Capital Campaign 2017

Investment Opportunities Questions

These answers are informational only, actual terms are governed by the prospectus and the Investment Agreement. Please know that there are always risks with any financial investment. The intention of the East Aurora Cooperative Market is to honor the Member Loan and Preferred Share terms based on the profitability of the Co-op. Please consult your financial advisor with any questions related to your unique financial situation, or for investment advice.

General Questions

Why is EACM offering owner investment opportunities?

Cooperative Principle 3: Member Economic Participation. In the spirit of Principle 3, Co-op owners have the opportunity to fund a business they believe in and own while earning interest on the investment. This is a crucial piece of the co-op business model that all co-ops are built on.

Additional financing is in the works that is contingent on financial backing from the co-op ownership that will favorably impact our eligibility and loan interest rates for the balance of our current financial needs.

Is it typical for co-ops to raise capital from owners regularly?

Yes! When a business needs capital, the business owner or owners are responsible for providing or securing that money. In a community owned co-op that’s no different, but WE own this co-op, so the responsibility is ours as member-owners. Once the store is able to overcome the financial hurdle of the construction debt and secure adequate working capital, the co-op is expected to be financially self-sustaining with income earned through day-to-day operations.

What happens if we don't reach our goal?

That’s not an option. Our business needs cash to conduct business. Member-owners came together to build our store, and we can do it again to sustain our co-op through this challenge!

Member Loans

What is a Member Loan?

Member Loans are cash loans that you and other Co-op member-owners make to the East Aurora Cooperative Market (EACM). To make Member Loans, you must be a member-owner of EACM in good standing and be a bona fide resident of New York State.

How do Member Loans work?

Member-owner lenders share in the financial risks and rewards of the business. Each member-owner lender invests what they’re able, and together Co-op owners will finance the majority of the co-op’s financial needs. It’s the beauty of being community owned! The minimum loan that can be accepted by the co-op is $1,000 for terms ranging from 4-10 years.

Member-owner lenders will receive the principle of their loan plus the interest earned when the term of their loan concludes.  This in addition to any annual patronage dividends all member-owners may be eligible to receive.

How are Member Loans paid back?

Like any loan, Member Loans have maturity dates and interest rates. You choose the length of your loan and the interest rate will be determined by the duration of the loan. Our intention is to pay back the principal and all accrued interest when the loan matures. Interest does not compound over time.

When do the Member Loans mature?

Member Loans mature between four and ten years. The co-op has set up a loan schedule restricting the number of loans available for a given term (so they don’t all come due at the same time). You choose the number of years for which you would like to loan the money to the Co-op. The Co-op gives you a promissory note back with the intention of repaying the loan according to the terms you chose.

What interest rate will I receive?

Member Loan interest rates are between 1.5-4.5%, determined by the duration of the loan. For example, a 5 year loan carries a 2% interest rate while a 10 year loan carries a 4.5% interest rate.

Will this affect my taxes?

Yes, you will have to pay taxes on the interest earned as it is realized. Please consult your tax advisor to learn how member-owner loans might affect your taxes. The EA Co-op will provide the required tax statements to member-owner loan holders.

Preferred Shares

What is a Preferred Share?

Preferred Shares are unique types of stock that member-owners may purchase from the East Aurora Cooperative Market (EACM). To purchase Preferred Shares, you must be a member-owner of EACM in good standing and be a bona fide resident of New York State.

How do Preferred Shares work?

Like other types of stock, EACM Preferred Shares pay a return, or dividend, of up to 2% out of co-op profits. They are called Preferred Shares to differentiate them from Common Shares, which is your $200 member-ownership share. These shares are “Preferred” because their dividend payment comes before the disbursement of the Common Share’s patronage dividend. Common Shares do not earn a standardized dividend. Members may purchase multiple Preferred Shares. but these shares do not carry additional voting rights.

Preferred Shares offer a higher financial advantage to the co-op than Member Loans, because they are categorized as assets rather than debt. Another advantage of Preferred Shares is that they keep co-op profits within the membership. Preferred Shares are $100 each, and require a a minimum of five shares ($500).

How are dividends paid?

Each year the EACM Board of Directors will assess whether a dividend can be paid to holders of Preferred Shares, based on the financial performance and needs of the Co-op. The dividend rate for preferred shares is 2%. When the co-op is not profitable, dividends accrue but are not paid. It is anticipated that no dividend will be declared or paid until after 2019.

When do Preferred Shares mature?

Preferred Shares have no fixed maturity date. The shares are designed to stay in the co-op and generate a return for holders of Preferred Shares once the Board deems it to be financially prudent based on store profitability.

What is the advantage of Preferred Shares?

Preferred Shares are beneficial to the Co-op because they appear as equity on our balance sheet (instead of a liability). A stronger balance sheet puts us in a better position to negotiate with outside lenders and vendors.

How do I get my money back?

Preferred Shares are designed to be an investment that stays in the co-op and earns a yearly dividend for share holders once the co-op is profitable.

Shareholders may submit a request to cash out their shares at any time to the Board of Directors. Requests must be made in writing and a waiting period may be required. The Board would vote on whether to buy back the shares, depending on the financial performance and needs of the Co-op at that time. All repurchased shares require approval by the Board. In order to benefit the Co-op and community, preferred shares should be considered long-term investments.

Does owning Preferred Shares affect my voting ability?

No. Unlike your member-owner common share, which comes with one vote, Preferred Shares do not have voting power. As always, each primary member-owner has one vote in EACM business decisions.

Will this affect my taxes?

Once a dividend is declared by the board, any payments made will become income to you. Please consult your tax advisor to learn how preferred shares might affect your taxes. EACM will send out the required tax statements to shareholders for each year they receive a dividend.

Offering by Prospectus only to bona fide residents of New York State. NY # I14-6754.


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For East Aurora Co-op Market member-owners who are bona fide New York State residents.

Still have questions?

Call Kathy at 698-9962 or
Sheila at 655-2667
Email [email protected]

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East Aurora Co-op Market

EACM exists to create a vibrant, healthy community in the Southtowns by providing access to fresh, local and wholesome foods to everyone.

Open to Everyone 7 a.m. – 9 p.m. DAILY 
591 Main Street East Aurora NY 14052
PH: 716 655 COOP (2667)
Email: [email protected]