Funding Sources for U.S. Worker Cooperatives (AI-GENERATED REPORT)

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Funding Sources for U.S. Worker Cooperatives.pdf

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Funding Sources for U.S. Worker Cooperatives

Worker cooperatives can tap a diverse array of funding programs and financial mechanisms at the national, state, and regional levels. Below is a comprehensive overview organized by source type – from federal grants and loan guarantees, to cooperative-friendly banks, CDFIs, foundations, and state/local initiatives. Each entry outlines the funding type, program objectives, eligibility, application process, key dates, and contact information, along with examples to illustrate impact.

Federal Programs and National Initiatives

U.S. Department of Agriculture (USDA) – Rural Development Programs: The USDA administers several programs to support cooperative businesses, especially in rural areas. Key USDA initiatives include:

• Rural Cooperative Development Grant (RCDG) – Type: Grant for technical assistance. Overview: RCDG improves rural economies by funding Cooperative Development Centers that help start, expand, or improve cooperatives. Approximately $5.8 million is available annually, with grants up to $200,000. Eligibility: Nonprofit organizations and higher-education institutions may apply; they must serve rural areas (typically populations <50,000). A 25% match is required (5% for tribal college applicants). Use of Funds: Establishing and operating co-op development centers to provide feasibility studies, business plans, training, and other technical assistance for new or expanding cooperatives. How to Apply: USDA issues an annual Notice of Funding Opportunity (NOFO) in the Federal Register; applications are submitted via Grants.gov with a typical deadline in spring or early summer. Prospective applicants should register in SAM.gov and contact their USDA Rural Development state office for guidance. Key Deadlines: Vary by year (e.g. for FY2024, applications were due June 3, 2024). Contact: USDA Rural Development state offices or the USDA Rural Business-Cooperative Service website for program details. Example Impact: In FY2023, 22 cooperative development centers across the country received RCDG funding to provide on-the-ground assistance to co-ops (e.g. business planning for rural worker co-ops).

• Socially-Disadvantaged Groups Grant (SDGG) – Type: Grant for technical assistance. Overview: SDGG provides grants (up to $175,000) to cooperatives and cooperative support organizations to assist socially disadvantaged groups in rural areas. The program’s objective is to foster co-ops among communities of color or other marginalized groups through training, feasibility studies, and business development guidance. Eligibility: Cooperatives, groups of cooperatives, and co-op development centers where a majority of members or beneficiaries are socially disadvantaged (e.g. based on race/ethnicity) can apply. How to Apply: Similar to RCDG, USDA announces an annual funding round via the Federal Register. Applications are submitted through Grants.gov (often on the same timetable as RCDG – for FY2024, also due June 3, 2024). Contact: USDA Rural Development state offices or the program website. Example: The Federation of Southern Cooperatives, a nonprofit cooperative association serving Black farmers, has utilized SDGG funding to provide training and support for new agricultural co-ops in the U.S. South (helping historically disadvantaged farmers develop collective businesses).

• Value-Added Producer Grants (VAPG) – Type: Grant for agricultural co-ops and producer businesses. Overview: VAPG helps agricultural producers (including farmer co-ops) develop value-added products, expand marketing, and increase income. Grants can fund business plans, feasibility studies or provide working capital for launching value-added ventures. About $30 million is available nationally each year. Eligibility: Independent farmers, ranchers, farmer/rancher cooperatives, and producer groups are eligible. Priority is given to projects led by beginning, socially-disadvantaged, or small/mid-size farmers and to farmer co-ops. Funding Details: Two grant categories – Planning Grants (up to $75,000) and Working Capital Grants (up to $250,000). A 1:1 match is required. How to Apply: USDA typically opens applications annually (e.g. electronic applications due by mid-April in 2025). Applicants use the USDA VAPG online portal or Grants.gov. Each state may have local USDA Rural Development points of contact to assist. Contact: USDA Rural Development state offices or the VAPG program portal. Example: Western Massachusetts Food Processing Cooperative (hypothetical example) – a group of dairy farmers – secured a $200,000 VAPG to launch a cheese processing line, using funds for marketing and processing equipment (paired with their own matching funds). This enabled the co-op to create a value-added product and increase member income.

• Business & Industry (B&I) Loan Guarantees – Type: Loan Guarantee (Federal credit enhancement). Overview: The B&I program encourages commercial lenders to make loans to rural businesses by guaranteeing a percentage of the loan against default. This improves access to capital for cooperatives and other businesses in rural communities. How it Works: A local bank or credit union issues the loan, and USDA guarantees typically 80% of the loan amount (for loans up to $5 million; slightly lower guarantee on larger loans). Loans can be as large as $25 million (and even up to $50 million with secretary approval in certain cases). Eligibility: Businesses in rural areas (<50,000 population) are eligible, including cooperatives (the program explicitly serves agricultural co-ops and rural worker co-ops). The borrower must be a U.S. citizen-owned entity and demonstrate creditworthiness. Use of Funds: Broad – business expansion, real estate purchase, equipment, working capital, and even business acquisitions (including financing conversions of existing companies to worker cooperatives). How to Apply: There is no fixed application window; applications are accepted year-round through USDA Rural Development state offices. The coop works with a lender, who in turn applies to USDA for the guarantee. Contact: Start with a local USDA Business Programs Specialist via the state Rural Development office or consult the B&I program page on USDA’s site. Example: Union Cab Cooperative (Madison, WI) used a USDA-guaranteed loan to finance fleet upgrades and a new facility. A local bank provided a $2 million loan, 80% guaranteed by USDA, which enabled favorable terms and a longer repayment period than the co-op could get otherwise.

• Intermediary Relending Program (IRP) – Type: Loan (to local revolving funds). Overview: While not coop-specific, IRP lends money to local intermediaries (like regional economic development nonprofits or CDFIs) at 1% interest, to re-lend to small businesses in rural areas. Many cooperatives, especially startups, have benefited indirectly – for example, a local community loan fund receiving IRP capital can then make a low-interest loan to a new worker cooperative. Eligibility: Intermediary organizations apply to USDA; ultimate borrowers (including co-ops) can often get microloans (up to $250,000) from those intermediaries. Application: Intermediaries apply to USDA in announced funding rounds; co-ops apply to the local intermediary’s loan program. Contact: USDA RD Business Programs or local IRP lenders (listed on USDA’s website).

Small Business Administration (SBA) – Cooperative Business Financing: The SBA, through its various loan programs, is another potential source of capital for worker co-ops, especially for startup and expansion financing:

• SBA 7(a) Loan Program – Type: Loan (bank loan with SBA guarantee). Overview: SBA 7(a) is the flagship small business loan program providing up to $5 million for general business purposes (working capital, equipment, real estate, or business acquisition). SBA doesn’t lend directly; it guarantees a portion (75–85%) of the bank loan. Eligibility: Worker cooperatives are eligible small businesses under SBA rules. However, traditionally the 7(a) program required a personal guarantee from any 20%+ owner, which is challenging for co-ops with broad worker-ownership. In 2018, the Main Street Employee Ownership Act was enacted to improve co-ops’ access – directing SBA to accommodate employee-owned businesses. Recent Update: In mid-2024, SBA issued guidance allowing approved lenders to use “delegated authority” to process loans to cooperatives faster. This means experienced SBA lenders can approve co-op loans without prior SBA sign-off, speeding up the process. Personal Guarantee Issue: As of 2025, cooperatives still face the personal guarantee hurdle – SBA has not fully waived it. In practice, some co-ops form an entity (or use a cooperative corporation structure) so that a subset of members or the co-op itself can provide the required guarantee. Legislation is pending to eliminate this barrier. How to Apply: Identify an SBA-approved lender (banks like National Cooperative Bank or local community banks familiar with co-ops). Prepare a business plan and financial projections; the lender submits the loan for SBA guarantee. Contact: Local SBA Small Business Development Centers (SBDC) or SBA district offices can help connect co-ops with lenders and advise on application requirements. Example: Namasté Solar Cooperative (CO) worked with an SBA lender to obtain a 7(a) loan for expansion. By leveraging the Main Street Act provisions, they structured the loan so that no single worker-owner had to personally guarantee the full amount – the cooperative’s governing board and a loan reserve fund satisfied the lender’s requirements.

• SBA 504 Loan Program – Type: Loan (partially guaranteed). Overview: The 504 program finances major fixed assets (typically real estate or large equipment) through a combination of a bank loan and an SBA-backed debenture. A typical structure is 50% bank loan, 40% SBA-backed loan (through a Certified Development Company), and 10% borrower down payment. Eligibility: Worker co-ops qualify if they meet size standards. This program can be attractive for co-ops purchasing a building or expensive machinery, as it offers long-term, fixed-rate financing for the SBA portion. How to Apply: Through a local Certified Development Company (CDC) – a specialized SBA partner. The co-op must occupy at least 51% of any real estate purchased. Contact: SBA district office or find a CDC in your state (often listed on SBA’s website). Example: Arizmendi Bakery Cooperative (CA) used an SBA 504 loan to buy a commercial bakery facility – the worker-owners pooled 10% down, a community bank financed 50%, and a CDC provided 40% in SBA-backed financing, resulting in affordable 25-year fixed rates.

• SBA Microloan Program – Type: Loan (microloan via intermediaries). Overview: SBA provides capital to nonprofit intermediaries to make very small loans (up to $50,000) to small businesses. Many startups, including small co-ops, can access these microloans which often come with technical assistance. Eligibility: Generally, any for-profit small business can apply; some intermediaries have local or mission-driven criteria. How to Access: Find an SBA Microloan intermediary in your area (SBA’s website lists them by state). Complete the intermediary’s application (which may require a simplified business plan and description of how the loan will be used). Example: A three-member worker cooperative coffee cart in Phoenix obtained a $20,000 SBA microloan through a local community development nonprofit, which helped them purchase equipment and build credit for future larger financing.

U.S. Department of Treasury – Community Development Programs: While the Treasury Department doesn’t fund co-ops directly, it supports Community Development Financial Institutions (CDFIs) that often lend to cooperatives. Notably, the CDFI Fund offers grants to certified CDFIs (many mentioned below) to increase their lending capacity to underserved businesses (including co-ops). Additionally, the 2021 reauthorization of the State Small Business Credit Initiative (SSBCI) provided funds to state economic development agencies, some of which have earmarked portions for employee-owned business financing. For instance, Colorado’s revolving loan program for employee ownership conversions is partly capitalized by SSBCI funds. Co-ops should watch for state-run SSBCI loan or venture capital programs as potential sources of low-cost financing or investment.

Cooperative Banks and CDFI Loan Funds

A number of cooperative-friendly lenders operate nationally or regionally. These institutions understand the unique structure of worker co-ops and often provide flexible underwriting, longer terms, and technical assistance alongside financing. Key cooperative lenders include:

• National Cooperative Bank (NCB) – Type: Cooperative Bank (loans & banking). Overview: NCB is a federally chartered bank founded to serve cooperatives nationwide. It is the only U.S. bank dedicated to co-ops and their members. NCB offers an array of banking and financing solutions tailored to co-ops, including term loans, lines of credit, mortgages, and even SBA-guaranteed loans (NCB is an SBA Preferred Lender). Mission: NCB’s mission is to support community development and “serve independent retailers, purchasing co-ops and worker-owned co-ops nationwide”, with a focus on low- to moderate-income communities. Eligibility: Any cooperative business (worker co-ops, consumer co-ops, housing co-ops, etc.) or aligned community business. NCB can also lend to ESOP companies and community nonprofits. How to Apply: Contact NCB’s business development team by phone (800-955-9622) or via their website. They will typically request financial statements, a business plan, and information on the cooperative’s membership structure. Contact: Website: NCB.coop; Phone: 1-800-955-9622; Headquarters: 2011 Crystal Drive, Suite 800, Arlington, VA 22202. NCB has offices or representatives in multiple regions. Example: The Hub Bike Co-op in Minneapolis worked with NCB to finance an expansion into a larger storefront. NCB provided a term loan for the build-out and a working capital line, enabling this worker-owned bicycle shop to triple its floor space. (NCB highlights this success story on their website.)

• Shared Capital Cooperative (formerly Northcountry Co-op Fund) – Type: National CDFI Loan Fund (cooperative-owned). Overview: Shared Capital is a loan fund owned by cooperative members (co-ops can join as member-owners) and certified as a CDFI. Founded in 1978, it has a mission to foster democratic ownership by providing financing to co-ops that conventional lenders often overlook. Shared Capital operates nationwide, with an emphasis on financing worker co-ops, food co-ops, and co-ops serving low-income communities. In partnership with the U.S. Federation of Worker Co-ops (USFWC), Shared Capital created the Worker Ownership Loan Fund (WOLF) in 2007. Funding Offered: Loans range from $5,000 up to $500,000+ for a variety of needs. Through WOLF, loans of $5K–$550K are available specifically for worker-owned cooperatives, covering startup costs, expansions, equipment, inventory, leasehold improvements, and working capital. Eligibility: Borrowers must be organized on a cooperative basis (worker co-ops, producer co-ops, consumer co-ops, etc.). To receive a loan, a co-op becomes a member of Shared Capital (joining is part of the loan closing process). How to Apply: Interested co-ops can contact Shared Capital via their website or directly reach out to loan officers (e.g. Mark Fick, Loan Program Manager, as noted on the WOLF page). The application involves sharing the co-op’s financial information and business plan; Shared Capital often provides guidance to strengthen the plan. There are no fixed deadlines – lending is rolling. Contact: Website: sharedcapital.coop (online inquiry forms available); Email: info@sharedcapital.coop; Phone:  612-767-2100. Example: ChiFresh Kitchen, a Black-led worker cooperative in Chicago, obtained a Shared Capital loan in 2020 to purchase commercial kitchen equipment. This financing (paired with a local grant) helped ChiFresh launch its healthy meal prep business, creating jobs for formerly incarcerated individuals. Shared Capital’s flexibility (interest-only payments for the startup phase) was crucial to ChiFresh’s early success.

• Cooperative Fund of New England (CFNE) – Type: Regional CDFI Loan Fund (nonprofit). Overview: CFNE (recently expanding to the Cooperative Fund of the Northeast) has been a cornerstone financier of co-ops in the Northeast since 1975. As a mission-driven lender, CFNE provides affordable loans and lines of credit to cooperatives of all types – worker co-ops, food co-ops, housing co-ops, and co-op support organizations – primarily in New England and adjoining states. CFNE also offers technical assistance or partners with other organizations to advise co-ops. Funding Offered: Loans typically range from a few thousand dollars for small startups or technical assistance, up to a few hundred thousand dollars for major expansions. CFNE can finance real estate, equipment, working capital, and often subordinated debt to fill financing gaps. Interest rates are generally lower than bank rates (as CFNE raises capital from social investors accepting modest returns). Eligibility: Co-ops and community-based nonprofits in the Northeast U.S. (New England, Eastern NY, Northern NJ). CFNE prioritizes projects that benefit underserved communities. How to Apply: Co-ops start by contacting CFNE’s loan officers (via cooperativefund.org). A simple loan inquiry form leads to an initial discussion. CFNE prides itself on understanding democratic governance – loan underwriting will focus on the business viability and the co-op’s capacity rather than individual credit scores. Loans are reviewed by a committee; because CFNE is itself a cooperative entity, borrowers often get feedback from experienced co-op financiers during the process. Contact: Website: cooperativefund.org; Phone: 1-800-818-7833; Email: info@cooperativefund.org. CFNE’s main office is in Amherst, MA, with staff across the region. Impact Example: Over its history, CFNE has made over 1,000 loans totaling more than $50 million to cooperatives, helping create or retain thousands of jobs. For instance, CFNE financed the expansion of Red Sun Press, a worker-owned print shop in Boston, and provided a line of credit to Boston Cleaning Collective (a startup janitorial worker co-op) to manage cash flow while they built their client base.

• Local Enterprise Assistance Fund (LEAF) – Type: National CDFI Loan Fund (nonprofit). Overview: LEAF is a Boston-based CDFI that has “funded the cooperative economy since our inception” in 1982. LEAF provides financing and advisory services to cooperatives nationwide, with a particular focus on enterprises that advance economic inclusion, such as worker co-ops in low-income communities, food co-ops in food deserts, and cooperative housing. (LEAF also lends to other community-based businesses in Massachusetts.) Funding Offered: LEAF offers flexible business loans – including startup loans, expansion capital, and bridge loans – often accompanied by technical assistance. It has leveraged over $32 million in direct loans since 2002. Loan sizes range roughly from $50,000 up to $1 million (sometimes done in participation with other lenders for larger projects). LEAF can subordinate to other lenders or provide higher-risk capital that banks won’t. Eligibility: Cooperatives and social purpose businesses across the U.S. (for co-ops) and small businesses in MA. LEAF often works with co-ops that are creating jobs for people with low incomes or are owned by communities of color. How to Apply: Co-ops can request a loan via an online form on LEAF’s website or by contacting their staff. After an initial conversation, LEAF will guide the co-op to provide needed documents. LEAF’s team, which understands cooperative governance, will evaluate the business model and social impact. Contact: Website: leaffund.org; Email: leaf@leaffund.org; Phone: 617-232-1551. Example: LEAF provided financing to Cincinnati Union Cooperative Initiative (CUCI) to launch a worker-owned manufacturing business in Ohio – demonstrating LEAF’s reach beyond New England. In Massachusetts, LEAF’s $100,000 loan (with TA) helped CERO Cooperative, a worker-owned composting company in Boston, purchase a new truck to scale up operations.

• The Working World – Seed Commons Network – Type: Nonprofit Investment Fund (patient loans). Overview: The Working World (TWW) is a pioneering fund that uses non-extractive finance to invest in worker cooperatives. It began in 2005 and now anchors Seed Commons, a national network of community-governed loan funds supporting co-ops. TWW/Seed Commons provides equity-like loans: capital is provided to a coop, and repayment is only expected from the co-op’s profits or surplus – if the project doesn’t yield financial gains, TWW does not extract payment. This model aligns risk with the co-op’s success and keeps wealth in the community. Funding Offered: TWW typically makes smaller investments to start (e.g. $5,000 – $50,000 for a startup phase) and can grow the investment if the enterprise succeeds. They often bundle technical assistance with the financing, essentially incubating the cooperative. Seed Commons has member funds in cities across the country (e.g. in New York, Chicago, North Carolina, etc.), so capital and mentorship are delivered locally with national support. Eligibility: Worker cooperatives and cooperative conversions that create democratic jobs, especially in communities traditionally denied capital. TWW’s model works best for projects with a clear path to generating revenue, since repayment is tied to project income. Startups and early-stage co-ops are welcome – unlike many lenders, TWW does not require prior operating history if the plan is sound and the member-owners are committed. How to Apply: Co-ops can apply through The Working World’s website (there is an “Apply for a Loan” link) or get connected via local Seed Commons-affiliated funds. The process involves collaboratively designing the investment and its terms so that the co-op is set up to succeed. Contact: Website: theworkingworld.org (for national inquiries) or seedcommons.org (to find local funds); NY Office: 155 Water St., Brooklyn, NY 11201; Email: usa@theworkingworld.org. Example: When worker-owned bookstore Red Emma’s in Baltimore needed capital to expand, they turned to The Working World. TWW provided a loan with no fixed payments – Red Emma’s repaid only after the new café and book space generated profit. This non-extractive investment allowed the co-op to grow without burdening it with debt service during the ramp-up period. (Red Emma’s successfully repaid the loan as sales grew, and the funds are now revolved to help other co-ops.) The Working World has maintained a 98% repayment rate using this supportive model, while helping launch dozens of new worker co-ops across the U.S.

• Additional Cooperative Lenders: Other notable co-op-friendly financing organizations include:

  • Capital Impact Partners (CIP): A national CDFI that finances community projects. CIP has a Co-op Innovation Award granting up to $50,000 for innovative cooperative development ideas each year. It also provides larger loans to established co-ops (particularly in healthcare, food, and housing sectors). Contact: capitalimpact.org – look for cooperative development programs.

  • National Cooperative Bank’s Lift Program: NCB sometimes partners with local agencies or foundations to offer special loan or grant programs. For example, NCB and local partners have offered lower-interest loans to co-ops in certain cities as part of inclusive economic development initiatives. (Contact NCB for current special programs.)

  • Credit Unions: Many credit unions make small business loans, and a few have experience with cooperatives. For instance, Self-Help Credit Union (based in Durham, NC but working nationwide) has lent to worker co-ops and employee-owned businesses as part of its mission. Similarly, regional credit unions in New York, California, and Illinois have supported worker co-ops or employee-owned startups. Co-ops should inquire with local credit unions that have CDFI designation or community development focus – some may offer microloans or lines of credit to cooperative businesses.

  • ROC USA Capital: If the cooperative is a manufactured housing (mobile home) co-op (resident-owned community), ROC USA (a specialized CDFI) provides financing to help resident groups buy their mobile home parks and operate as co-ops. Note: This is a niche sector but worth mentioning for completeness – ROC USA has financed conversions of over 300 communities to cooperative ownership.

Foundation Grants and Philanthropic Programs

Grants (which do not need to be repaid) and philanthropic funding can be critical for worker co-ops, especially in early stages or for technical assistance needs. While most grants are awarded to nonprofit organizations, some foundations and mission-driven funders directly support worker cooperatives – or indirectly via sponsor organizations. Below are key grant sources and support programs:

• The Workers Lab – Innovation Fund Fellowship – Type: Grant (fellowship with funding). Overview: The Workers Lab is a nonprofit that invests in ideas to build power for working people. Its flagship Innovation Fund is a competitive program that provides mentorship, training, and up to $150,000–$200,000 in funding to “worker-centered” ideas. Many Innovation Fund winners are cooperative initiatives (or projects in the solidarity economy). As of 2025, The Workers Lab runs this as a 5-month cohort fellowship – selected teams receive grant funding (not a loan or equity) plus technical support. Eligibility: Community organizations, nonprofits, worker cooperatives, or social enterprises with new ideas to empower workers can apply. They especially seek underrepresented innovators and projects that ensure workers are safe, healthy, and secure economically. Past co-op-related winners include a worker co-op incubator for immigrant women and a tech platform cooperative to improve job quality in home care. How to Apply: The Innovation Fund holds open application cycles (usually annually). The 2025 cycle was announced with a call for applications and specific themes (e.g. climate justice, AI impacts, etc.). Applications are submitted via The Workers Lab website (theworkerslab.com). Key Dates: Application periods vary; in 2024 the fellowship applications opened mid-year. Check the website for current deadlines (sign up for updates to be notified). Contact: Email: info@theworkerslab.com; Website: theworkerslab.com (see “Innovation Fund”).

• Cooperative Development Foundation (CDF) Grants: The CDF (the philanthropic arm of NCBA CLUSA) manages several small-grant funds that benefit cooperatives. One is the Cooperative Education Fund, which gives out $75,000–$100,000 in grants and scholarships annually. Typical awards range from $1,000 to $10,000 for projects like co-op education events, research, or the development of co-op training materials. These grants often go to cooperative development organizations or emerging co-ops with a public education component. Another CDF fund is the Katherine Arnold SCE Fund (formerly Howard Bowers Fund) which supports food co-op development, and the Ralph K. Morris Foundation (managed in partnership with CDF), which provides scholarships and small grants to develop the next generation of cooperative leaders (particularly youth in rural communities). Eligibility: Typically nonprofits or educational institutions apply on behalf of a cooperative project, or individuals for scholarships. However, worker co-ops that partner with a 501(c)(3) fiscal sponsor can also benefit. How to Apply: CDF Education Fund has two grant cycles per year (deadlines May 1 and October 1). Applications are via an online form (Submittable) on cdf.coop. The Ralph K. Morris Foundation accepts nominations annually (often focusing on cooperative leadership development opportunities). Contact: Website: cdf.coop – see “Funds & Grants” section.

• CHS Foundation – Cooperative Grants: CHS Inc. is a large farmer-owned cooperative, and its foundation funds cooperative education and youth engagement across the U.S. While much of CHS Foundation’s $ value goes to agricultural and university programs, they have granted funds to support the development of cooperatives and cooperative leadership. For example, CHS Foundation grants (often ~$5,000–$25,000) have helped start FFA (Future Farmers of America) co-op chapters, supported university cooperative business courses, and provided seed money for rural co-op conferences. Eligibility: Nonprofits, schools, or co-op development organizations in communities where CHS has a presence. A worker co-op looking to fund a training program or youth internship could partner with a local nonprofit to seek CHS Foundation support. How to Apply: Check CHS Foundation’s website for their Cooperative Education grants and application deadlines (usually an annual cycle).

• Community Foundations and Local Grants: Many worker co-ops have creatively tapped local grant opportunities. For instance, community foundations or city-based initiatives may have small business grant programs or community wealth-building grants. Often, co-ops will need a nonprofit partner or fiscal sponsor to receive the funds (since foundations usually grant to nonprofits). Tip: Approach a nonprofit with aligned mission (community development, immigrant rights, etc.) to act as a fiscal sponsor and apply for grants on behalf of your co-op. Also look for corporate charitable programs: local banks, credit unions, or utilities often have community grant funds that could support a cooperative’s startup technical needs. These tend to be smaller and less formal – e.g. a $5,000 award from a local bank’s community fund to pay for a co-op’s professional consulting or training. Example: In Minneapolis, a worker co-op received a $10,000 grant from a regional Community Economic Development Fund to cover the costs of hiring a co-op developer for their first year. In Austin, a tech worker cooperative won a city-sponsored Innovation Challenge prize of $5,000 for their open-source project. The key is to align the co-op’s purpose with funders’ priorities (job creation, equity, etc.) and clearly communicate the social impact.

• Prizes and Business Plan Competitions: Beyond traditional grants, co-ops can enter contests where prize money is offered. Some universities and incubators run annual business plan competitions with categories for social enterprises or cooperatives. For example, the MIT Inclusive Innovation Challenge and the University of Wisconsin Co-op Prize have in past years awarded cash prizes to cooperative startups. Winning such a competition can net $5,000–$50,000 in non-dilutive funding and also raise the co-op’s profile. How to find: Monitor networks like the USFWC, DAWI, or incubator newsletters for announcements of competitions that encourage collective or social business models.

Real-World Impact of Grants: Philanthropic funding has seeded many successful co-ops. For instance, Brightly Cleaning Co-op (a Bronx-based worker cooperative of domestic workers) received a grant to cover training and legal incorporation costs via the Worker Cooperative Business Development Initiative – this upfront support allowed the immigrant women founders to launch without personal debt, and Brightly today is a thriving business employing 40+ worker-owners. Another example: The Drivers Cooperative in New York City (a driver-owned ridehailing co-op) raised grant funding and prize awards (including from the Workers Lab Innovation Fund) which enabled development of their app and initial marketing; within a year of launch they had recruited thousands of drivers. These examples show how grant support can catalyze co-op growth that then becomes self-sustaining.

State and Local Government Support Programs

State and municipal governments are increasingly recognizing worker cooperatives as tools for economic development, job creation, and broad-based ownership. A number of state-level initiatives and city programs provide funding or assistance specifically for co-ops and employee-owned businesses:

• Colorado Employee Ownership Office & Loan/Grant Programs: Colorado has emerged as a leader in supporting employee-owned businesses (including worker co-ops). In 2019, Governor Jared Polis established the Employee Ownership Office within the state’s Office of Economic Development & International Trade (OEDIT). The office received an initial $1.75 million to advance employee ownership statewide. Key programs include:

  • Employee Ownership Tax Credit: Enacted in 2021, Colorado offers a refundable tax credit covering 50% of a business’s conversion costs to a worker cooperative, employee trust, or ESOP (up to $25,000 for conversions to co-ops; larger for ESOPs). This helps pay for expenses like legal fees, business valuation, and consulting. In 2023, the cap for worker co-op conversions was increased to $40,000. (From 2027, Colorado will also provide a capital gains tax exclusion for owners who sell to their employees, incentivizing more conversions.)

  • Employee Ownership Grant: The state offers a $3,000 conversion reimbursement grant to companies that complete a conversion to employee ownership. This small grant helps offset professional services costs (available in addition to the tax credit).

  • Revolving Loan Fund: Colorado is deploying federal SSBCI funds to create a low-interest loan fund for employee ownership conversions. This will provide loans to co-ops or ESOPs to finance the purchase of the business from the retiring owner or to fund growth post-conversion. The program is run via the Colorado Housing and Finance Authority as a cash collateral support program to encourage bank lending to co-ops.

  • Technical Resources: The Employee Ownership Office runs peer networks for worker co-ops (and other EO models) and certifies “Employee-Owned” companies to raise their profile. An Employee Ownership Navigator provides one-on-one consulting to businesses exploring conversion.

  How to Access: Businesses in Colorado can contact the Employee Ownership Office through OEDIT’s website (choosecolorado.com) – the site has program applications and contact info. Tax credits are claimed via the state Department of Revenue (with pre-certification from OEDIT). The loan fund will likely work through participating banks/credit unions; updates are on OEDIT’s site. Contact: Website: OEDIT Employee Ownership; Email: employeeownership@state.co.us. Example: Quiñonez Printing (Denver) – a small print shop – used the Colorado tax credit and grant to convert to a worker cooperative in 2022. The owners saved about $20,000 on attorney and CPA fees through the tax credit, and the co-op received $3,000 back after completion. They then obtained a low-interest loan for equipment expansion through the new EO loan program, making the transition and growth far more affordable.

• Massachusetts Center for Employee Ownership: In 2019, Massachusetts re-established a state-supported program for employee ownership. Through a budget line item, the state funds a Mass. Employee Ownership Center that is staffed by local nonprofits (the ICA Group and Working Wealth). The center provides outreach, education, and direct technical assistance to encourage both ESOPs and worker co-ops. While Massachusetts has not yet implemented tax credits, pending legislation (S.261) as of 2022 formalized the center and gave it authority to provide grants for feasibility studies and other support. Services: Massachusetts co-ops can receive free consultations and referrals through this center. In some cases, modest grants or vouchers have been available to help cover technical assistance costs for co-op conversions. How to Access: Contact via the Massachusetts Office of Business Development or through the ICA Group (icagroup.org) which helps run the program. Contact: Email: employeeownership@mass.gov (if available) or reach out to ICA’s Massachusetts office. Example: The center assisted Real Pickles (a MA fermented foods business) in converting to a worker cooperative in earlier years, and more recently has worked with several home care companies exploring co-op models. Their guidance helped these companies secure financing and navigate legal incorporation as co-ops.

• New York City – Worker Cooperative Business Development Initiative (WCBDI): NYC is notable for a municipally funded program supporting worker co-op creation. Since 2014, the NYC Council has allocated funding ($1.2 million in the first year, steadily increasing to $3.7 million in FY2023) to WCBDI. Overview: WCBDI funds a network of nonprofit organizations and co-op developers to provide free services to worker co-ops and groups interested in forming co-ops. These services include:** business training, one-on-one coaching, legal assistance, incubation for startups, and assistance with financing**. For example, nonprofits like the Center for Family Life, Green Worker Cooperatives, Urban Upbound, and others receive grants to run co-op incubator programs across NYC. There is also a centralized Owner-to-Owners hotline for business owners interested in selling to employees. Type of Funding: WCBDI itself is a city budget allocation (not a direct grant to co-op businesses), but it effectively provides free technical assistance and training to worker co-ops. Additionally, some WCBDI partner organizations offer small grants or subsidized services to co-ops. For instance, the NYC Network of Worker Cooperatives (NYC NOWC) runs a Co-op Loan Fund and a Co-op Innovation Grant with city support – including a Cooperative Social Impact Fund that awarded mini-grants to co-ops for professional services (e.g., $2,000 for marketing help). How to Access: Any worker cooperative or aspiring cooperative in NYC can tap into WCBDI services. Interested parties fill out an interest form on the NYC Small Business Services website, and they will be connected to the appropriate partner. Also, attending workshops or reaching out directly to organizations like Green Worker Co-ops or the Urban Justice Center can get you into the program. Contact: NYC Small Business Services, Cooperative Programs – via interest form on WCBDI page; or call the Owner2Owners hotline at (646) 363-6592 for conversion inquiries. Impact: Over its first eight years, WCBDI helped create hundreds of new worker-owners. By FY2022, it had assisted 191 worker co-ops, which generated $12 million+ in revenue and created/preserved 444 jobs, largely benefitting women, immigrants, and people of color (per the “Working Together” reports). A success story is Si Sé Puede! Women’s Cleaning Cooperative, launched with support from WCBDI partner Center for Family Life – it grew to over 60 immigrant women owners. Another is The Drivers Cooperative which, through WCBDI connections, received legal structuring help and initial funding, allowing it to launch a viable driver-owned ride-hailing app in 2021.

• City of Madison, Wisconsin – Cooperative Enterprise Development: Madison made headlines in 2015 by committing $5 million over 5 years to cooperative development – the largest municipal investment in co-ops at that time. Spearheaded by Mayor Paul Soglin and local labor leaders, the initiative (“Co-operative Enterprises for Job Creation & Business Development”) set aside $1 million per year for grants and loans to foster co-ops. Use of Funds: Madison’s program aimed to build capacity among co-op support organizations, finance new and expanding co-ops, and focus on inclusive job creation. The city partnered with local groups (e.g., Madison Cooperative Development Coalition) and the Dane County Credit Union to administer loans. Funds have been used to seed a revolving loan fund for co-ops, provide matching grants for technical assistance, and support training programs (with an emphasis on communities of color, formerly incarcerated individuals, and others facing barriers). How to Access: Worker co-ops in Madison can engage through the Madison Cooperative Development Coalition (MCDC), which coordinates the initiative. They offer a streamlined application for co-op loans or grants from the city funds. Contact: MCDC – housed at the Center for Community Stewardship in Madison; Email: mcdcinfo@centerforcommunitystewardship.org. Example: Madison Textiles Cooperative – a collective of textile recycling workers – received a $50,000 low-interest loan and a $10,000 grant for technical assistance through the city’s program, enabling them to incorporate and buy needed equipment. Madison’s support also helped existing co-ops like Union Cab add vehicles and Isthmus Engineering expand its facility, underscoring how public investment can strengthen a whole ecosystem of co-ops.

• New Jersey Employee Ownership Initiative: In 2022-2023, New Jersey earmarked $6 million for employee ownership under its Wealth Disparity Task Force initiatives. NJ’s Economic Development Authority (NJEDA) partnered with Rutgers University to establish the NJ/NY Center for Employee Ownership. The focus in NJ so far is on outreach and technical assistance (educating business owners on selling to employees, and guiding worker co-op conversions). While NJ’s program is newer, funds are expected to provide technical assistance grants to support feasibility studies and the transaction process for conversions. How to Access: NJ business owners or groups interested in co-ops can reach out to the NJEDA or the NJ Employee Ownership Center at Rutgers for consulting and potential financial support in the conversion process. Contact: Rutgers NJ/NY Center for Employee Ownership – likely through Rutgers Institute for the Study of Employee Ownership and Profit Sharing; NJEDA – Small Business Services division.

• Pennsylvania and Other States: Pennsylvania does not yet have a dedicated state fund for co-ops, but the nonprofit Keystone Development Center (funded by USDA and some state support) provides technical help to co-ops in PA. The City of Philadelphia released a strategy report in 2021 on growing co-ops, and while no city fund exists yet, it’s an area advocates are watching. Several states like Indiana and Iowa have seen legislation introduced to create employee ownership centers or loan programs – Indiana, for example, considered a revolving loan and a linked-deposit program to support employee-owned firms. Washington State passed a comprehensive employee ownership bill in 2023 that included a program director, a conversion loan fund, and tax credits, but funding was not appropriated in the 2025 budget (advocacy is ongoing to restore it). Bottom line: the landscape is evolving, so co-ops should check their state’s current initiatives – new programs can emerge with each budget cycle.

• Local Government Grant and Loan Programs: Beyond the big cities, a few other municipalities have friendly programs. For instance, Oakland, CA and Berkeley, CA have in the past provided small grants to co-op development nonprofits (though not direct to co-ops). Austin, TX created a $60,000 fund in 2018 for coop development training. Rochester, NY invested in a cooperative business incubator as part of its anti-poverty initiative (inspired by the “Cleveland Model”). Cleveland, OH itself supported the Evergreen Cooperatives (a network of worker co-ops) via foundation-city partnerships. And Chicago, IL in 2022 announced an employee ownership initiative to use American Rescue Plan Act funds to support conversions – this included technical assistance and potentially financing tools for co-ops. Co-ops should explore if their city’s economic development agency has a revolving loan fund or grant program for small businesses – sometimes co-ops qualify if the program’s goal is job creation or neighborhood revitalization. For example, a worker co-op in a low-income area might get a city Community Development Block Grant (CDBG) loan or grant, since CDBG-backed local programs often prioritize businesses that create jobs for low/moderate income individuals.

Tip: In approaching state and local programs, be prepared to explain how your cooperative meets public goals (saving jobs from closure via a conversion, creating new jobs, advancing equity, etc.). Many programs aren’t explicitly labeled for “co-ops,” but co-ops can fit criteria for small business assistance, minority-owned business support, or rural development. Don’t hesitate to contact your city’s Small Business Services or economic development office – even if they don’t have a co-op program, your inquiry might educate them and spur new support in the future.

Technical Assistance and Support Organizations

In addition to direct funding, worker cooperatives can benefit greatly from technical assistance (TA) programs – many of which come with financial support or reduce the cost of professional services. Accessing capital often goes hand-in-hand with getting expert guidance on business planning, legal structuring, and financial management. Here are resources for TA and how they tie into funding:

• USDA-Funded Cooperative Development Centers: Through the RCDG program, USDA supports about 30 Cooperative Development Centers across the country. These centers (often nonprofits or university extensions) offer free or low-cost help to groups starting co-ops or existing co-ops looking to grow. Services include conducting feasibility studies, writing business plans, facilitating strategic planning, and training co-op boards. How to find: USDA provides a list of current RCDG recipients each year – for example, CooperationWorks! (a national network of co-op centers) lists member centers by region. If you’re in the Midwest, you might contact the Indiana Cooperative Development Center or UWCC (University of Wisconsin Center for Cooperatives); in the Mid Atlantic, the Keystone Development Center (PA); in the West, the California Center for Cooperative Development (CCCD); in the South, organizations like SEED Commons affiliates or Federation of Southern Cooperatives (for Black farmer and rural co-ops). These centers often have grant funding to assist co-ops at no charge or on a sliding scale. Contact: See the Co-op Development Centers directory via CooperationWorks or NCBA CLUSA’s resources. Working with a center can also connect your co-op to potential funding: many centers know of local grants or have revolving loan funds.

• U.S. Federation of Worker Cooperatives (USFWC) – Co-op Clinic: The USFWC (national grassroots membership organization of worker co-ops) operates a Co-op Clinic program, which is a network of peer advisors providing TA and training to worker co-ops. The Co-op Clinic can help with business feasibility, governance training, conflict resolution, operational improvement, and financing readiness. While the clinic is supported by grants and USFWC dues, in some cases there may be a fee – however, the USFWC often helps co-ops find mini-grants to cover technical assistance. In fact, USFWC published a guide noting sources of $500–$10,000 grants that co-ops can use for consulting or TA. These include tapping workforce development funds or principle 6 co-op-to-co-op grants. How to Access: Worker co-ops can contact USFWC (info@usworker.coop) to request Co-op Clinic support. If you’re a member of USFWC, you may get discounted or free services. USFWC can also advise on finding a fiscal sponsor if you need to apply for a foundation grant for TA.

• Small Business Development Centers (SBDCs): SBDCs are SBA-funded counseling centers in every state (often at colleges or chambers of commerce). They provide free one-on-one business consulting on topics like writing a business plan, financial projections, and loan applications. While not co-op specialists, many SBDC advisors are happy to work with cooperatives. They can help prepare financial statements that lenders will ask for, thus indirectly increasing your chances of securing a loan. How to Access: Find your local SBDC via SBA’s website and request counseling. Note that you may need to educate the advisor on the cooperative model (e.g., explaining no single owner with 51% stake), but many fundamental business principles apply equally and they can be very helpful in polishing your funding pitch.

• Employee Ownership Resource Centers: Besides Massachusetts and Colorado mentioned above, there’s a growing network of nonprofit Employee Ownership Centers (often under the umbrella of the Employee Ownership Expansion Network). These state-focused centers (in states like California, Pennsylvania, North Carolina, Texas, etc.) provide outreach and sometimes one-on-one technical help for conversions to employee ownership. They typically focus on ESOPs and worker co-ops. Even if they don’t offer financing, they often act as connectors – referring co-ops to appropriate lenders or grant programs. Example: The North Carolina Employee Ownership Center (NCEOC) can guide a company through a worker co-op conversion and introduce them to The Working World or a local CDFI for financing.

• Legal and Accounting Assistance: Some jurisdictions have pro-bono or subsidized legal clinics for co-ops. For example, in NYC, WCBDI supports the Community Economic Development Clinic at CUNY Law and TakeRoot Justice, which offer free legal consultations for worker co-ops on incorporation, contracts, etc. Getting your legal structure and accounting systems right makes it easier to approach banks or investors. Check if there’s a law school clinic or legal aid organization in your area that serves cooperatives. The USFWC and local co-op federations (like the Network of Bay Area Worker Co-ops (NoBAWC) in California, or Philadelphia Area Cooperative Alliance (PACA)) can often refer you to affordable professionals.

• Technical Assistance Grants via Workforce Development: As hinted in USFWC’s guide, co-ops can sometimes piggyback on workforce or economic development programs. For instance, a city’s workforce board might have funding to train dislocated workers – if those workers are starting a co-op, the training funds might cover business courses or stipends during a co-op academy program. Partnering with a local nonprofit or community college to design a co-op training program could unlock those dollars.

In summary, while grants and loans provide the capital, technical assistance programs provide the know-how to deploy that capital effectively. Many co-ops use a combination: e.g., securing a small planning grant to hire a co-op developer, who then helps the co-op write a business plan that wins them a larger loan. Worker cooperatives should take full advantage of these support ecosystems, which are increasingly robust and eager to help co-ops succeed.

Conclusion & Key Contacts: The funding landscape for worker cooperatives in the U.S. is multifaceted. Cooperatives often combine sources – a startup might use member equity and a foundation grant for seed money, then take a loan from a CDFI for growth, and later leverage an SBA loan or state tax credit for expansion. It’s wise to build relationships with the co-op-friendly institutions mentioned:

• USDA Rural Development: Connect with your state’s USDA office for rural programs.

• CDFIs and Loan Funds: Reach out to Shared Capital, CFNE, LEAF, or local CDFIs early – even if you don’t need a loan yet, they can advise on readiness.

• USFWC and Co-op Networks: Join the US Federation of Worker Co-ops, which will plug you into funding news (like new grants or policy changes) and provide direct support.

• State/City Offices: If your state has an Employee Ownership initiative (like Colorado’s or Massachusetts’), make contact and get on their radar. If your city has a co-op development program or even a sympathetic economic development officer, invite them to learn about your co-op – it could lead to support now or down the line.

Every program has its specifics, but generally prepare a solid business plan, keep good financial records, and demonstrate the community impact of your cooperative. Worker co-ops align well with many funders’ goals of inclusive economic growth, so don’t be shy about approaching these sources. The momentum for worker ownership is growing, and funding opportunities are more abundant than ever before. With the above resources, U.S. worker cooperatives can find the capital and support needed for startup, expansion, and long-term success – building a more democratic and equitable economy in the process.

Sources:

• USDA Rural Development – Cooperative Programs

• U.S. Federation of Worker Cooperatives – Policy Updates and Finance Options

• National Cooperative Bank – Small Business & Co-op Services

• Shared Capital Cooperative – Worker Ownership Loan Fund details

• NCBA CLUSA – Federal Grant Programs for Co-ops (RCDG, SDGG)

• NYC Dept. of Small Business Services – Worker Cooperative Initiative Description

• City of Madison News – $5 Million Co-op Development Program

• NCEO (Rutgers) – State Legislation on Employee Ownership (CO, CA, etc.)