Organic Valley Principle 6 Cooperative Growth Fund Frequently Asked Questions (FAQs)

What is the Organic Valley Principle 6 Cooperative Growth Fund?
The Organic Valley Principle 6 Cooperative Growth Fund is a loan and investment program supporting the growth and development of food cooperatives (cooperatively owned retail grocery stores) throughout the United States. The fund is operated by Shared Capital Cooperative under an agreement with, and thanks to the generous financial support of, CROPP Cooperative, the parent company of the Organic Valley brand.

Who is eligible to borrow from the Organic Valley Principle 6 Cooperative Growth Fund?
Any cooperatively owned retail grocery store in the U.S. that has been in operation for at least 3 years is eligible to apply for a loan. Applicants are assessed on the feasibility of their projects and their ability to repay the loan.

To borrow, a cooperative must be a member of Shared Capital Cooperative, which is a cooperative association. If the co-op is not already a member of Shared Capital, it will be required to become a member prior to receiving the loan.

Membership requires the purchase of member equity in Shared Capital, and members have a variety of rights including nominating candidates to the board of directors and voting in board elections. Find out more about membership at www.sharedcapital.coop/join.

 What kind of funding is available through the Organic Valley Principle 6 Cooperative Growth Fund?
The Organic Valley Principle 6 Cooperative Growth Fund provides term loans to food cooperatives. In the future, the Organic Valley Principle 6 Cooperative Growth Fund may offer equity investments, such as investments in C-shares and preferred stock. Equity investments are not available at this time. The Organic Valley Principle 6 Cooperative Growth Fund does not offer grants.

What can a loan from the Organic Valley Principle 6 Cooperative Growth Fund be used for?
Loans from the Organic Valley Principle 6 Cooperative Growth Fund can be used for a variety of purposes, including but not limited to equipment, leasehold improvements, inventory and working capital.

 How much can a cooperative borrow?
The Organic Valley Principle 6 Cooperative Growth Fund typically provides loans of $25,000 to $50,000, which will be used to match loans made through Shared Capital Cooperative’s other loan programs. Shared Capital can provide loans up to $1 million.

As a matching loan program, the Organic Valley Principle 6 Cooperative Growth Fund is intended to increase the amount of financing available to food co-ops by matching financing available from Shared Capital’s other lending programs, up to $50,000. A loan from the Organic Valley Principle Six Fund cannot be more than 50% of the total financing from Shared Capital.

What is the interest rate?
Thanks to the generous financial support of CROPP Cooperative, the Organic Valley Principle 6 Cooperative Growth Fund offers loans at a discounted interest rate of just 5%. Since all loans are match-financing from Shared Capital Cooperative, the final interest rate on the loan will reflect a blended rate and will depend on the rates available through the other Shared Capital loan programs.

How does a cooperative apply?
A cooperative interested in applying for a loan through the Organic Valley Principle Six Fund should review terms and eligibility and complete the Organic Valley Principle Six Fund Intake Form online at www.sharedcapital.coop/organic-valley-principle-six-fund. If you have questions, you may contact Brenda Pfahnl.

 Why was the Organic Valley Principle 6 Cooperative Growth Fund created?
CROPP Cooperative, maker of the Organic Valley and Organic Prairie brands, recognizes that food cooperatives helped build CROPP into a thriving co-op and further its mission to save family farmers. In appreciation for this long-standing loyalty and support, CROPP wanted to pay it forward by investing in food co-ops, with a goal of supporting the growth and success of food co-ops nationwide. In doing so, CROPP is supporting the sixth tenet of the cooperative principles established by the International Cooperative Alliance: “Cooperation among Cooperatives.” This fund is a great way to return support and embody the founding principles that bind all cooperatives.

What is the partnership between Organic Valley and Shared Capital?
The Organic Valley Principle 6 Cooperative Growth Fund is operated by Shared Capital Cooperative under agreement with CROPP Cooperative. After considering creating and managing a loan fund on its own, CROPP determined that it would be more advantageous to partner with Shared Capital. Shared Capital has nearly 40 years of experience lending to cooperatives and has deep staffing expertise in underwriting and managing loans. CROPP has a long-term relationship with Shared Capital as a member and partner. This new relationship is a way to enhance both companies’ brands while allowing each to focus on what it does best.

Are borrowers required to carry or promote Organic Valley products?
Cooperatives that borrow from the Organic Valley Principle 6 Cooperative Growth Fund are not required to carry Organic Valley products or do any special promotions. For those that do choose to carry Organic Valley products, CROPP Cooperative is offering borrowers special assistance with marketing and promotions, available at no cost. This program is entirely optional for borrowers. To find out more about this optional marketing and promotions assistance, contact Kelly Gibson, Director of Relationship Marketing, at kelly.gibson@organicvalley.coop or 608-625-3590.

How much money is CROPP Cooperative investing in the Organic Valley Principle 6 Cooperative Growth Fund?
CROPP Cooperative has made an investment of $1 million in Shared Capital Cooperative to support the Organic Valley Principle 6 Cooperative Growth Fund and to develop a fund for startup food co-ops. The Organic Valley Principle 6 Cooperative Growth Fund is a revolving loan fund; as loans are repaid, the principal and interest flowing back into the fund will be used to finance more cooperatives. CROPP may consider additional investments in the future.

How are loans approved?
All lending decisions are made by Shared Capital Cooperative in accordance with its lending policies and procedures and the Organic Valley Principle 6 Cooperative Growth Fund agreement. The staff and board members of CROPP Cooperative do not make lending decisions.

 How does the partnership work?
CROPP Cooperative made an investment of $1 million to Shared Capital Cooperative to create the Organic Valley Principle 6 Cooperative Growth Fund and a startup loan fund. Both CROPP Cooperative and Shared Capital will market and promote the fund. Shared Capital will manage the fund and all lending.

Why doesn’t the Organic Valley Principle 6 Cooperative Growth Fund provide loans to startup food co-ops?
Shared Capital Cooperative is in the process of developing a special fund to help meet the capital needs of startup food co-ops. CROPP Cooperative has pledged funds to support the startup fund, along with National Cooperative Bank, and several leading food co-ops. A separate fund is being created because of the special capital needs of startups and because these loans carry greater risk. The startup fund is expected to launch later in 2016.

How can I find out more about the Organic Valley Principle 6 Cooperative Growth Fund?
To learn more about the Organic Valley Principle 6 Cooperative Growth Fund, visit www.sharedcapital.coop/Organic-valley-principle-six-fund or contact Brenda Pfahnl.

 Can anyone invest in the Organic Valley Principle 6 Cooperative Growth Fund?
At this time, additional investments are not being accepted in the Organic Valley Principle 6 Cooperative Growth Fund. At some point in the future, we may be able to invite others to invest in the fund to increase the amount of money available to support the growth of food cooperatives. If you are interested in making investments that support food co-ops, contact Christina Jennings for more information.

 What does the name mean?
“Principle Six” refers to “Cooperation among Cooperatives,” which is the sixth of seven Cooperative Principles established by the International Cooperative Alliance.