SELC started working with Berkeley’s Loan Administration Board to make the necessary changes to the small business loan fund, which city council unanimously approved in September.
“We took this strategy rather than asking the city to set up a whole new revolving loan fund just for cooperatives, just build on what’s already there,” says Sara Stephens, housing and cooperatives attorney at SELC. “It’s just so hard to ask cities for money. If there’s already a pot of money here, how can we make this work better for cooperatives?”
In Berkeley, SELC proposed and the Loan Administration Board accepted the idea of a limited guarantee for worker cooperatives. Instead of requiring a personal guarantee for the whole amount of the loan, a worker cooperative must decide on a panel of owners representing at least 50 percent of ownership in the cooperative, and that group of owners will then each be responsible for equal shares of the loan amount rather than the whole amount. If one of those workers wants to leave the worker cooperative for whatever reason, the cooperative must designate another member to replace them as part of the ownership panel.