THE Co-operative Action loan fund has restructured its lending criteria to give co-ops even better opportunities to raise business finance.
In partnership with loan fund manager, Industrial Common Ownership Finance, the new structure includes larger loans and deferred capital repayment terms.
`We are determined to be as supportive as possible,` says Stephen Youd-Thomas of Co-operative Action.
`Our restructured loan system now creates a revolving credit fund which is more adventurous than previously. We have pushed the boat out further because we are prepared to take even more risks to ensure we reach people who, otherwise, could not get help.`
Co-operative Action was set up almost two years ago to support the development of new co-operative and social enterprises. Since then, says ICOF's Andrew Hibbert, `there has been nearly £ 400,000 worth of loans – and no bad debts. Everyone is repaying to term.
`But, as their original remit was similar to ICOF, an established co-operative lender, they have felt a need to distinguish the Co-operative Action fund for people who, literally, have nowhere else to turn.`
The main changes to the loan structure – available to co-operatives and mutually structured social enterprises – are:
* New maximum loan sizes – up 50% from £ 50,000 to £ 75,000.
* More willingness to take first risk on loans when it's part of a package with another lender. If things go wrong, Co-operative Action will be at the bottom of creditors? claims and this flexibility will encourage other lenders to feel more secure about getting involved.
* Greater willingness to look at low interest rates – as far down as base rate – for types of organisation that might struggle to pay a more commercial figure. Credit unions, for example, need to borrow on the lowest possible terms in order to pass the benefit on to members.
* Feasibility studies now qualify for loans of up to £ 15,000 each. They have always qualified for grants but not loans – due to the high risk of the study proving non-feasibility.
* Commitment to deferred `patient? capital payments` – interest-only payments for the length of the term with a one-off capital repayment at the end.
`Co-operative Action is adding unique features to the range of finance available for co-ops,` says Mr Hibbert. `But it's not soft money. A loan is still judged on the ability to pay back and the indication that a viable business can generate the funds to do just that.`
* For further information on Co-operative Action visit www.co-operativeaction.coop