As Vermont small businesses re-open during the ongoing pandemic, their struggle is real. There have been pools of money provided by the feds, the state and even at the local level in the form of grants. And there is constant chatter about more stimulus money going to mom-and-pop operations.

But that can’t happen fast enough.

What we will see sooner than later will be a growing list of businesses across the state that, despite their best efforts and intentions, won’t reopen.

Helping businesses is going to require a significant infusion of money.

There is precedence: selling bonds.

State and local governments, as well as certain nonprofits, issue these securities to raise capital for projects such as hospitals, libraries and roads.

Retail investors favor the bonds because they pay a specified amount of interest semiannually, which is free of federal income tax for a period of years. At the end of the bond’s term — its maturity — you get your principal back.

An article published by Bloomberg this week notes that elsewhere in the world, countries are being forced to think differently to what we now have come to know as a worldwide recession.

According to the article, the typical method in Europe for raising funds is with an auction — think Sotheby’s — whereby a country sells an amount of debt at a given time on a given day. Like at an art auction, investors make bids and prices fluctuate according to demand.

Another way is through “syndication,” which involves appointing a group of banks to underwrite a sale, according to the article. Syndications have largely been used to introduce new or ultra-long bonds to the market and have become a popular choice for funding coronavirus recovery plans. They cost a nation more but are guaranteed to raise the cash.

Here in Vermont, residents can purchase municipal bonds. But the process is not a direct sale like it was in war time, when Americans could invest in war bonds to finance our military action.

According to the state treasurer’s website, “The State does not sell bonds directly. You must buy these bonds through a registered broker/dealer. These bonds may be either newly issued or they may be offered on the secondary market. ... The State issues general obligation bonds through either a competitive sale or a negotiated offering.”

So could such an idea work in Vermont? Create a pool of money from bond sales that, in effect, would serve as an investment in Vermont businesses, and help jump start the stalled economy? The idea is being floated, but the concern likely keeping it from getting traction is that uncertainty of the economy, and whether, if too many businesses fail across Vermont, there would be an adequate return for the bond investors.

It might be a risk worth taking.

Vermonters want to help. They want to see the downtowns full and vibrant. They want to see mom-and-pop operations thriving and succeeding.

It is an old fashioned idea that has been complicated by brokers who get a cut. Even if the syndication idea could be implemented in one form or another, it seems as if there could be great potential.

For example, the syndication process is working well in Europe. According to Forbes, on a day when the United Kingdom, Spain, Ireland and Greece all conducted such sales, investors laid down nearly $300 billion in offers.

And the idea behind municipal bond has always had a place here in America.

In fact, the municipal bond market has served as a vehicle for assisting localities in reviving local industries and abandoned facilities by providing incentives for investors to support such high-risk efforts. It’s been happening for decades.

Small investors make up about 67% of the $3.8 trillion municipal bond market, holding bonds either individually or through mutual funds, according to the Municipal Securities Rulemaking Board.

According to Forbes, as safe and steady as municipal bonds may seem since they are backed by the taxing power of governments, they’re not immune from the economic shocks stemming from the coronavirus. The Federal Reserve this week announced it is doing what it can to shore up the bond markets.

It would be like reaching back to a simpler time, to a day far less complicated and scary. Wouldn’t it be nice for Vermonters to invest in Vermonters once again? We hope the idea can find some traction.

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