The federal government is currently updating regulations for programs across several departments, including a few which address access to financing for cooperatives. The USFWC has worked with partners to articulate and vet responses to these updates to ensure co-ops have continued and expanded access to financial options.
We ask you to submit comment and tell the Small Business Administration and Treasury Department to ensure co-ops can access two important finance options: The Small Business Administration’s loan programs, and the Treasury Department’s CDFI Fund.
Here are the three important actions:
- Submit a letter of support to the Department of Treasury here on your letterhead using this template, telling them to ensure co-ops can access CDFI funds
- Sign on to this comment letter as a supporter of removing SBA’s personal guarantee requirement
- Submit your own comment letter using this template as a supporter of removing SBA’s personal guarantee requirement (yes, doing both helps!)
A few minutes of your time can make a huge difference in making sure co-ops have access to financing.
If you have any questions, email Aaliyah Nedd, NCBA CLUSA Government Relations Manager at anedd@ncba.coop or Mo Manklang, USFWC Policy Director at mo@usworker.coop.
Keep reading for more context below.
Action #1: Tell the Treasury Department that their updates to the CDFI Fund rules threaten co-op access to financing – Due Dec 19th
Community Development Financial Institutions (CDFIs) are one of the key sources of financing for cooperatives, and one of the main ways they are able to finance loans is through the U.S. Treasury’s CDFI fund. An update to the rules on the CDFI fund proposes that would require household economic data for all owners in order to assess whether entities can applying to receive funds can count within the CDFI fund’s target populations. This would make access to loans difficult for cooperatives which have numerous member-owners, and tremendously affect current financing options.
For more information click here.
Comments on the “CDFI Target Market Assessment Methodologies” are due on December 19, 2022. Submit your own comment here using this template.
Actions #2 & 3: Tell SBA that cooperatives should have reasonable access its loan progams
SBA has invited comment on a proposed rule update on SBA business loan programs which would allow borrowers to use 7(a) loans all or part of a business.
However, the proposed rule fails to address SBA’s personal or equity guarantee requirement within 7(a) lending programs. SBA requires a “personal guarantee” from an owner with a 20 percent stake in the business to receive the small business loan guarantee.
This keeps co-ops from receiving guaranteed loans in the same manner that standard small businesses can. In the cooperative business model, no member typically owns more than a 20 percent stake in the business, meaning the personal guarantee effectively bars cooperatives from accessing this program despite being explicitly listed as an eligible entity. For more information on the personal guarantee, click here.
- Sign on to this coalition comment letter as a supporter of removing SBA’s personal guarantee requirement
- Submit your own comment letter using this template as a supporter of removing SBA’s personal guarantee requirement (yes, doing both helps!)
Comments on the SBA proposed rule for its business lending programs are due on December 27, 2022.
Spread the word
Share the following or retweet the USFWC’s post (Use this image):
Co-ops need financing just like any other small businesses – tell the @SBAgov and @USTreasury to ensure their programs serve ALL #smallbiz, including #coops by Dec 19 https://www.usworker.coop/blog/take-action-now-to-advocate-for-equitable-co-op-financing/
If you have any questions, email Aaliyah Nedd, NCBA CLUSA Government Relations Manager at anedd@ncba.coop or Mo Manklang, USFWC Policy Director at mo@usworker.coop.
