One of the advantages of being a Co-operative Society is that co-ops can run and publicly advertise 'loan stock schemes' (sometimes written as one word, "loanstock"). Loan stock is a way of raising private arrangement finance, usually from individuals (including group members) and other co-ops.
Loanstock can be relatively short term, and interest is often cumulative, so compared with a mortgage style loan at the same interest rate, it will cost you more over time. You can get around this by paying the interest annually if your cash flow can support this.
On the other hand, you don't need to pay it every month, so it has a beneficial effect on your early years cash flow, when finances are often at their tightest. Lenders also often require little or even no interest.
The pros and cons
Loan stock is one of several possible ways for a co-op to raise funds. For some co-ops, it may be the only one available, especially in early stages such as raising a deposit. For others, you'll need to compare, contrast, mix, and match with other options (some of which are presented on the Finance page). Here, then, are some considerations.
Advantages
- As discussed above, a