Willy St. Co-op Local Vendor Loan Fund



From March-April 2015

Williamson Street Grocery
Madison, Wisconsin

Year founded:  1974
Equity investment:  $56 individual, $91 household
Number of owners:  32,000
Number of employees: 350
Number of business units:  two retail stores, one offsite kitchen

There are lots of creative ways that local agriculture is supported by food co-ops throughout the country, but food co-ops creating a loan fund for local farmer development has been relatively uncommon. The Willy St. Co-op in Madison, Wisc. has been piloting a program others could potentially use as a model going forward. The idea behind the Willy St. Co-op Local Vendor Loan Fund was to create a funding source for farmers that would fill necessary gaps in financing equipment or projects, bring together multi-stakeholders to invest in their success, and fulfill the co-op’s mission to promote community asset-building.

The Willy St. Co-op Local Vendor Loan Fund’s first phase pilot took place last year during 2014. The goal was to roll out $100,000 in loans and assess how well the co-op, its investing owners, and three local community organizations could effectively pool their resources to assist Willy St. Co-op’s farmers and vendors with their operational and financial development. Prior to the establishment of the loan fund, the co-op spent two years working with Slow Money Wisconsin, Forward Community Investments (a community development financial institution), and the University of Wisconsin-Extension Food Finance Institute, along with a handful of co-op owners.

"By partnering we have something that’s really about building capacity in our community."

David Waisman, Director of Finance, Willy Street Co-op, Madison Wisconsin

It was important to all of the partner organizations that they work together, and each one has brought something unique and valuable to the process. Much more so than if each party decided to go it alone. David Waisman, director of finance at Willy St. Co-op, said the co-op probably could have raised the funds on its own, but he said partnering was the way to make the loan fund more effective. “By partnering we have something that’s really about building capacity in our community. There are a lot of beneficiaries,” he said.

For example, Slow Money Wisconsin and a handful of co-op owners had approached the co-op about potential investment vehicles to help farmers with financing, but that it was imperative that their efforts create a loan fund that would be replicatable in other cities, states and regions. They didn’t want to create a one-and-done project, but something people from all over could benefit from—a real tangible benefit to the project—and one that’s also in keeping with cooperative values.

As a CDFI, Forward Community Investments could act as the loan fund’s administrators and take care of loan paperwork and other areas of financial due diligence. In that way, Willy St. Co-op didn’t have to take on that level of technical expertise to disburse and track the loans.

As part of the process of establishing the loan fund, Willy St. Co-op also did a local vendor survey asking them what they felt like they needed. Local vendors identified the need for gap financing of $30,000-$50,000 loans that they wouldn’t normally secure through banks. Additionally, vendors said that technical assistance for business development of local farms is often limited because it is advice focused on agriculture, not necessarily how to be better business people. That’s where the Food Finance Institute comes in. With every loan made, farmers get technical assistance tailored to their needs as local vendors.

It’s part of everyone’s vision to support farmers and local vendors, but the vision doesn’t stop there. It’s important to everyone involved that the loan fund enhances what they do in their own organizations. Willy St. Co-op’s decision to partner not only made good sense, but it was a strategic decision to help build their own business relationships within the local farm community.

In 2014, the loan fund supported three borrowers. The Healthy Ridge Farm in Door County, Wisc. wanted to expand their fruit orchards and fund irrigation equipment with $50,000. Keewaydin Farms in Viroqua, Wisc. got a $40,000 loan to help consolidate their distribution, and build hoop houses to extend their growing season. Cheesemaker Crème de la Coulee in Madison, Wisc. makes French-style artisanal soft cheeses, and they are financing the inventory to age cheese with a $5,000 loan. This will help them ramp up their production and expand to markets in Milwaukee and Chicago. For all of these producers, the loans are a real boost, as the kind of things they want to do (plant trees, organize distribution, age cheese) are things that conventional banks don’t finance because they represent too much risk.

The second phase of the pilot begins this year with the Willy St. Co-op reaching out to more co-op owners to invest.

“I think what’s so cool is that everyone participating benefits in different ways,” Waisman said. Willy St. Co-op can increase their supply of local products to their customers, it’s something investors can feel good about, more expanded business conducted with local farms means rural families and communities are sustained economically, and the loan fund’s business partners have also seen their mission’s expand and grow to encompass more people. “We’re really proud of this. We’re all in it together, and supporting businesses that strengthen the fabric of our communities,” Waisman said.

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