information and developments around public banking and credit issues, visit Commonwealthgroup.net.

 

Capital and credit are the two key financial tools of business. Capital usually plays a large part in the early, establishment phase of a company. Once the company is funded and operational, it usually does not require additional capital unless it needs to undertake a major project, e.g., build a new factory, launch a new product line, etc.

In contrast, credit is an everyday tool. Soon after a company is capitalized and launched, credit becomes an integral part of operations. Whether in the form of trade credit by suppliers or bank lines of credit, etc., it serves the vital function of smoothing out the flow of funds in and out of a business. The lack of credit can have a major and deleterious effect.

The current widespread lack of credit is choking our economic recovery. There are structural reasons for the dearth of credit, but there is something we can do about it. The key requires an understanding of the banking system, how it is failing us, and what we can do about it.

For a good understanding of how the banking world works and how it contributes to our economy, see the Publicly Owned Green Banks section. This section also explains how communities can use the banking system to address their own needs. For a more in-depth analysis, see the section entitled Publicly Owned Green Banks: An In-Depth Analysis.

An Innovative Banking Concept

We have have designed a banking solution that gives green businesses access to credit. Our plan entails the creation of a green bank that makes loans exclusively in support of local renewable energy and energy/resource conservation projects. The key difference is that the bank is owned by a non-profit corporation, a L3C or a combination thereof, and therefore dedicated to serving the public good. We call this type of bank a Public Benefit Bank (PBB).

This PBB service is provided by the CEED Program’s CalGreen Bank. The PBB green bank concept builds on ideas first put forward by Ellen Brown, author of Web of Debt and the nation’s leading expert on the topic of government owned banks (another form of Public Benefit Bank). Her research has clearly demonstrated the benefits to the federal government, states and local communities of implementing the government owned bank concept into solutions for revitalizing the economy.

See CalGreen Bank for more information on how we have structured our program and how it might serve your community.