Capital for employee-owned businesses, and those seeking to become employee-owned
Purpose:
Our goal is to assist small to medium-sized employee-owned (ESOP or cooperative) businesses in Vermont, including those which may have encountered difficulties obtaining traditional financing.
Eligibility:
We fund businesses which are already employee-owned, are becoming so through the purchase of stock or business assets, and start-ups that will be owned by substantially all of the employees.
Uses of financing:
Proceeds may be used for fixed assets, working capital, financing of worker shares in cooperatives or the funding of Employee Stock Ownership Plans.
Term:
Loans are available with a term of 60 days to five years. Repayment is typically on an amortized basis, but alternatives will be considered. Minimum loan size is $2,000 and the maximum is $50,000 although we participate with other lenders to help those whose needs exceed this limit.
Lending is generally done at the prime rate. A final determination will depend on factors specific to each application.
Security requirements:
All loans will be secured by assets of the business, or by personal pledge in the case of worker shares. We will consider taking a subordinate position to other lenders to facilitate the transaction.
Application process:
We attempt to keep this as easy as possible. Contact us for an application form, which you submit along with the application fee of $50 to $250, depending on your size and need. You may also download the necessary materials from our website by clicking here: loan application.
The application materials you send will include a description of the business, past financial statements and future projections, management qualifications, the specifics of the loan you now request, and information about your employee ownership structure.
Our partner, the Massachusetts-based Local Enterprise Assistance Fund, performs a basic credit analysis, and our VEOC credit committee makes a final decision, usually within six weeks of receiving a completed application. Closing costs are the responsibility of the applicant.
Decision criteria:
In addition to the typical financial criteria reviewed by most lenders, we may consider other aspects including the degree of employee participation in the business and the potential value of the applicant as a demonstration project. While we must assess the potential risks of any loan, it is our intention to lend in many situations a more conventional funder would reject.
Reporting and other requirements:
All borrowers will be required to provide regular financial information to the Fund, typically on a quarterly basis. Under certain circumstances we may recommend or require that you retain technical assistance, either as an initial condition of the loan when warranted, or subsequently if performance and/or repayment fail to meet expectations.
For more information, call us at 802-861-6611 or email info@veoc.org.