Grassroots Investing Program Growing the Local Food System & Strengthening the Local Economy
The La Montanita (LaM) Fund is a member funded micro-lending program designed to grow the local food system and strengthen the local economy. It provides an opportunity for members of La Montanita Food Co-op to support farms, ranches, value-added producers, and other food system endeavors and related businesses in the La Montanita foodshed region, as well as non-food businesses in New Mexico that utilize the cooperative economic business model. La Montanita Co-op Members can purchase Interests (similar to investing in a mutual fund) in the LaM Fund. Proceeds from the sale of the Interests in this offering are deposited in an account with New Mexico Educators Federal Credit Union for use as collateral for loans made by NMEFCU to local producers and based on the recommendations of the LaM Fund Loan Advisory Committee. The loans are administered by NMEFCU.
The LaM FUND also provides the opportunity for farmers, ranchers, value-added producers, other food system projects, and cooperative businesses that might not be eligible for conventional loans to get small scale projects financed at an affordable rate. Loan recipeints must operate within our foodshed region. The La Montanita foodshed region encompasses a 300-mile radius around Albuquerque, throughout New Mexico and extending into southern Colorado, west Texas and eastern Arizona.
The LaM Fund is managed by La Montanita, and governed by the La Montanita Board of Directors. The LaM Fund uses members’ investments to collateralize loans made and administered by the New Mexico Educators Federal Credit Union (“NMEFCU”) to producers to help them scale up production and invest in new crops and products to create as complete a regional nutritional palette as possible, and cooperative businesses to help build the regional economy.
A little history on the program
The LaM Fund was formed on July 19, 2010, as a new, wholly owned subsidiary of La Montanita. For close to a decade, La Montanita has made loans to local farmers and food producers. This loan program provided capital for development to producers. The loans were repaid to La Montanita through scheduled deductions in payments on delivery invoices for goods purchased from participating producer-borrowers. These loans totaled over $40,000 during 2009 and 2010. During the time it made these loans, La Montanita had more requests from food system businesses for aid than it could cover.
The LaM Fund is the outgrowth of this loan program.
The LaM Fund closed its first offering on December 31, 2010. In that offering, it raised $97,000. Two loans, totaling $1,500 in principal amount were made and have since been repaid. Income for the LaM Fund’s first 12 months was negligible. Of the balance of invested funds of $95,500, $7,000 were withdrawn by those investors on December 31, 2011, and $88,500 were automatically rolled over to remain available for loans. The LaM Fund closed a second offering on December 31, 2011. In that offering, it raised $9,750 in addition to the funds that were automatically rolled over from the first offering. Eight loans totaling $86,850 in principal amount were made. Net loss for the 12 months ended December 31, 2011 was $53.83 on total revenues of $1,986.41. No loans have been or are delinquent. The LaM Fund paid $2,040 in earnings in 2012 to 2010 investors.
How it Works
La Montanita owns and controls the LaM Fund. The fund consists of two types of Interests—A and B. Both A Interests and B Interests allow for the participation in LaM Fund activities but do not provide ownership of the LaM Fund. They do entitle A and B Interest purchasers to a share of any income from LaM Fund activities, such as loan fees, as determined by the La Montanita Board of Directors, proportional to the number of Interests they have purchased.
La Montanita will purchase all A Interests by rolling over its A Interests purchased in the previous offerings. If a loan defaults, collateral provided by A Interests will be accessed first to repay NMEFCU before collateral provided by B Interests is accessed.
The investing aspect of the LaM FUND is open to all current Co-op members who reside in New Mexico. The money raised from the sale of the “Interests” are placed in a Money Market account at the New Mexico Educators Federal Credit Union (NMEFCU), and are used to collateralize the loans to producers and other cooperative enterprises approved by the LaM FUND’s Loan Advisory Committee.
Interests are $250 each with a total 800 units in this year’s offering. The Interests are divided into 100, A-Interests and 700, B-Interests. La Montanita Co-op will purchase all 100, of the A-Interests for a total Co-op investment of $25,000 this year. Monies from the Co-op purchased A-Interests will be used first to cover outstanding balances in the event of a LaM FUND loan default. These A-Interests are the Co-op’s financial commitment to the program and although the purchase of LaM FUNDS interests are considered high risk, the A-Interests purchased by the Co-op, provide a lessening of risk to other LaM FUND investors.
B-Interests are available to all Co-op members on a first come first serve basis until they are gone. To keep the grassroots nature of the investing program individuals are limited to 40 B-Interests for an individual maximum investment of $10,000. Investors who purchase the “Interests” will receive the highest possible NMEFCU money market interest rate (based on the total amount in the account) on our cooperatively pooled, federally insured account. Any income generated by LaM FUND loans will be shared in proportion to the number of “Interests” purchased. The Interests have a one-year term beginning January 1st, 2013 and ending on December 31, 2013.
Payments to investors on LaM FUND generated income will be approved by a vote of the Co-op Board of Directors in much the same manner as they now approve the annual membership patronage refunds and will be paid within the first 90 days of 2012.
Co-op members can purchase B-Interests between now and December 31, 2012 until they are gone.
Loan applications will be taken on an ongoing basis. The LaM FUND Loan Committee will meet throughout 2013 to review all applications. Funds for approved loans will be available in late winter and early spring just in time for the 2013 growing season.
Join your Co-op in our latest community building adventure. Put your money where your mouth is and become a La Montanita FUND investor today.
Read a prospectus, investor agreement, loan applications and lending criteria here, or contact Robin Seydel at 505-217-2027, toll free at 877-775-2667 or at