Making the Co-op Possible

  1. How can I give to the Campaign to bring the Co-op to open its doors?  

    Owners have a unique opportunity to provide a loan. Loans are paid back to owners with interest based on the term and amount of loan. Loans must be made at a minimum of $1,000. If you are not an owner, we hope you will consider becoming an owner.  However, anyone can donate and receive tax benefits for doing so. We accept any amount, but due to fees passed on from our fiscal sponsor, we do ask that you consider a minimum of a $500 gift. Owners can also purchase non-patronage certificates in $50 increments.  See details below *.
  2. What if I don’t have cash immediately available?

    The Campaign will run until May 15, 2018, which means that you can make a loan or donation pledge if you have funds available by the close of the campaign. Full loan payments and donations are needed to secure pursuit of the remaining funding from banks.
  3. What legal assurances have been put into place?

    Owner Loans are legal in the state of Indiana. We have contracted with an attorney familiar with both Indiana and co-op specific law and are confident that we are in compliance with all pertinent state laws related to our campaign.
  4. What is the likelihood that the loans will be repaid?

    It is important the lenders read the disclosure statement and understand the risks involved with a loan to Columbus Food Co-op. The success rate of a typical retail establishment is 47% after 5 years. A typical co-op's success rate after 5 years is 79%. Columbus Food Co-op has enlisted the assistance and advice of industry experts in preparing our financial projections. Our feasibility studies show positive projections that will allow us to begin loan repayment in year 5.
  5. Can I make a loan now and still make another one later?

    Yes, multiple loans can be made during the campaign (through May 15, 2018). Making your loan during the campaign helps us meet our timeline and demonstrate the support we need to assure commercial lenders. Loans made outside of that timeframe would be accepted, subject to board approval, but would not help us receive commercial lender approval.
  6. Why is it necessary to have the terms of the loan so far out?

    To provide the best assurance that the co-op will be able to repay the loans, the loans are scheduled to come due over 10 years with repayments starting in year five. This spreads the repayment period over a longer term enabling the co-op more flexibility during the typically lean first few years of business.
  7. How many co-ops have done owner loan campaigns and what is their success rate?

    Cooperative Development Services states that 100% of co-ops they are associated with use capital from owners (or owner loan campaigns) for startup or expansion projects. Owner Loans have proven to be a successful way to raise capital in the co-op industry. A co-op's success rate after 5 years in business on average is 79%.
  8. Can I pay my loan in stocks?

    No you cannot pay your loan in stock. The legalities of such an arrangement make it difficult and costly, therefore we've decided that loans must be made via check or cash.
  9. Can I pay my loan via credit card?

    No, you cannot pay your loan with a credit card.  The fee's associated with credit card processing at these dollar amounts make it an unreasonable form of payment for an Owner Loan Campaign.
  10. How is interest compounded?

    Interest is compounded annually and awarded at the culmination of the loan.
  11. I can’t make a loan until X date (after the campaign ends). Can I still make a loan then?

    The campaign is structured to give all owners equal opportunity during the course of the campaign to make a loan, so it is preferred that all loans take place during the campaign timeline (September 13 – May 15, 2018). Please contact us to discuss your individual situation.
  12. I really believe in the co-op, but I can only put together $500. Can I make a loan that is less than $1,000?

    The minimum loan amount we can accept is $1,000. If you would like to contribute to the mission of the co-op at an amount less than $1,000 we encourage you to make a donation or purchase non-patronage certificates in $50 increments with no maximum purchase amount required.
  13. I'd like to participate, but I'd prefer to make a donation and not a loan. Is that possible?

    Yes absolutely that is possible.  We offer the opportunity to make a tax-deductible donation by making your check payable to our fiscal sponsor:  Tax-deductible donations are routed through our fiscal sponsor.  Checks should be made payable to the Cooperative Development Fund of CDS.  (Please note “Columbus Food Co-op” on the memo line.)  
  14. What are Non-Patronage Certificates?

    A Non-patronage Certificate (NPC) is a share of equity in the Co-op for which the owner is not entitled to any patronage dividend nor any additional voting privileges but does retain the possibility of repayment. The board has no obligation to repay NPCs. Conservative projections indicate that the Co-op will generate sufficient earnings to redeem the NPC’s and pay any declared interest in years 9 and 10 of operations.  The Board of Directors may, at its discretion, declare interest on NPC’s.  NPC’s may be paid back, with any declared interest, at the discretion of the Co-op’s Board of Directors.
  15. Why would I choose a Non-patronage Certificate over a loan?

    First, NPC’s can be purchased in $50 increments, which is significantly lower than the minimum loan required ($1000). Second, an NPC may be attractive to Co-op owners who want to support the Co-op, but who are not concerned about receiving interest or repayment.  (While the Co-op projects that NPC’s will be paid back, beginning in year 9 of operation, there is no obligation to repay.) An NPC shows up on our balance sheet as equity (which is more favorable to banks) and a loan shows up as a liability (which isn’t perceived as favorable in the banking industry).
  16. So I can make a loan, a donation or purchase an NPC. What is the best option for the co-op?

    The answer is dependent on the amount of the contribution. The following assumes the contribution is of an equal amount in all options. By far the best option for the co-op is an unrestricted donation. The second best option would be to purchase NPCs and finally the next best option would be to make a loan to the co-op.
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