Capital Campaign

July 2023 Update:

We have raised over $1.8 million to date which means we have exceeded our minimum target!  However, we continue to welcome new member-investors and for current member-investors to increase their original loan amounts.  Any additional funds we raise, through member loans, may be used to reduce our bank loan with the National Co-op Bank (NCB) where we are required to pay 9% interest.  With more member loans, we have lower interest cost for your Co-op AND we get to pay our member-owners instead of the bank….A true win-win!

SO, if you are a member and ready to invest, here is a summary of the key loan terms:

  • Our minimum investment is $2,000 for Virginia member residents and $5,000 for Maryland member residents; but we need members, who are able, to step forward with $10,000, $20,000, $50,000 or even more.
  • Loans for Virginia residents earn from 4% to 6% interest.
  • Loans for Maryland residents earn from 4.5% to 6.5% interest.
  • These are 15 year loans paying simple interest for the first 10 years, then principal and interest in years 11 through 15.
  • For investments of $100,000 or more, the terms can be negotiated.  For example, you can request to have the principal fully repaid in year 10.

For further details and to receive your member lender investment package, please contact us at

DISCLAIMER:  This information is not intended to be a solicitation to individuals who are not members of the Lovettsville Cooperative Market.  The initial offering under the Capital Campaign was for Virginia residents only.  A limited offering became available to Co-op members who are Maryland residents later in 2021.  All potential investors should read the LCM Offering Memorandum for a complete description of the program, return on investment details, and the risks associated in making an investment.

Any member-owner who may be interested in investing should email us at to request a copy of the Offering Memorandum for a complete set of terms and supporting materials.

What is a Capital Campaign?

The Capital Campaign is the Co-op’s primary method for raising funds necessary to equip and open our community owned grocery store.  In the capital campaign, the Co-op reaches out to its member-owners and asks them to invest in their Co-op.  As with most businesses, owners invest for a financial return.  But unlike conventional businesses, member-owners invest in their co-op not only for personal financial gain, but also to support a community centered business that shares their values and benefits the community as a whole.  This is, in fact, one of the seven principles of a co-op.  It is economic participation by its member-owners.  Also note that this is an investment designed to pay a return; it is not a donation.

(The Co-op is able to accept donations through a third party nonprofit, but this is not our primary source of funding.)

What is the goal of the Lovettsville Co-op’s Capital Campaign?

Our goal was to raise at least $1.78 million by store opening.  We have raised over $1.8 million as of July, 2023!  This amount was crucial for our bank financing through the National Co-op Bank (NCB).  By raising more than this, we have the option to borrow less from commercial lenders, thereby paying more interest to our member-owners instead of the banks.

How much can I earn?

The Notes carry an interest rate that varies with the amount of the Notes, and such rate may be selected by the investor within the limits set forth below.  Loan amounts of $100,000 or more may be at interest rates and terms mutually agreed upon by the investor and the Lovettsville Co-op (i.e. principal fully paid back in year 10).  As of March 30, 2021, we moved into a new phase of our Capital Campaign which now includes our Maryland residents who are Co-op members.  The following tables indicate the different offering depending upon state residency:


Loan Amount                                       Interest Rate Selected by Investor

$2,000 – $19,999                                               Up to 4.0%

$20,000 – $49,999                                            Up to 5.0%

$50,000 – $99,999                                            Up to 6.0%

$100,000+                                                          TBD*


Loan Amount                                         Interest Rate Selected by Investor**

$5,000 – $19,999                                               Up to 4.5%

$20,000 – $49,999                                            Up to 5.5%

$50,000 – $99,999                                            Up to 6.5%

$100,000 +                                                          TBD*

*Amounts above $100,000 may be at interest rates and terms agreed upon by the subscriber and the company

**Maryland member loans are subordinate to Virginia member loans and, therefore, have a slightly higher rate of return

How will the funds be used?

The total cost of opening the new store is estimated to be a little $3.28 million.  Approximately half of this is for leasehold improvements (buildout cost), equipment, and a project overrun allowance.  Other pre-opening expenses include professional fees (e.g. legal, design, co-op consultants), personnel, inventory and other lesser expenses.  In addition, the Co-op is funding a substantial working capital reserve to help insure adequate funds are available for the first several years of operations until the store’s cash flow is positive.

What are the other funding sources?

The other primary source of funds will be a bank loan from National Co-op Bank for $950,000. In addition, the Co-op will be using the member equity collected through the $200 member-owner share investments, a tenant improvement allowance from the developer and other secondary sources.  While the Capital Campaign is focused on raising funds through investments by member-owners, the Co-op has set up a mechanism for individuals (both members and non-members) to make tax-exempt charitable donations that can be used by the Co-op.

When will this all happen?

Phase IV of our Capital Campaign began as of April 2023.  Construction began in April, with the store opening planned for Summer 2023.  See our Store Status page for more details.

How can I be sure the funds will be used wisely?

Your Board has worked with national industry experts to develop financial and business plans that reflect the best practices of food co-ops across the country.  For example, a detailed 10-year financial plan has been prepared with a co-op financial expert from Columinate and reviewed with several banks in the process of securing loans.  The store has been designed by a top firm in the food co-op industry working with architects experienced in developing grocery stores.  In fact, the store design has been completed, working with one of the leading national firms.  We have also retained one of the leading attorneys in co-op law to assist in issues related to governance, the capital campaign and the lease.  Hiring industry experts is expensive, but it is the only way that we, your Board, believe we can deliver a comprehensive business plan that maximizes the potential for success.

Can I make a loan now and still make another one later?

Yes.  For some households, temporary conditions may limit their current lending ability.  Arrangements can be made for a second loan in the future, which could potentially increase your eligible interest rate.  For details, email

What if I don’t have cash immediately available?

Some owners have made loans by moving money within their savings portfolios, including IRAs rather than taking it out of current spending.  Others have used resources available through home equity lines of credit.

Isn’t my ownership enough?  Why is an owner loan needed?

The Co-op needs approximately $3.28 Million to open the store.  Member equity from the $200 membership fees has raised approximately $216,000, and based on our financial projections, the bank is willing to loan the Co-op $950,000. That means the Co-op needs an additional $2.1 Million in order to open the store.  These capital requirements have been met primarily through member loans.These types of member loan programs are long-standing methods used by co-ops to raise money and show community support for their stores.  They demonstrate the existence of a loyal customer base and reduce debt service, making the business stronger.

What legal assurance do we have?

All of the legal documents have been reviewed by an attorney experienced in co-op law and we understand they are appropriate.

What is the likelihood that loans will be repaid?

Our business development consultant has experience with hundreds of co-ops across the country.  His experience is that 90% of co-op loans are repaid on time and 95-98% of loans are repaid to the lenders.

Why is it necessary to have the terms of the loan be so far out?

To be sure the Co-op is able to repay owner loans, the loans are scheduled to come due over 15 years, with simple interest being accrued or paid each of the first 10 years, then principal and interest being paid from years 11 through 15.  This “patient money” allows the Co-op to build up its cash flow before having to pay down the loan principal.

What are other terms of the Notes?

The Notes represent our unsecured promise to repay both the principal and simple interest of the loan over a 15 year period.  Simple interest on the Notes will start accruing from the time funds are contributed to the developer (defined as “Contribution Date”).  Interest accrued from the Contribution Date to  the date the store opens (“Opening Date”) will be paid to the Lender at such time when there is sufficient cash flow from operations after fulfilling all other vendor and creditor obligations and funding reserves, as determined by Co-op management and the Board of Directors.  Simple interest on the Notes will be accrued annually on the principal balance outstanding during each year.  On the third year of the anniversary of the Opening Date, it is planned that interest will begin to be paid. This date may change depending on the store’s financial performance.  Principal repayment will begin in year 11; twenty percent (20%) of each loan’s principal amount will be repaid on the 11th through the 15th anniversary of the Opening Date, such that the loan’s principal and interest, collectively, will be fully repaid at the end of year 15.

For Co-op members who are Virginia residents, notes must be for an amount greater than or equal to $2,000 or any multiple of $1,000 in excess of $2,000.  For Co-op members who are Maryland residents, notes must be for an amount greater than or equal to $5,000 or any multiple of $1,000 in excess of $5,000.

The Notes may be subordinate to other loans obtained by the Co-op and are unsecured.

The Co-op may accept loans from financial institutions or have lease terms that contain covenants that delay our ability to make interest and principal payments on the Notes until certain financial ratios, such as debt coverage ratios, are met.  In such a case, payments on the Notes that would otherwise be made annually may be delayed until future years.  However, the Co-op would continue to have an obligation to make these payments when such covenants are satisfied.

Note:  These represent a partial listing of the terms of the Notes.  Any member-owner who may be interested in investing should email us at to request a copy of the Offering Memorandum for a complete set of terms and supporting materials.

What happens to my investment if I die?

Your investment is part of your estate and is treated like the rest of your assets.  Some members are using a Pay on Death (POD) form that specifies their beneficiaries.  Please consult with your financial advisors about it.

What if the Capital Campaign fails to raise the targeted amount?

If the Co-op raises less than $1.7 million, the Board will assess our options to determine how we can successfully move forward with the project.  This would most likely involve scaling back on the equipment or arranging a bridge loan, but the Co-op WILL be moving forward!

(Updated August 2022)

Copyright 2023. Lovettsville Cooperative Market, Inc.