Grassroots Investing Program Growing the Local Food System & Strengthening the Local Economy
The La Montanita Fund (LaM Fund) is a grassroots member investing and 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, 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 are deposited in an account with New Mexico Educators Federal Credit Union for use as collateral for loans to local producers based on the recommendations of the LaM Fund Loan Advisory Committee. LaM Fund loans are administered by NMEFCU.
The LaM FUND 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 to medium scale projects financed at an affordable rate. Both investors and loan recipients must live work in the state of New Mexico. The LaM Fund is managed by La Montanita, and governed by the La Montanita Board of Directors. The LaM Fund works to help to producers scale up production and invest in new crops and products to create as complete a regional nutritional palette as possible. It is also available to cooperative businesses to help build the regional economy in areas of community need beyond food production.
A little history on the program
For close to a decade, La Montanita has made pre-payment 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 product 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.
How it Works: Investing
The LaM Fund was formed on July 19, 2010, as a new, wholly owned subsidiary of La Montanita which owns and controls the LaM Fund. 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. B Interests allow for the participation in LaM Fund activities but do not provide ownership of the LaM Fund. Both A and B Interest purchasers are entitled 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 purchased all A Interests and rolls over A Interests purchased the LaM Fund’s first offering, each year, to maintain its commitment of a $25,000 investment in the LaM Fund. 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. If a loan defaults, collateral provided by A Interests will be accessed first to repay NMEFCU before capital provided by B Interests is accessed.
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 per offering. Investors who purchase the “Interests” will receive the highest possible NMEFCU money market interest rate (based on the total amount in the account) on the cooperatively pooled, federally insured Money Market account. Any income generated by LaM FUND loans will be shared in proportion to the number of “Interests” purchased. Investors can choose investment terms of one, three and five years.
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 approve the annual membership patronage refunds and will be paid within the first 90 days of the calendar year.
Co-op members can purchase B-Interests between October 1st and March 31 or until they are gone. Investment in the LaM Fund is considered high risk.
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” is placed in a Money Market account at the New Mexico Educators Federal Credit Union (NMEFCU), and used to collateralize loans to producers and other cooperative enterprises approved by the LaM FUND’s Loan Advisory Committee.
How It Works: The Loans
Loan applications will be taken on an ongoing basis. Loan applications are easy to fill out and help applicants begin to put together a business plan for their food or cooperative business. LaM Fund staff is happy to answer loan applicant questions and provide technical assistance if possible. The LaM FUND Loan Committee meets as needed to review all applications. Funds for approved loans are available in an ongoing basis. 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