Types of Loans

The Tenacity Works Fund generally provides term loans over a 5-year term with a fixed rate of interest. The rate is 2 percentage points above the prime lending rate with a minimum rate of 8%. The loans are usually placed as subordinate debt, which only has priority over the members’ own investments. By receiving the loan as subordinate debt the co-op has an increased chance of securing additional conventional financing from credit unions of other financial institutions as the conventional lenders can have first claim on the assets of the co-op.

Occasionally the Tenacity Works Fund also provides a loan with interest-only payments for an initial term of 1- 2 years to assist the co-op with  its cash flow during early period of the loan. The interest rate for the interest-only period may be slightly higher than the regular rate which is charged during the interest and principal payment period.