As a community development loan fund, the Fund for Jobs Worth Owning is always looking for ways to structure our services in creative ways that will help borrowers expand their impact. One great way we do this is by offering flexible lines of credit for community-owned cooperatives, without the need for personal guarantees by co-op worker-owners. Lines of credit are not a typical product for small CDFIs, partly because they are time-consuming to administer.  Banks are great at offering this product, but they almost always require a personal guarantee to secure any business loan.  While such a guarantee might make sense for a sole proprietorship, partnership, or family-owned business, for a worker cooperative it doesn’t. Why should one owner of a co-op who happens to have some personal assets put their house at risk for a business loan where they do not (by design) exert sole control or reap sole benefit?  It is not a fair system for them, and creates the potential for conflict between some members who may face significant personal risk on a loan, and others who do not.

That is why cooperative specialists like the FJWO generally eschews this form of collateral, focusing instead on the underlying strength of the business, and its ability to produce cash flow to pay the loan. Rather than pitting members against each other with personal guarantees, our approach is to concentrate on the cooperative’s own financial performance, uniting co-op members in a common objective. One good example is our recent loan to The STOKE Collective.

STOKE developed out of a core belief that communities possess the power and vision to transform their world through a shared commitment to slow and thoughtful capacity building. Their objective is to support social justice movements in skill building, tending to relationships, and creating strong accountability structures. STOKE emerged from collaborations between a group of facilitators and trainers who first worked together in the UMass Alliance for Community Transformation (UACT). Five original founders have since been joined by six other members. STOKE offers a sliding-scale fee structure for organizations with smaller budgets so that any group, regardless of budget, can access the support they need. The cooperative draws upon the lived experiences and identities of its diverse membership to serve the needs of a wide range of grassroots movements and organizations.

While working with STOKE is clearly a much-valued experience for members, there is no denying that the recent pandemic put a strain on them and limited opportunities for in-person outreach and training. A $30,000 line of credit from the FJWO has allowed the cooperative to make some much-needed investments in new program development and marketing, while still ensuring that regular payroll can be maintained.

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