The Riverwest Co-op board & staff continue to take the necessary steps to keep the co-op open and the are seeking a loan from Shared Capital- a non-traditional lender that specifically works with cooperative businesses. This is a dramatic step for us, since we historically resisted external assistance that might threaten our sustainability. The one-time investment in this case, however, may the difference between us remaining open instead of shutting the Co-op's doors.

A successful loan application will need to show that we have also secured commitment from our membership. Aside from giving a financial gift, one way to offer your show of support is through a “Member Loan.”

In our 21 years of operation, this will only be the second time that we have asked for this kind of support. Member Loan financing is a critical part of how co-ops across the country and in Wisconsin raise money.

Our goal is to raise $35,000 from members, which can be leveraged to obtain $75,000 from Shared Capital Cooperative Fund. The money raised will be used to update our systems, hire more staff, upgrade equipment and products, invest in advertising, engage more members, and re-envision our café.

The loan program is described below. Please feel free to share it with anyone who you think might be able to help.

Contact our treasurer, Jill, with any questions at 414-331-3873 or 1291jcap@gmail.com

Co-operatively yours,
The Riverwest Co-op Grocery & Café Board

1. Because Member Loans are subordinate to bank debt and not secured with any collateral,

they provide Riverwest Co-op with a strong equity position in the eyes of commercial

lenders and vendors.

2. Riverwest Co-op offers participation in the program to all Member-Owners (hereby

referred to as Members) who are current in their Fair Share payments and are residents

of the State of Wisconsin. An eligible Member interested in participation should be familiar

with all of the information in this handout.

3. Riverwest Co-op’s Board of Directors reviews and adjusts the interest rates paid on

Member loans on a regular basis and revises them as necessary. However, once a note is

issued, the interest rate is fixed until the loan’s maturity. The current program has a set

minimum loan amount of $500, with average an loan size of $1,000-$5,000. The current

term is 2, 3, 4, 5 or more years. The interest rate is determined by the lender with a fixed

range of 0-5%.

4. Riverwest Co-op loans (notes) are offered at face value. The offering price (value) has no

particular relationship to the value of Riverwest Co-op or its operation results. The notes

are not transferable. They cannot be sold, assigned, or transferred to another person. No

market exists for these loans, and none is expected to develop.

5. These loans involve risk and should be made only by Members who have determined that

it is in their interest to support the growth of the Co-op. All Member Loans are unsecured

and subordinated.

6. Each owner is notified when a loan reaches maturity. At the time of maturity, Riverwest

Co-op’s Board of Directors will determine if the note is available for renewal or

termination. Interest on Member Loans is calculated on a simple interest basis and is paid

out annually. Members are responsible for reporting interest income, and the Riverwest

Co-op Grocery & Café issues IRS Form 1099INT for reporting purposes.

7. Riverwest Co-op’s outside lenders (banks) require that owner-member loans are

subordinated to any bank debt and loans.

8. Risk factors: Lending money to Riverwest Co-op involves a significant degree of risk.

There are general risks inherent in any undertaking of this scope, many of which are

beyond the control of Riverwest Co-op’s management. The likelihood of success in this

project must be considered in the light of unforeseen difficulties, complications, and

delays encountered in such efforts. Some general risks involved in operating the business

that could affect the repayment of any Member Loan are:

● Riverwest Co-op relies on the management staff and its Board of Directors, none of

whom has any legal commitment regarding their length of service with the Co-op.

● There is no guarantee that Riverwest Co-op will be able to recruit and retain people

possessing the skills and experience needed by the Co-op.

733 E. Clarke St.

Milwaukee, WI 53212

414.264.7933

How does a member loan program work?

1. You (member) tell us (Co-op) how much money you would like to lend us.

2. We call you to discuss when you would like that money back. You can loan us

the money for 2, 3, 4, 5, or more years.

3. Based on how much money you loan us and when we mutually agree that the

Co-op will pay it back, the Co-op will set an interest rate of between 0-5%.

The interest rate tells you how much additional money beyond your original

loan we will pay back.

4. The Co-op will create a “Certificate of Indebtedness” that includes all the

details of the loan (amount, term, interest rate).

5. At the end of the loan term, the member is paid back the original amount of

the loan, plus the annual interest.

Below are two examples:

1) $2000 for a 5-year term at 2% interest rate. The Co-op will repay $2200

{$2000 + $200 interest ($40 interest each year * 5 years)}.

2) $5000 for a 4-year term at 3% interest rate. The Co-op will repay $5600

{$5000 + $600 interest ($150 interest each each year * 4 years)}.

The Co-op is going to do right by you as best we can, but there are some risks to

loans! Contact Jill and the Board to learn more about those risks

and other terms of agreement.

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