Eligibility Standards

 Program loans of the Cooperative Fund are available only to organizations operated on a cooperative or non-profit basis. Applicants must also be located within the New England states of Massachusetts, Vermont, New Hampshire, Maine, Connecticut and Rhode Island or within the adjacent parts of New York state.

An organization is considered by the Fund to operate on a "cooperative" basis only if it exhibits most of the following characteristics:

• its purpose is supportive of the common good;
• its membership is open to persons who will use its services and accept its responsibilities;
• its membership policies are not applied to discriminate in any arbitrary or prohibited manner;
• Its activities are broadly participatory by its members;
• its governance is democratic or based on consensus;
• its monetary return on invested capital is strictly limited;
• its earnings are either equitably used with within the organization or distributed on the basis of patronage.

To be considered as operating on a "non-profit" basis an applicant organization must not be controlled by or for persons who merely provide equity capital, nor may investors be permitted to realize more than a limited monetary return for the use of their money. In most cases, these criteria will be automatically satisfied by an organization that meets the above characteristics of a cooperative.

Eligible recipients of the assistance provided by the Cooperative Fund encompass the entire spectrum of cooperatives and non-profits. These include not only the more familiar consumer and farmer co-ops but also, for example, worker-owned businesses, community service organizations, craft marketing co-ops, fishermen's co-ops, day care centers, cooperative charter schools, housing cooperatives and community land trusts. Those who use its services may organize virtually any group on a cooperative basis and it may be operated for purposes other than maximizing investment profits. The function of the Cooperative Fund is to encourage and assist this type of community economic development, particularly for organizations that are resource poor but otherwise sound and promising.

Lending Policies

 The standards that the Fund uses in evaluating and deciding upon loan requests include the following:

 

• the need for and importance of the services provided by the co-op;
• the viability of the organization;
• the commitment and support of its members;
• the skill and effectiveness of its management;
• the adequacy of its capitalization program;
• its current and prospective financial condition;
• the adequacy of available collateral; and
• the ability of the co-op to repay the loan.

The Fund's lending practices are characterized by an unusually high degree of fairness, flexibility and service. Program loans are provided for any reasonable purpose. The interest rates charged to borrowers are below or at market levels, and repayment terms are arranged to accommodate the needs of the borrowing organization. The only fees are a $100 loan application fee and a one point closing fee.

All borrowers are required to pledge adequate collateral as security for their loans, but the many contacts of the Fund among cooperative organizations in the region allow it to accept collateral of a type and quantity at variance with commercial lenders.

The terms and conditions of the loan agreement entered into with borrowers are significantly less restrictive and obtrusive than most commercial loan contracts. The agreement is nevertheless a detailed and comprehensive one that is fully protective of the legal rights and financial solvency the Fund. Reporting requirements, are quite strict in requiring borrowers to submit substantial information on a regular and timely basis. The Fund is thus able to closely monitor the financial performance and organizational development of its borrowers. The Fund provides technical assistance services to its borrowers in connection with the loan application process and subsequently as circumstances warrant. The education and experience of staff and Trustees of the Fund allow it to provide a wide range of quality services, particularly in the areas of organizational development, financial management, and training in consensus process.

Priority Criteria

The financial assistance provided by the Cooperative Fund is intended primarily to benefit co-ops of greatest need. Priority among eligible organizations is therefore accorded to low-income co-ops and others with special problems of access to needed financial resources. Low-income status is defined by the Fund to include organizations meeting any of the following standards:

• the co-op serves an economically disadvantaged community and this community is reflected in its membership and patronage;
• more than half of co-op members are low income persons; or
• the co-op has, through unusual and unavoidable circumstances, suffered a significant economic adversity that exceeds the ability of the organization and its members to rectify.

Low-income co-ops and non-profits are provided a number of benefits and prerogatives by the Fund in addition to being given priority over other applicants for available funds. For example, their application fee might be reduced and they receive the lowest practicable interest rates on their loans. As the resources of the Fund permit, they may also be provided technical assistance services on a low-fee or gratis basis.