QOZB Capital: Innovating Working Capital
Innovation in the Opportunity Zone industry comes scarcely when regulatory updates are provided sparsely. The pain points in development are also very difficult to rectify on a large scale given that most are individual to each QOZB’s project. One such overall pain point lies in the restrictions placed upon investing undeployed working capital dollars. Austin-based OZ company, QOZB Capital, LLC is attempting to address this issue by offering short-term, zero-coupon notes at a fixed interest rate of 6%, as well as a free app to aid with working capital planning.
Specifically designed to fit within the OZ program’s restrictions on working-capital investments, such notes offer a chance for QOZB’s to protect undeployed working capital from rising inflation. With lock-up periods starting at 150 days, QOZB Capital, LLC offers QOZBs an alternative to the low interest rates associated with typical short-term debt instruments. They are able to offer this by leveraging the invested principal on the blockchain, in insured and dollar-backed stable-coins. While there is a risk associated with this form of placement, the dollars never actually leave FDIC insured bank accounts and are always directly redeemable by the digital coins.
It’s a fairly straightforward value proposition, make money off undeployed working capital, instead of potentially losing it to inflation. QOZB Capital, LLC seeks to offer maximum flexibility in this regard by catering the length of each note to the lockup period, thus allowing for a QOZB to segment their yield in connection with the active working capital plan.
On the app development front, QOZB Capital intends to provide free infrastructure for capital planning and OZ compliance. Through their upcoming Working Capital Planner, the Austin based startup is enabling any QOZB to utilize their web-based app to create a functional layout of an entire working capital plan. The platform will also offer QOZB’s the ability to purchase their zero-coupon notes within the app directly and to automatically incorporate them into the created capital plan.
Ultimately, QOZB Capital’s goal is to incorporate themselves as a new necessity for the OZ industry by creating a value proposition that they believe any QOZB can benefit from. Their products seem to be functionally simple, but QOZB Capital, LLC is enabling an immediate potential return on working capital, which has historically been difficult to obtain. For future opportunities, QOZBs will need outlets for relatively low risk gains to perpetuate the development and sustaining of their projects.