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 percent, 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.
Interest rates and terms are as follows:
- 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 percent 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
Interested co-ops would 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.
- Those which are approved for the next step would make a full application by submitting a business plan and financial statements, audited if available, and year-to-date statements which are no more than two months old.
- 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.
Criteria for the CEBA loans
The criteria will be similar to the current 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, differently-abled people, and youth.
The first intake deadline will be July 31, 2023. It is expected that there will not be enough loans available to meet all of the demand; early applications are encouraged. CWCF will be holding webinars in early July for interested members to explain this opportunity. There will also be an FAQ posted to the CWCF website. Co-ops who may be interested in the loan offering are asked to complete this brief survey.