Capital Campaign

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 is for Virginia residents only.  A limited offering will be 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 that is designed to pay a return; it is not a donation.

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

Our goal is to raise at least $1.6 million by November 30, 2021.  During Phase I of our Capital Campaign, we raised $1 million.  We are targeting to raise $600,000 by the end of November during Phase II which begins in early September.  If we raise more than that, we may 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.  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 over $2.6 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. 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 I of our Capital Campaign ran from February 2021, through May 2021.  Phase II begins in early September, 2021.  If we are successful in raising the necessary funds, construction will begin in the latter half of 2021, with the store opening planned for mid-2022.  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 will be designed by a top firm in the food co-op industry working with architects experienced in developing grocery stores.  In fact, we have already begun working with Sevenroots on the design.  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.

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 start up funds.  Funds to start the store come from ownerships (memberships), owner loans, donations and outside loans.  Owner 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 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 paid annually on the principal balance outstanding during each year of the Note’s term, on or about each anniversary of the Opening Date.  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.

Notes must be for an amount greater than or equal to $2,000 or any multiple of $1,000 in excess of $2,000.

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 $1.6 million, the Board will assess our options to determine if we can successfully move forward with the project.  In the event our Board decides we are unable to go forward with the project for any reason, proceeds from the Notes (less expenditures for necessary project costs) will be returned to lenders with a pro rata share of all interest accumulated (if any) on the funds during the period that they were held by the Co-op.

(Updated August 2021)

Copyright 2021. Lovettsville Cooperative Market, Inc.