Refinancing stabilized properties can unlock better financial terms.Once a property is stabilized, developers may qualify for lower interest rates, extended repayment periods, and more flexible loan structures than those available during construction or lease-up.
Stabilization is a sign of operational maturity. Most lenders define a property as stabilized when it reaches 90 percent or higher occupancy, consistently collects rent, and maintains stable net operating income (NOI) over 12 to 24 months. It signals to lenders that a project is financially reliable and lower risk.
Capital Impact Partners brings deep experience in refinancing stabilized affordable housing, mixed-use, and commercial properties in markets across the country.
Capital Impact Partners offers tailored refinancing solutions to support community-rooted real estate developers in sustaining long-term ownership and financial stability.
What is a Stabilized Property?
A stabilized property is one that has moved beyond construction or lease-up and is now generating steady income. For lenders and investors, this signals that the property is lower-risk and eligible for better financing options. Stabilization can apply to both residential and commercial properties, and typically reflects consistent operations, occupancy, and income performance over time. Real estate developers typically meet stabilization criteria when:
Occupancy reaches 90 percent or higher. This level of resident or commercial occupant retention demonstrates strong market demand and effective property management, reducing concerns about vacancy risk.
Net operating income (NOI) is consistent. NOI reflects the property’s actual performance. A 12- to 24-month track record of steady income shows that the property is no longer volatile and can cover its operating costs and debt service.
The lease-up period is complete. A property in lease-up may still be unpredictable. Once stabilization is achieved, rent rolls or lease revenues are steady, tenant turnover is minimal, and collections are reliable (source).
Stabilization is not just a financial milestone, it also marks a shift in how the property is positioned. It becomes a long-term asset rather than a development in transition.
Stabilized vs. Unstabilized Property: What’s the Difference?
Understanding the difference between stabilized and unstabilized properties helps clarify when refinancing becomes viable, and why timing matters.
Unstabilized properties are in an earlier phase of development, often still undergoing lease-up or achieving initial occupancy. They may not yet have a reliable income stream, and therefore present greater risk to lenders.
Stabilized properties have proven income performance and high occupancy levels. These assets are more appealing to lenders and investors due to lower volatility and more predictable returns.
If developers are unsure where their property stands, reviewing occupancy trends and financials over the past 12–24 months can help determine whether they have reached stabilization.
How to Refinance a Stabilized Property: What Real Estate Developers Need to Know
Refinancing a stabilized property can improve long-term financial health and free up resources for other priorities. Real estate developers often refinance to replace higher-cost construction or bridge loans with more sustainable, permanent debt.
Refinancing offers more favorable terms. Once a property is stabilized, developers typically qualify for lower interest rates, longer loan durations, and amortization schedules better aligned with operating cash flow. These terms improve financial predictability and reduce pressure on monthly budgets.
“As stabilized” value creates opportunity. A property’s value after stabilization, known as its “as stabilized” value, is based on actual income performance, not projections. This can increase the property’s appraised value, enabling developers to access equity, reduce loan-to-value ratios, or secure better loan pricing.
Capital Impact Partners customizes refinancing solutions. Capital Impact Partners works with real estate developers to structure refinancing that reflects project goals and community impact, not just balance sheets. We understand the complexities of affordable and mixed-use projects and offer flexible capital to meet long-term needs.
Why Property Stabilization Matters in Real Estate Finance
Stabilization isn’t just a status, it’s a turning point in a project’s life cycle. In real estate finance, it determines how lenders view risk and how capital is priced and structured.
Stabilized properties are considered lower-risk. Lenders prefer working with stabilized assets because they demonstrate consistent revenue and operations. This reduced risk can unlock more competitive financing terms and expand lending options.
It allows for more strategic financial planning. Developers with stabilized assets can move beyond reactive financing. With more predictability, they can plan for future investments, debt service, reserves, or property improvements with greater confidence.
It strengthens a developer’s track record. Successfully stabilizing a property shows a lender that the developer can deliver and operate a financially sound project. This can help build credibility and improve access to capital for future deals.
At Capital Impact Partners, we support real estate developers during and after stabilization, offering refinancing tools to sustain long-term ownership and preserve community value.
Refinancing stabilized real estate helps replace higher-cost construction or bridge loans with more sustainable, permanent debt.
When & How to Refinance a Stabilized Property
Many real estate developers begin exploring refinancing options as soon as stabilization is achieved, but timing and preparation still matter.
Post-stabilization is the right window. Once a real estate developer has achieved reliable occupancy and NOI, they may be able to secure a more favorable loan that aligns with the property’s current value, not its projected potential. This is when the “as stabilized” value truly matters.
Key triggers include debt maturity and market opportunity. Developers often refinance when an interest-only construction loan is set to expire or when interest rates drop and the property is in a strong financial position.
Steps to take before refinancing:
Analyze NOI over the past 12–24 months.
Assess current interest rates and available products.
Partner with lenders like Capital Impact Partners who understand the goals of a community-rooted developer and can offer tailored refinancing solutions.
How Capital Impact Partners Supports Stabilized Properties
As part of the Momentus Capital branded family of organizations, Capital Impact Partners provides refinancing solutions that are flexible, responsive, and designed to meet the needs of real estate developers advancing community-focused projects.
We provide long-term, fixed-rate financing that supports developers in maintaining ownership of stabilized assets.
Our team has deep experience working with affordable housing, mixed-use, and commercial projects across markets.
We don’t just provide capital, we work with developers to understand their project’s context and provide financing that fits their goals, timelines, and community priorities.
Refinancing a Stabilized Property in Action: Woodland Ridge Apartments
Refinancing a stabilized property isn’t just about improving loan terms. It can also free up critical resources to support long-term community goals. A recent example from Capital Impact Partners shows how refinancing stabilized real estate can strengthen a developer’s financial position while deepening local impact.
In San Antonio, Texas, Capital Impact provided a $10 million loan to refinance existing bank debt on Woodland Ridge Apartments, a stabilized 150-unit affordable housing community. The property serves individuals and families earning 60 percent or less of the area median income, meeting a critical need for attainable housing.
Refinancing stabilized real estate isn’t just about improving loan terms. It can also free up critical resources to support long-term community goals.
The borrower, Alamo Community Group, is a nonprofit affordable housing developer that also provides resident support services. By refinancing with Capital Impact Partners, the organization replaced higher-cost private debt with more flexible and reasonably priced financing.
As a result, Alamo Community Group was able to:
Reduce financial pressure through improved loan terms
Strengthen its balance sheet for long-term ownership
Continue providing affordable housing and services for a population living with low incomes
This case highlights how refinancing a stabilized property can help real estate developers preserve affordability, maintain financial stability, and reinvest in community outcomes.
Is your property stabilized? If your property has reached or is approaching stabilization, now may be the right time to refinance.
Contact us to learn more about how our flexible financing solutions can support your real estate development goals.
Momentus Capital is investing $50 million in the Atlanta region through 2027 to advance community and economic development, supporting small businesses and increasing access to affordable housing and quality education. Our place-based approach is driven by local voices and designed to strengthen existing community assets while fostering new opportunities for growth.
The cooperative business model emphasizes shared ownership (by a business’s employees and/or members) and democratic governance, offering a flexible structure for a wide range of organizations.
There are multiple types of cooperatives, including worker, consumer, producer, housing, and platform cooperatives, each serving different purposes.
Choosing the right cooperative model depends on an organization’s goals, stakeholder composition, and desired member engagement.
Co-op financing options include member contributions, grants, and mission-aligned lenders like Capital Impact Partners, which supports cooperative development through loans, impact investments, and grants.
The cooperative business model provides a compelling alternative to traditional business ownership, especially for those prioritizing employee ownership, democratic governance, and community alignment. In this guide, we explore the most common types of cooperative business models, explain how each one works, and outline how to determine which model best fits your goals. We also spotlight how Capital Impact Partners, part of the Momentus Capital branded family of organizations, supports various types of employee-owned businesses through flexible co-op financing options.
What is a cooperative business model?
A cooperative business model is an enterprise owned, governed, and operated for the benefit of its members. Unlike traditional companies that distribute profits based on capital investment, cooperatives prioritize use and participation. This means that members use the cooperative’s services or products, and their participation in decision-making and ownership is essential for democratic control and long-term sustainability. Members — whether workers, consumers, or producers — share control, usually following the principle of “one member, one vote,” and also benefit financially based on their engagement.
Common Features of the Cooperative Business Model
Most cooperatives share the following characteristics:
Democratic Governance: Cooperative businesses follow the principle of one member, one vote, regardless of the amount of capital contributed. This ensures shared control among members and prevents decisions from being driven solely by financial power.
Member or Community Control: Members have the authority to elect leadership and shape strategic direction, fostering accountability and alignment with community needs.
Long-Term Business Continuity: Cooperatives are designed to be resilient and enduring. Their structure promotes reinvestment in long-term goals and values (PDF) rather than short-term profit maximization.
Types of Cooperative Business Models
Cooperative business models can be adapted to a range of sectors and needs. The most common are:
Worker Cooperatives
Consumer Cooperatives
Producer Cooperatives
Purchasing (Shared Services) Cooperatives
Housing Cooperatives
Financial Cooperatives
Multi-Stakeholder Cooperatives
Platform Cooperatives
Investment Cooperatives
Social Cooperatives
Worker Cooperatives
A worker cooperative is an employee-owned business in which the workers own the majority of shares and control decision-making. Employees earn a share of profits and elect the board. These models are ideal for small businesses considering ownership succession. An illustrative example is Obran Cooperative, a worker-owned cooperative conglomerate corporation that is giving decision-making processes and capital back to its caregivers, operators, and health care workers. Capital Impact partners supported Obran’s acquisition of a home health care provider in Los Angeles using one of our impact investment products.
ChiFresh Kitchen is another example of a worker cooperative. They are a local food service cooperative in Chicago that received a grant from Capital Impact Partners’ 2020 Co-op Innovation Award. ChiFresh sells meals to local residents and businesses, providing a vital healthy food resource to the community.
Worker cooperatives like Ward Lumber — which received financing from Capital Impact Partners — are ideal for businesses considering ownership succession.
Consumer Cooperatives
Consumer cooperatives are owned and controlled by the people who buy the goods or use the services. They’re common in grocery retail, utilities, and housing.
Producer Cooperatives
Producer cooperatives are formed by independent producers (e.g., farmers, craftspeople) who come together to market, process, or distribute their goods jointly.
Purchasing (Shared Services) Cooperatives
Purchasing cooperatives allow small businesses or independent contractors to increase their purchasing power by buying goods and services collectively. The Independent Drivers Guild started off as a purchasing cooperative formed to reduce costs for rideshare drivers in NYC, and a recipient of Capital Impact Partners’ 2019 Co-op Innovation Award. They have now morphed into a worker cooperative.
Housing Cooperatives
Housing cooperatives are collectively owned and governed by residents who manage shared property to ensure long-term affordability and control. Capital Impact Partners has supported NASCO Properties, Inc., with lending to help them acquire existing properties. NASCO is a housing cooperative that offers students, families, and older adults low-cost housing with an unusual twist. The residents of the buildings rent their properties, but run the facilities cooperatively, committing to maintain the buildings and shared spaces, hold regular meetings, and share communal meals.
NASCO, a housing cooperative and recipient of Capital Impact Partners’ Co-op Innovation Award, offers students, families, and older adults low-cost housing with a twist.
Financial Cooperatives
Financial cooperatives include credit unions and cooperative banks, member-owned financial institutions offering savings, loans, and other financial services.
Multi-Stakeholder Cooperatives
Multi-stakeholder cooperatives include more than one member class, such as workers, users, and community investors, with shared governance across groups. They are well-suited for community-serving health care, education, or food systems.
Platform Cooperatives
Platform cooperatives apply cooperative principles to digital platforms. They sell goods or services primarily through a website, mobile app, or protocol and rely on democratic decision-making and shared platform ownership by workers and users.
Focused on social goals such as employment or delivery of community services, these cooperatives often blend multiple structures and operate as mission-aligned organizations.
Are you part of a cooperative that’s driving innovation and creating positive change in your community?
We encourage you to explore the resources and support offered by Momentus Capital and to consider applying for next year’s Co-op Innovation Award.
How to Choose the Right Cooperative Business Model
Identify Your Primary Stakeholders
Determine who will own and benefit from the cooperative. The identity of your primary stakeholders will influence the type of cooperative model that best suits your organization. For example, a worker cooperative is owned and governed by employees and is ideal for businesses aiming to promote employee ownership. A consumer cooperative is suitable for organizations focused on serving member needs, such as retail or utility services.
In the cooperative business model, members hold regular meetings to discuss and vote on important issues, fostering transparency and accountability.
Define Your Mission & Objectives
Clarify the core mission and long-term objectives of your cooperative. Understanding your goals will help determine the cooperative model that aligns with your values and desired impact. Consider:
How does your cooperative plan to deliver value to its members?
What are your long-term sustainability and growth plans?
Housing cooperatives such as Pilsen Housing Cooperative, a recipient of Capital Impact Partners’ Co-op Innovation Award, are types of cooperatives suitable for individuals or groups seeking affordable and community-oriented housing.
Assess Governance Structure & Member Participation
Evaluate how decisions will be made and the level of member involvement in governance:
Democratic Control: Most cooperatives operate on a one-member, one-vote principle, ensuring equal say in decision-making regardless of capital contribution.
Board of Directors: Elected by members to oversee operations and make strategic decisions.
Member Meetings: Regular meetings to discuss and vote on important issues, fostering transparency and accountability.
Evaluate Financial Requirements & Resources
Consider the financial aspects of starting and sustaining your cooperative:
Start-up Capital: Determine the amount of capital needed to launch operations and how it will be raised (e.g., member contributions, loans, grants).
Revenue Streams: Identify potential income sources to ensure financial viability.
Access to Financing: Explore financing options tailored to cooperatives, such as those offered by Capital Impact Partners, which provides lending, impact investments, and grant funding to support cooperative development.
Understand Legal & Regulatory Considerations
Research the legal requirements for establishing a cooperative in your jurisdiction:
Incorporation: Determine the appropriate legal structure and process for incorporating your cooperative.
Bylaws and Policies: Develop governing documents outlining membership criteria, decision-making processes, and operational procedures.
Compliance: Ensure adherence to local, state, and federal regulations affecting cooperatives.
Financing & Support for Cooperatives
Cooperatives typically fund operations through a combination of:
Member Buy-In: Members purchase shares or contribute capital to help fund start-up costs and build equity capital in the business.
Co-op Financing: Capital from community lenders, Community Development Financing Institutions (CDFIs), and mission-aligned institutions helps cover growth or working capital needs. This financing often features flexible terms tailored to the unique structure of cooperative enterprises.
Grants and Awards: Philanthropic or government support may be available for early-stage cooperatives or those with social missions.
Capital Impact Partners is one of many organizations supporting employee-owned businesses. We support cooperative businesses through:
Lending: We offer co-op financing through flexible loans tailored to the unique structure and cash flow needs of cooperative businesses.
Impact Investments: We offer a flexible, non-dilutive investment capital approach that targets community-centric companies, including employee-owned businesses.
Co-op Innovation Awards: These annual grants help early-stage and emerging cooperatives scale.
Obran Cooperative is a worker cooperative that received a non-dilutive impact investment from Capital Impact Partners to continue on its mission of sustaining a more effective health care system.
The Bottom Line
The cooperative business model is a flexible and powerful tool for advancing employee ownership, community control, and long-term impact. Whether you’re forming a worker cooperative to support the transition of an existing business, launching a housing cooperative to maintain affordability, or joining forces to improve purchasing power, there’s a cooperative model built for your goals.
Have questions? Learn more about ways that Capital Impact Partners supports employee ownership and employee-owned businesses via financing, grants, and impact investments.
Traditional financing for growth-stage businesses usually requires you to give up significant equity or take on covenant and guarantee requirements.
Momentus Capital’s Impact Investments team offers businesses and organizations financing options that are more flexible and align with the performance of the business.
We offer two types of non-dilutive funding: preferred equity and revenue-based financing (mezzanine debt).
At Momentus Capital, our Impact Investments team provides flexible, non-dilutive funding to growth-stage, mission-driven businesses. Unlike traditional equity investors, we prioritize capital solutions that empower entrepreneurs without requiring you to give up ownership or accept restrictive covenants or guarantee requirements.
Whether your company is growing through innovation, market expansion, or even through acquisition, our Impact Investments team offers two unique non-dilutive financing options for growth capital:
Profit Share Preferred Equity; and
Revenue Share Mezzanine Debt
At Momentus Capital, we offer you a continuum of capital with comprehensive financial solutions for entrepreneurs, developers, community-based organizations, and partner lenders — supporting you at every stage of your growth.
Through our Impact Investments offering, we utilize alternative financing to support for-profit, growth-stage companies owned by community-rooted entrepreneurs or owners with a strong community presence.
What is non-dilutive funding?
First, it’s important to define what non-dilutive funding does. It allows you to raise capital without giving up ownership or equity in your company. Unlike traditional loans that require fixed payments regardless of your company’s performance, or venture capital that requires you to give up partial ownership – and with it, some say control over your company – non-dilutive financing is an alternative option that prioritizes impact and aligns with your success. To support your growth, especially if you have a strong community presence, we offer non-dilutive financing options in the form of profit share preferred equity and revenue share mezzanine debt. Each investment option serves differently depending on your business needs.
Momentus Capital’s investment of $1.5 Million in profit share preferred equity provided QualityWorks with the growth capital it needed. Stacy Kirk, CEO of QualityWorks, is happy with the results. “Collaborating with them has truly felt like a partnership. The capital they provided has enabled us to enhance our brand recognition, assemble a world-class business development team, and expand our AI capabilities which now makes technical solutions affordable to SMBs and Social Impact organizations.”
Profit Share Preferred Equity: Investing in Long-Term Success
Profit share preferred equity differs significantly from traditional equity options. Essentially, instead of gaining a partner that takes an ownership stake in your company, you gain an investor focused on your long-term success.
Instead of relinquishing a larger degree of control, you receive growth capital in return for a percentage of profits and dividend payment. When a pre-determined multiple on the investment is achieved, the shares are redeemed. Additionally, while the investment targets a three-to-five-year holding period there is no fixed term.
To Qualify
Your company must have a minimum revenue of $4 million and have proven profitability.
Momentus Capital invested in Montee Holland, CEO of the Tayion Collection, utilizing revenue share mezzanine debt. “Montee was impressive,” said Elisabeth Chasia, investments director for the Momentus Capital branded family of organizations. “He’d built Tayion largely on his own and already demonstrated a high level of success. He was a perfect fit.” (Photo by Ara Howrani)
Revenue Share Mezzanine Debt: A Flexible Repayment Option
Revenue share mezzanine debt offers a different approach. With this option, you pay a percentage of your company’s revenue, plus a fixed interest payment. This revenue-based option means that when your business is thriving, your repayments are higher, and when things slow down, they are lower. This flexibility makes it distinct from traditional debt which requires you pay fixed monthly or quarterly payments. It is particularly beneficial for your business if you have fluctuating or seasonal cash flow.
Revenue share mezzanine debt has a three-to-five-year term with a set maturity date. This is a crucial difference from our equity product. That provides a clear timeline for both you and us – a set end date – where the principle and any remaining interest/revenue share payments are due. Furthermore, since this option does not allow for business collateral or personal guarantees, it protects both your business assets and your personal assets.
To Qualify
Your company must have a minimum revenue of $4 million and a positive cash balance.
Choosing the Right Non-Dilutive Funding
Selecting the right growth capital option depends on your specific needs and circumstances. While both of our non-dilutive financing options help local businesses like yours grow, the real impact is in keeping wealth within your community.
Profit share preferred equity is an alternative lending option best suited for businesses expecting long-term profitability and stability. It gives you the ability to invest in growth without the burden of fixed debt payments or dilution of ownership.
Revenue share mezzanine debt is ideal if your business has fluctuating cash flow. This revenue-based financing allows your repayments to adjust with revenue, offering you flexibility and peace of mind.
Here’s a quick comparison of the key points you should consider:
Profit Share Preferred Equity
Revenue Share Mezzanine Debt
Ownership
Ownership
No loss of control, non-dilutive
No ownership stake given
Repayment
Repayment
Percentage of profits + fixed dividend
Based on long-term profit share
Percentage of revenue + fixed interest
Based on revenue percentage
Cash flow impact
Cash flow impact
Flexible, dependent on profit
Flexible, tied to revenue
Term
Term
3-5 year holding period with no predetermined maturity date
3-5 year maturity date
Key benefit
Key benefit
No fixed debt payments
Repayments adjust with revenue
Best for
Best for
Steady, profitable businesses
Fluctuating, strong cash-flow companies
At Momentus Capital, we’re committed to investing in local impact and supporting community-centric businesses. Our Impact Investments team offers these alternative financing options to help your business achieve its goals without the constraints of traditional funding.
Every business is unique, and we work with you to find the best solution for your specific needs. Whether that solution is a Community Development loan, an Impact Investment, an SBA loan, or a combination of any of these, we can help.
Ready to grow without adding debt? Talk to our Impact Investments team today and explore your options.
In September 2024, the Momentus Capital team gathered in San Diego, California, for its annual meeting to share stories of impact from borrowers and beneficiaries, and discuss the organization’s strategy for the coming year.
As part of that agenda, we held a panel discussion with four of our borrowers, showcasing the success stories of businesses and organizations that had previously faced challenges in accessing capital.
We invite you to read the accompanying transcript of our panel discussion on momentuscap.org
In this series about community development lending, we aim to shed light on the various loans we offer, in the hope that it will provide the clarity our borrowers need to make an informed decision about applying for a community development loan.
In this sixth installment, we explain New Markets Tax Credit (NMTC) Qualified Low Income Community Investment (QLICI) loans and how they are pivotal in supporting projects that uplift communities living with low incomes by providing crucial financing under favorable terms.
Understanding the New Markets Tax Credit Program
The New Markets Tax Credit (NMTC) program is a federal initiative designed to stimulate investment and economic growth in urban and rural communities living with low incomes, communities that often lack adequate access to capital. The primary goal of the NMTC program is to encourage economic development and job creation in areas living with low incomes. This is achieved by providing tax incentives to investors.
Under this program, Community Development Entities (CDEs) like Capital Impact Partners provide subsidized financing for qualifying businesses or real estate projects that meet the federal definition of a Qualified Active Low-Income Community Business (QALICB).
A QALICB is typically a business that is located in, or provides services to, communities living with low incomes. The capital provided to these qualifying projects is known as a Qualified Low-Income Community Investment (QLICI), which is typically structured as a seven-year, interest-only loan.
Understanding QLICI Loans
A QLICI is a specific type of investment that is central to the New Markets Tax Credit program. It involves directing financial capital into projects or businesses in communities living with low incomes that meet the qualifications set under the NMTC program.
A QLICI is essentially the financial vehicle through which capital flows from CDEs to QALICBs at favorable rates and terms that traditional financing might not offer.
Why is QLICI Valuable to Developers?
Access to Favorable Financing
QLICIs often come with more favorable terms than those available through conventional financial products. This can include lower interest rates, longer amortization periods, and interest-only payment periods. Such terms can significantly reduce the cost of capital for developers, making projects more financially viable.
Filling Funding Gaps
Many projects in areas experiencing low incomes struggle to secure funding because they are perceived as higher risk. QLICIs can provide the essential capital needed to fill these funding gaps and make such projects feasible. This is particularly important for large-scale developments that can have transformative impacts on their communities.
The importance of this type of loan can be seen through two QLICI notes totaling $7.7 million that Capital Impact provided for Coastal Bend Food Bank in Corpus Christi, Texas. This funding was essential for constructing a new 108,200-square-foot warehouse and distribution center. The project addressed urgent facility needs sparked by explosive growth at the food bank and was critical in a community prone to hurricanes, requiring more expensive construction to meet specific safety standards. New Markets Tax Credits played an indispensable role in the capital stack, preventing potential reductions in food distribution that would have created significant community hardship.
Enabling Comprehensive Development Projects
Developers using QLICIs can undertake comprehensive projects that might include various community-serving elements such as affordable housing, health care facilities, education institutions, and commercial spaces that create jobs. The flexible nature of QLICIs allows for multi-faceted development that addresses various community needs.
Leveraging Additional Financing
A QLICI can act as a critical piece in the capital stack that attracts other sources of funding. For example, the presence of a QLICI can help reassure other investors and lenders about the viability of a project, leading to increased overall investment.
Community Impact & Compliance Benefits
Projects funded through QLICIs are required to provide measurable community impacts, particularly in communities living with low incomes. This aligns with the growing focus among developers and investors on impact investing and social responsibility, while also supporting compliance with regulatory and corporate responsibility standards.
For example, Capital Impact Partners closed QLICI loans totaling $10.6 million to assist the Center for Transforming Lives in Fort Worth, Texas. The funding supported the conversion of a 102,000-square-foot warehouse into an early childhood education and economic mobility center, increasing child care availability by 57 percent and boosting economic mobility services to 1,200 parents by 65 percent annually. This initiative, crucially supported by NMTC, enabled the construction of a facility dedicated to creating intergenerational wealth through programming that supports workers’ physical, financial, and emotional needs.
QLICIs are a powerful tool in community development, providing critical financial incentives and benefits that support significant and impactful development projects in communities. For developers, the strategic use of QLICIs not only enhances the feasibility and scope of their projects but also contributes to their broader economic and social objectives, making them valuable partners in community revitalization efforts.
Check out our mission-driven lending page for more information about our products and to find out which might work best for you.
Imagine a business that doesn’t extract value, but reinvests in its community; where employees aren’t just workers but owners, and where workers have a clear path to wealth building.
That’s the power of a cooperative, a model in which individuals work together to run a small business, buy property, or provide a service. For decades, cooperatives have provided an option for groups and communities to build wealth and support economic development.
Like any other businesses, cooperatives (co-ops) need investment to create that growth. Several years ago, we thought: what model could we create to help co-ops grow and scale? That is how the Co-op Innovation Award was born. This year, we celebrate the 10th anniversary of the Co-op Innovation Award, which we still leverage to celebrate and expand this transformational business model and the access to economic opportunity that it affords.
Democracy at Work Institute (2015/2016 awardee) helps small businesses transition into worker-owned businesses.
Continuing a Deep History of Supporting Cooperatives
Capital Impact Partners, part of the Momentus Capital branded family of organizations, has provided co-ops with loans and strategic support since our founding in 1982. We were formed through legislation approved by the United States Congress to support the development of cooperatives in communities. In 1978, Congress saw the need to better support the cooperative movement. That led to the passage of the National Consumer Cooperative Bank Act and the creation of the National Cooperative Bank (NCB).
Four years later, a tiny division of NCB known as the Office of Self-Help Development and Technical Assistance was launched to provide more focused work on bringing co-ops to communities and contributing to economic development.
Over time, this effort grew and went through several different names before becoming Capital Impact Partners – the nonprofit Community Development Financial Institution we are today.
To date, we have provided more than $300 million in lending to cooperatives nationwide, fueling the kind of ownership opportunities that allow communities to build wealth.
CLEAN Carwash (2019 awardee) leveraged its grant to transition from a campaign to end car wash worker exploitation in Los Angeles into a worker-owned co-op and worker center.
Supporting Promising Co-op Models through New Approach
However, in 2015, we realized that some of the most promising co-op projects needed a different approach from the norm.
“We saw that the real innovation was happening in smaller, scrappier co-ops,” said Alison Powers, director, Economic Opportunities at Capital Impact Partners. “We wanted to water the seeds they were planting, but folks don’t need to take on debt at the earliest stages.”
To support that goal, Capital Impact Partners launched the Co-op Innovation Award, an annual grant program that supports innovative cooperatives. Each year, award winners receive a one-year grant (anywhere from $10,000-50,000) to support innovative, early-stage projects with potential for scale. While co-ops from all sectors may apply, preference goes to worker co-ops (product or service providers) and co-ops focused on affordable housing and food access.
Award recipients use their funding to launch and market new programs, hire specialists, invest in training and professional development, and more. In addition to this core support, the award often acts as catalytic capital that attracts further investment in these co-ops. Investment dollars can be hard to come by without cash already in-hand; the Award provides that leverage for co-ops. From 2015-2024, the 30 award winners leveraged their combined $1.025 million in grants to secure more than $13 million in additional funding.
ChiFresh Kitchen (2020 awardee) has scaled from renting commercial kitchen space to now owning their own commercial kitchen in Chicago.
How Co-ops Transform Communities
At the heart of the cooperative model is the principle of employee/member ownership. Each employee/member contributes equity capital to start or purchase the business and has an equal say in the co-op’s governance, regardless of their financial investment. Profits are distributed among members or reinvested in the business, ensuring that wealth stays within the community and benefits those who contribute to its success.
There are currently more than 30,000 cooperative businesses in the United States supporting two million jobs and earning more than $600 billion in revenue annually, but the potential exists for even greater impact.
Shared ownership means that the cooperative model can offer employees/members a powerful opportunity to build a stronger financial future. Local control and ownership keeps each cooperative focused on what its community wants and needs, and successful cooperatives create high-quality jobs and opportunities for employees/members to develop valuable leadership skills.
Are you part of a cooperative that’s driving innovation and creating positive change in your community?
We encourage you to explore the resources and support offered by Momentus Capital and to consider applying for next year’s Co-op Innovation Award. Together, we can build a stronger cooperative movement.
With 30 recipients to date, the Co-op Innovation Award has already had a significant impact nationwide.
For Co-op Cincy, a non-profit that supports a network of worker-owned businesses in the Cincinnati metro area, receiving its $35,000 award in 2021 made a game-changing new “co-op boot camp” possible. Power in Numbers builds on Co-op Cincy’s preexisting “Co-op U” training program with targeted training for entrepreneurs launching new cooperatives. Participants spend 14 weeks attending weekly classes and getting the hands-on support they need to get a cooperative up and running. So far, the program has launched cooperative businesses ranging from food trucks to a radio station.
“We used the Co-op Innovation Award to help individuals take economic control of their lives, developing co-op businesses that build long-term wealth. The grant funded our 2nd and 3rd iterations of Power in Numbers.
“Our vision and mission is to create a community that works for all — and it will take all of us to do that. We are really excited to have partners like Momentus Capital,” said Co-op Cincy Co-Director Ellen Vera.
The Industrial Commons (2022 awardee) uses training in sewing and upholstery among other skills to create economic opportunity in small-town North Carolina.
The Industrial Commons is a cooperative in Morgantown, NC, supporting its community by building workforce development. They offer training in a variety of skills, including sewing and upholstery, giving local community members tangible skills and opportunities for wealth building. The Industrial Commons leveraged their $30,000 award to gain a Department of Labor grant, which has funded the work of connecting local youth with their upholstery training.
“This award has been a part of the braid that is forming our overall story. It helped us learn in an active and hands-on way about the furniture manufacturing sector, and helped with learnings that we were able to integrate into our Accelerating Common Economies (co-op training) program, which has served nine communities in cooperative development,” said Aaron Dawson, senior director of Workplace Development at The Industrial Commons.
The Future of the Award: Supporting Economic Growth for All
The Co-op Innovation Award is not just about start-up funding; it’s about fostering a vibrant ecosystem of cooperative businesses.
“The ongoing legacy of the Co-op Innovation Award is meeting cooperatives and communities where they are and investing in them to determine their future and build wealth for themselves,” said Alison Powers. “Through the award, Momentus Capital will continue to foster peoples’ right to achieve the dreams they have for themselves and their future.”
Obran is utilizing the cooperative model to not only create a more effective health care system, but also support the workers themselves. Momentus Capital’s impact investment team worked with Obran to create a preferred equity investment vehicle to support their vision.
Cooperatives are a unique, democratic business model in which members’ ability to mobilize their combined resources can be a real force for positive change. Recognizing this fact we supported the Independent Drivers Guild, an organization advocating for for-hire drivers in NYC through our Co-op Innovation Award.
Whether you are an experienced charter school operator refining your approach or an enterprising newcomer ready to break ground in the charter school education sector, there is always more to discover and master to advance your institution and widen your impact. This series is crafted to deliver crucial insights and practical advice to drive your charter school projects and overall mission forward.
At the Momentus Capital branded family of organizations, which includes Capital Impact Partners, CDC Small Business Finance, and Momentus Securities, we are dedicated to expanding capital and opportunities for communities and local leaders, including those innovating in charter school education.
Charter schools stand at the forefront of educational innovation, offering tailored learning experiences that meet the many needs of their students. However, the journey from conceptualization to realization is complex, necessitating a deep understanding of community needs, financial intricacies, and the importance of a solid real estate development team. Inspired by the guidance provided in the report created by Capital Impact Partners, ‘The Answer Key: How to Plan, Develop, and Finance Your Charter School Facility (PDF)’, this blog series distills critical insights and strategic advice, tailored to the unique challenges faced by charter school operators:
A Thorough Concept: Discover the importance of crafting a comprehensive and compelling concept that aligns with community needs and educational goals.
Meeting Lender’s Expectations: Navigate the financial landscape with confidence, learning what lenders seek in charter school projects and how to effectively present your vision.
Assembling a Solid Real Estate Development Team: Understand the crucial role of assembling a skilled team to turn your educational vision into reality, from architects to legal advisors.
Closing out this series, we explore the crucial aspect of assembling a solid real estate development team for your charter school. A well-rounded team is necessary to navigate the multifaceted journey of opening a charter school.
The Core of Your Real Estate Development Team
A successful charter school project relies on the collective expertise of several key professionals and essential roles:
Project Manager: Often the linchpin of the development process, a skilled project manager oversees the project from conception through completion, ensuring milestones are met and the project stays within budget. Their experience in charter school projects can provide invaluable foresight and problem-solving capabilities.
Architect: The architect’s role is to translate your educational vision into a practical, regulatory-compliant design. Their expertise is crucial in creating spaces that are not only conducive to learning, but also inspire students and staff alike.
Legal Counsel: Given the complex regulatory environment surrounding charter schools, having knowledgeable legal counsel is non-negotiable. They navigate zoning laws, compliance issues, and other legal aspects to prevent unforeseen challenges.
General Contractor: Responsible for bringing the architectural vision to reality, the right contractor will manage the construction phase, ensuring quality, timeliness, and fiscal responsibility.
Selecting Your Team
Selecting the right professionals is about more than verifying credentials and experience. The Answer Key suggests that all team members should have/foster:
Shared Vision: Team members should share your commitment to the school’s mission, understanding the broader impact of the project on the community;
Experience in Charter Schools: Professionals with specific experience in charter school projects bring a nuanced understanding of unique challenges and opportunities;
Community Engagement: Team members who value community input can contribute to a design and development process that reflects the needs and aspirations of the community your school will serve.
Team members should share your commitment to the school’s mission, understanding the broader impact of the project on the community.
Fostering Collaboration
Collaboration among your team members can significantly influence the success of your project. Open communication and mutual respect among team members ensures that each professional’s expertise is effectively integrated into the project. Regular meetings and clear, shared goals help maintain alignment and momentum.
Building a solid real estate development team is fundamental to transforming your charter school vision into reality. By carefully selecting a team that not only possesses the requisite professional skills but also aligns with your educational mission and values community input, you set the stage for a successful charter school development. The Answer Key provides a framework for understanding the roles and relationships that will support your project from the ground up.
Collaboration among your team members can significantly influence the success of your project.
Review “The Answer Key” in its entirety and use it as a resource as you plan and work through your charter school development. If you decide that you need financing, you can reach out to our Lending team to discuss your options; our Construction team is another resource to support you as your development progresses.
At Capital Impact Partners, we specialize in offering flexible and affordable financing to a broad spectrum of community development projects that yield significant social impact. We extend our support to educational projects that elevate communities and promote sustainable growth. Additionally, we provide extensive support and resources tailored to the unique needs of charter schools, helping to ensure access to a quality charter school education for all students.
In this series about community development lending, we aim to shed light on the various types of loans we offer, in the hope that it will provide the clarity our borrowers need to make an informed decision about applying for a community development loan.
In this fifth installment, we explore an essential financial tool in community development: loan refinancing.
What is Loan Refinancing?
Loan refinancing in the context of community development involves replacing an existing debt obligation with another under different terms. This strategy is often used to secure lower interest rates, extend repayment terms, or access additional funds for project development. Refinancing can alleviate financial pressure, provide more favorable terms, and free up capital for further investment into community-centric projects. If approved, the borrower gets a new contract that takes the place of the original agreement.
Transforming Communities Through Strategic Refinancing
Refinancing can play a pivotal role in sustaining and scaling community development efforts. It offers developers the flexibility to adjust their financial strategies in response to changing market conditions or project needs, ensuring long-term project viability and impact.
The Benefits of Refinancing
Refinancing offers several advantages:
Reduced Costs: Lower interest rates can significantly decrease the overall cost of borrowing.
Improved Cash Flow: Extended loan terms provide developers with better cash flow management, enabling them to allocate resources more effectively across projects.
Strategic Allocation: Access to additional funds allows for investment in other critical aspects of development, such as predevelopment costs and new projects.
Example: Capital Impact Partners provided a $10 million loan to refinance an existing loan on a 45,252-square-foot property located in Los Angeles. This refinancing was strategically executed to replace the existing loan and secure additional capital for soft costs, predevelopment, and approvals necessary for transforming the property. This loan enabled the conversion of vacant buildings into a six-story, 252-unit, 100-percent affordable multifamily apartment building targeting tenants living with low and moderate incomes, helping address the acute demand for affordable housing in Los Angeles.
For community developers looking to maximize the impact of their projects, understanding and utilizing refinancing can be a game changer. By adjusting financial strategies to better suit their needs, developers can ensure the sustainability and expansion of their community initiatives.
Check out our mission-driven lending page for more information about our products and to find out which might work best for you.
Whether you’re a seasoned real estate developer fine-tuning your strategies or an aspiring newcomer eager to make your mark in the industry, there is always more to know and learn to help grow your business and scale your impact. This series is designed to provide invaluable insights and actionable advice to propel your development projects and your business forward.
At Capital Impact Partners, in particular, we offer flexible and affordable financing to a wide array of community development projects that deliver tangible social impact. From community health centers to affordable housing developments, we are committed to supporting projects that uplift communities and foster sustainable growth. We also offer programmatic services that equip you with the resources, support, and networking opportunities you need to succeed in the real estate development world.
In the competitive realm of real estate development, success hinges not only on vision and execution, but also on the ability to navigate complex relationships, craft solid projections, and attract investors. These pillars serve as the bedrock upon which thriving projects are built, distinguishing between mere ventures and enduring successes.
In this final installment of our series, let’s explore the key elements that set a developer up for attracting investors for real estate development, as well as strategies for anticipating and meeting their needs.
Financial Statements & Bankability
Ensuring that developers’ balance sheets and other financial statements accurately reflect their business’ health is paramount to attracting investors for real estate development. Lenders and investors look for reliability, organization, and trustworthiness when evaluating potential projects. By conveying a deep understanding of the project, its financing strategy, and the market, developers can instill confidence and mitigate lender scrutiny.
“For the Bobbi project, I was able to prepare for lender scrutiny by knowing the deal inside and out better than any consultants on my project, and being able to articulate the vision, the financing strategy, and the market.”
– Ronette (Ronnie) C. Slamin, Founder and Principal at Embolden Real Estate
In an effort to support developers to overcome barriers to success, Capital Impact Partners has partnered with Amazon to launch the Housing Accelerator Fellowship (HAF) in the Washington Metropolitan area to support our organizations shared goals of facilitating new opportunities for real estate developers while also increasing affordable and workforce housing across the region. On October 10, 2023, Capital Impact Partners celebrated the first HAF cohort of 15 fellows to complete the program.
Anticipating Investor & Lender Needs
Before approaching lenders or investors, developers must ask themselves critical questions about their project and financing strategy. Being upfront about personal finances, including credit score and debt payment history, is essential for building trust and credibility. By aligning project goals with lender portfolios and understanding their business models, developers can tailor their pitches to meet lender and investor needs effectively.
Professional Patience & Effective Communication
Patience is a virtue in real estate development, particularly during the funding and underwriting phases. Rushing the underwriting process can lead to misunderstandings and delays, so developers must approach it with professionalism and collaboration. Maintaining effective communication, especially in challenging situations, is crucial for building strong relationships, attracting investors, and hence securing financing.
By emphasizing transparency, aligning with lender objectives, and fostering collaboration throughout the underwriting process, developers can forge robust partnerships with lenders and investors, ensuring the financing needed for their projects.
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