How Worker Co-op Development Frameworks Overcome Challenges

  1. Non-Extractive Lending – An emerging approach to lending the centers cooperative ownership structures and offers favorable terms, often referred to as “non-extractive finance”, is rapidly growing the worker co-op sector. Rather than looking at individual collateral and credit, cooperative focused lenders prioritize values alignment and business planning. These lenders, such as Seed Commons and Shared Capital, spend a lot of time helping worker co-ops develop a strong business plan to don’t require the co-op to start paying interest on their loans until they have become profitable. This helps worker co-ops establish themselves.
  2. Co-op Incubation – There is a growing network of nonprofit cooperative developers that offer business coaching, management training, back end support, and opportunities for financing to assist the development of worker co-ops. Research shows that co-op incubation is essential for the development of worker co-ops.
  3. Education and Advocacy – Lack of awareness is one of the biggest challenges worker co-ops face. Educating small business service offices, law students, accountants, business owners, policy makers, and potential worker-owners about the benefits and opportunities worker co-ops offer is an essential piece of the puzzle.
  4. Policy – Local, state and federal policy has been utilized to advance co-op development. Whether in the form of tax incentives, preferential contracts, funding, business development, and more, cities and states that have implemented pro-co-op policies have seen significant advancements in co-op development.