Most employee ownership transitions are primarily debt-financed, in the form of loans to the business. Ensuring that the business can take on the debt servicing is essential. Because of this, one of the most important first steps in assessing the fit of an employee ownership transition is a feasibility assessment that incorporates a debt capacity analysis.
The following is just one example of how a worker coop transition could be financed
DEBT
| Senior lenders | $3,600,000 |
| Seller (subordinate) | $1,500,000 |
| Inventory loan | $500,000 |
| TOTAL SOURCES | $5,600,000 |
| Purchase of business | $4,250,000 |
| Inventory | $930,000 |
| Working capital and technical assistance | $290,000 |
| Closing costs | $130,000 |
| TOTAL USES | $5,600,000 |
Take a look at our financing case studies that share a few examples of what’s possible.
Explore funding options
Businesses that work with Project Equity to transition to employee ownership can apply for flexible and affordable financing through the Employee Ownership Catalyst Fund.
