We are organizing a credit union to finance worker cooperatives. We are not currently chartered. Thought we plan to provide a range of consumer services, the primary purpose of this credit union will be business lending to worker cooperatives.
Because worker cooperative are worker owned democratically managed business, traditional sources of financing which transfer ownership or control to outside investors are impermissible. Excluded investments include most venture capital and angle investments, and standard equity or common shares. As a result worker cooperatives rely heavily on debt or debt like investments and reinvested earning so that members retain ownership and control.
Worker cooperatives are not well understood by most financial institutions. Questions like “Who owns it?” and “Who is in charge?” are met with the only possible answers: We all own it and we make decisions democratically. These are not the correct answers for most loan officers. Loans to worker cooperatives often involve a substantial educational process since those approving the loan are dealing with an unfamiliar entity. The financial structure of worker cooperatives is usually unknown.
Overall the worker cooperative community is poorly server by existing financial institutions, with rare exceptions. The proposed “Worker Cooperative Federal Credit Union” will provide a unique opportunity for worker cooperatives to self finance on a much larger scale. We anticipate there is the capacity for about $10M in worker cooperative lending, which would easily justify the creation and operations of a credit union. This would be balanced with a much larger volume of consumer lending to individuals.