100+ organizations request Congressional hearing on SBA’s disappointing report on cooperative lending

Dear Chairman Rubio, Ranking Member Cardin, Chairwoman Velazquez, and Ranking Member Chabot:

Thank you for your leadership on the House Small Business Committee to help create an economy that works for Main Street America.

We write to you today to request a committee hearing on the Small Business Administration’s (SBA) recent report to Congress, “Cooperative Lending – Personal Guarantee Requirement” that was required through the bipartisan supported and passage of the Main Street Employee Ownership Act.

The Main Street Employee Ownership Act, included in the National Defense Authorization Act of Fiscal Year 2019 (Public Law No. 115-232), required SBA to “study and recommend practical alternatives for cooperatives that will satisfy the loan guarantee requirements of the Administration.”

During two listening sessions, SBA heard from many different entities within the cooperative sector: lenders (including CDFIs), trade associations, potential borrowers, and community and economic developers. Through these discussions, and in a separate meeting with the U.S. Department of Agriculture that makes loans to cooperatives without personal guarantees, there were numerous alternatives proposed to the personal guarantee requirement that would enable the SBA to lend to cooperative businesses while mitigating risk.

We appreciated SBA’s engagement and were hopeful there would be a commonsense solution to resolve the barriers for cooperative businesses. Additionally, we were optimistic that SBA would take a nominal step and provide alternatives and ideas of its own.

We were greatly disappointed to learn that the SBA did not provide any practical alternatives as required by law, and instead, relied on its existing requirements that make it implausible for cooperative businesses to access the agency’s programs.

Further, SBA’s recommendation regarding an existing business to be sold and converted to an employee-owned cooperative would actually create new barriers. The agency recommends that a selling business owner provide a full, unlimited personal guarantee for the life of the loan. This is an entirely unreasonable request for a business owner entering retirement. Imagine a small business owner selling their business, but having to sign a personal guarantee for the buyer’s own loan.

For decades, the cooperative industry has asked SBA to level the playing field for cooperative businesses. In 2012, a House delegation sent a letter to SBA to resolve this issue, and now seven years later, Congress has again directed the agency to finally find a solution. With the seeming lack of support from the SBA, we ask that your committee assert itself and make this a priority to resolve.

Thank you for considering our request to hold a committee hearing. We look forward to continuing to work with Congress and the SBA to find a solution that will uphold the intent of Congress and enable growing cooperative businesses to finally access SBA financing.


40 Square Cooperative Solutions, Bloomington, Minnesota

A Slice of New York, Santa Clara, California

Blue Hill Co-op, Blue Hill, Maine

Brattleboro Food Co-op, Brattleboro, Vermont

Buffalo Mountain Food Co-op & Cafe, Hardwick, VT

California Center for Cooperative Development, Davis, California

Capital Impact Partners, Washington, D.C.

Caruso Co-operative Consulting, Tolland, Connecticut

CCEC, Chicago, Illinois

Center for Economic Democracy, Boston, Massachusetts

Chicago Community Loan Fund, Chicago, Illinois

CoBank, Greenwood Village, Colorado

Consumer Federation of America, Washington, D.C.

Community Purchasing Alliance Cooperative, Washington, D.C.

Community Reinvestment Fund, USA; Minneapolis, Minnesota

Community Wealth Builders, Baltimore, Maryland

CooperationWorks!, Berkeley, California

Cooperative Development Foundation, Washington, D.C.

Cooperative Development Institute, Northampton, Massachusetts

Cooperative Development Services Inc., Saint Paul, Minnesota

Cooperative Fund of New England, Amherst, Massachusetts

Cooperative Network, Madison, Wisconsin

Corrigan Consulting, Chicago, Illinois

Credit Union National Association, Madison, Wisconsin

Daily Groceries Co-op, Athens, Georgia

Democracy at Work Institute, Oakland, California

Employee Ownership Expansion Network, Arlington, Virginia

Farm Credit Council, Washington, D.C.

Fiddleheads Food Co-op, New London, Connecticut

Firebrand Cooperative, Fargo, North Dakota

Flatbush Food Cooperative, Brooklyn, New York

Florida Cooperative Empowered Economic Development Corp., Saint Petersburg, Florida

Food Co-op Initiative, Savage, Minnesota

Franklin Community Co-op, Greenfield, Massachusetts

Fredericksburg Food Cooperative, Fredericksburg, Virginia

Friendly City Food Co-op, Harrisonburg, Virginia

Fund for Democratic Communities, Greensboro, North Carolina

Georgia Center for Employee Ownership, Atlanta, Georgia

Hanover Co-op Food Stores & Auto Service Centers, Hanover, New Hampshire

Hunger Mountain Cooperative, Montpelier, Vermont

Indiana Center for Employee Ownership, Indianapolis, Indiana

Indiana Cooperative Development Center, Indianapolis, Indiana

Indiana Farmers Union, Morristown, Indiana

Jason Wiener | p.c., Boulder, Colorado

Keystone Development Center, Ephrata, Pennsylvania

Lake County Community Development Corporation, Ronan, Montana

Littleton Food Co-op, Littleton, New Hampshire

Local Enterprise Assistance Fund (LEAF), Boston, Massachusetts

Mad River Market, LLC, Winsted, Connecticut

Main Street Alliance, Washington, D.C.

Maryland Center for Employee Ownership, Baltimore, Maryland

Middlebury Natural Foods Co-op, Middlebury, Vermont

Minnesota Cooperative Education Foundation, Saint Paul, Minnesota

Missouri Farmers Union, Clarence, Missouri

Montana Cooperative Development Center, Great Falls, Montana

Montana Farmers Union, Great Falls, Montana

NASCO Development Services, Chicago, Illinois

National Center for Employee Ownership, Oakland, California

National Co+op Grocers, Iowa City, Iowa

National Cooperative Bank, Arlington, Virginia

National Cooperative Business Association CLUSA International, Washington, D.C.

National Council of Farmer Cooperatives, Washington, D.C.

National Farmers Union, Washington, D.C.

Nebraska Farmers Union, Lincoln, Nebraska

Neighboring Food Co-op Association, Shelburne Falls, Massachusetts

New England Farmers Union, Shelburne Falls, Massachusetts

New Whalom Cooperative LLC, Leominster, Massachusetts

New York City Network of Worker Cooperatives, Brooklyn, NY

North American Students of Cooperation, Chicago, Illinois

North Carolina Employee Ownership Center, Durham, North Carolina

North Dakota Association of Rural Electric Cooperatives, Mandan, North Dakota

North Dakota Farmers Union, Jamestown, North Dakota

North Wind Renewable Energy Cooperative, Stevens Point, Wisconsin

Northeast Organic Farming Association/Massachusetts Chapter, Barre, Massachusetts

Northwest Cooperative Development Center, Olympia, Washington

Ohio Farmers Union, Ottawa, Ohio

Pennsylvania Center for Employee Ownership, Havertown, Pennsylvania

Philadelphia Area Cooperative Alliance,  Philadelphia, Pennsylvania

Platform Cooperativism Consortium, New York City, New York

Project Equity, Oakland, California

Putney Food Co-op, Putney, Vermont

Ravalli County Economic Development Authority, Hamilton, Montana

Rhode Island Center for Employee Ownership, Providence, Rhode Island

Rocky Mountain Employee Ownership Center, Denver, Colorado

Rocky Mountain Farmers Union, Denver, Colorado

Shared Capital Cooperative, Saint Paul, Minnesota

South Dakota Farmers Union, Huron, South Dakota

Sustainable Economies Law Center, Oakland, California

Technicians for Sustainability, Tucson, Arizona

The Bailey Group LLC, Annandale, Virginia

The Cooperative Catalyst of New Mexico, Albuquerque, New Mexico

The Federation of Southern Cooperatives/Land Assistance Fund, East Point, Georgia

The ICA Group, Northampton, Massachusetts

The Working World, New York, New York

U.S. Federation of Worker Cooperatives, Oakland, California

Upside Down Consulting LLC, Chicago, Illinois

Valley Alliance of Worker Co-operatives, Northampton, Massachusetts

Valley Co-operative Business Association, Shelburne Falls, Massachusetts

Vermont Employee Ownership Center, Burlington, Vermont

Washington Area Community Investment Fund, Washington, D.C.

Willimantic Food Co-op, Willimantic, Connecticut

Work Hard Pittsburgh, Pittsburgh, Pennsylvania