Newsletters: March - April 2007
Owner Loan Q&A
What is an Owner Loan Program?
Natural food cooperatives use owner loan programs to provide additional owner funding for the costs of starting a co-op, opening a second store, or in our case, expanding at our current site.
Owner loans, in addition to ownerships, provide a demonstration of community support for New Leaf Market and are a major component of our fundraising effort. The Owner Loan Program is not the only source of funds for New Leaf Market; however, financial institutions and granting agencies regard owner loans as a true test of the support of the community for the Co-op.
For an expansion and renovation, New Leaf Market needs funding for store design and construction, site improvements, equipment, inventory, working capital, and other initial start-up costs.
What are the goals of New Leaf Market's Owner Loan Campaign?
We've set a goal of $400,000 for our owner loan campaign. This will help leverage the senior debt funding we need to expand our current store.
What are the terms of the Owner Loan Program?
- The Owner Loan Program is open to all New Leaf Market primary owners.
- Owners choosing to make loans will negotiate with New Leaf Market for an interest rate of 0-3.5% for loans up to $10,000, and 0-5% for loans over $10,000. These interest rates reflect a basic premise of owner loans as an investment in the quality of life of the community rather than as financial growth investments. This is an important distinction as you consider loaning money to the Co-op.
- Maturity dates on loans will be scheduled to coincide with the 4-, 5-, 6- or 7-year term negotiated by the owner.
- The owner loans will be unsecured and will be subordinated to the claims of any creditors who hold a security interest in some or all of New Leaf Market's assets.
- Interest will be paid once a year beginning within 12 months of the store opening.
- Loans are expected to range from a minimum of $1,000 to $50,000, with an average loan of $4,000.
Are there risks associated with this program?
Yes, there are risks-these loans are unsecured and are subordinate to bank loans. There are other risks as well; these are described in the Offering Memorandum, which will be provided to you if you are interested in making an owner loan to New Leaf Market.
What can I do now?
We hope you, as an owner of New Leaf Market, will consider making a loan to help make sure your co-op is as strong as possible. This is your opportunity to help Tallahassee and the surrounding communities by supporting a grocery cooperative that will enhance economic sustainability in our region, support local farmers, and contribute to community building among our customers.
Owners supporting New Leaf Market through owner loans play a vital role in the establishment and growth of our member-owned business and the expansion of the cooperative movement. Your support of the Owner Loan Program will enable construction to begin on the expansion allowing New Leaf Market to better serve all of Tallahassee.
Your loan will help New Leaf Market to...
- begin expansion construction at the existing Apalachee Parkway store.
- provide owners and other shoppers with an abundance of fresh, local and organically grown foods.
- support local growers and food producers and the local economy, while creating jobs in a thriving local business.
- provide education about cooperatives, food, health and related topics.
- make a contribution to the community by providing a welcoming community-based environment in which to shop-one that strives to complement, rather than compete with, other local businesses.
- create Tallahassee's first one-stop shop natural foods grocery cooperative.
