The federal government’s Canada Emergency Business Account (CEBA) program offered interest-free loans of up to $60,000 to small businesses and not-for-profits at the height of the pandemic, a program that several CWCF members participated in.
For eligible CEBA borrowers in good standing, repaying the balance of the loan on or before December 31, 2023 will result in loan forgiveness of up to 33%, or up to $20,000. Some CWCF members may face difficulties repaying the full required amount of the loan when it comes due. CWCF’s Tenacity Works Fund (TW Fund) is developing a loan offering which may be helpful to affected worker co-ops in those circumstances.
Interest Rates and Terms
The TW Fund will generally make investments as term loans. The minimum investment by the Fund is generally $15,000 and the maximum investment is $50,000.
- Term loans with available security, likely second behind other lenders unless the loan is for specific assets
- Rate: 4 – 8 %, depending on risk level. The rate will be set at 4% if a co-op can match the amount put in by CWCF. If not, then the CWCF Investment Committee will decide on the rate
- Term: 5 years with monthly payments beginning at the end of the first month
- No penalty for early redemption
- Unless the co-op’s financials show a clear ability to immediately start full repayments of Principal and Interest (P&I), the loan payment will start with interest-only payments at first: typically for six months, and then be reviewed
- Within two years, it is expected that the co-op will begin repaying P&I, unless the TW Fund’s Investment Committee grants an exception
Interested co-ops are asked to submit an initial Expression of Interest (EOI) with a summary of their financial information, the length of time the co-op has been in operation, and the rationale for the application via this link.
EOIs approved for the next step would make a full application by submitting:
– a business plan or feasibility study, and financial statements (audited if available), year-to-date statements which are no more than two months old, and projections.
The third and last intake deadline for Expressions of Interest will be September 30, 2023. Full applications must be submitted by October 16, 2023. It is expected that there will not be enough loans available to meet all of the demand; early applications are encouraged.
Criteria for CEBA – TW Loans
The CEBA-TW loan criteria will be similar to CWCF’s standard TW Fund loan criteria. Priority will be given to co-ops whose continued successful operation would be most impacted by a loan. If it appears that a co-op is going to go out of business or be unable to repay the loan, then CWCF will not make the investment.
Other factors will include:
- whether the co-op includes many / a majority of people part of equity-denied groups*
- values alignment of the co-op with CWCF’s values and principles
- longevity of operations
- length of membership in CWCF
*equity-denied groups include but are not limited to: women, members of BIPOC communities, LGBTQ2S+ people, people with disabilities, and youth.