Social investment loans to the Cooperative Fund are provided on terms chosen by the investor within a range of options including:
The Fund encourages long-term investment. Social investment loans, however, may be called for repayment within a short period of time. For those that are particularly large, the Fund asks that repayment be limited to fifty thousand dollar increments within each 30-day period after it receives notice of withdrawal.
Social investment loans are not insured in any way or collateralized through secured interests in any property of the Fund. They rest only on the general credit of the Cooperative Fund of the Northeast.
Social investment loans made directly to the Cooperative Fund are not tax deductible nor are they included in the income of the investor when they are repaid. Any accrued interest, whether paid out or left to accumulate with principal, is fully taxable to the social investor. An IRS 1099 form is sent out at the end of each year. A social investment loan may, however, be rendered tax deductible when it is provided indirectly through a self-directed individual retirement account with a bank providing such a service. Under this option, funds are deposited with the participating bank and then self-directed for investment in the Cooperative Fund of the Northeast. Funds on deposit in the IRA account may not be prematurely withdrawn without substantial penalty. They may, however, be removed from the Cooperative Fund and redirected elsewhere. Persons desiring to use this tax benefit are advised to obtain further information regarding the restrictions and dollar limitations that apply to the use of this procedure.
Funds remitted to the Cooperative Fund will be acknowledged by a promissory note with the terms chosen by the social investor. Under this note the Fund is obligated to provide financial statements and reports on its activities at least three times a year. The specimen promissory note in Appendix D of the prospectus provides full information as to warranties and obligations assumed by the Fund in its relationship with a social investor.