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Determining Financing Needs

Under the Ontario Co-operative Corporations Act, (referred to as the Act) co-operatives have two different forms to choose from when incorporating: with share capital and without share capital. Each structure offers different options and benefits for raising money or carrying on operations. For the most part, which form to choose will be decided based on the purpose of the co-op and what types of financing are required.

Understanding what financing will be needed for the co-op’s operations will dictate whether or not the group needs to incorporate with share capital or without. Before making the decision about share structure, a group should try and answer the following questions about their business and what their financing needs might be. For more information on Share Capital, Financing and other topics, refer to the On Co-op FactSheets, available through the "For More Information" link at the bottom of this page.

  1. Will the co-op need to purchase equipment, land or other assets before being able to start operations?
  2. Will the co-op have to purchase supplies or maintain inventory on an ongoing basis?
  3. Will the co-op need working capital during start-up or in the early project stages?

Capital is the money used by a co-op to do business – it generally refers to the amount available to the business as assets like cash or property, minus the liabilities that the co-op has. In many cases, both a share structure and a non-share capital structure may be able to provide the co-op with the funds needed for its particular situation. However, there may also be different benefits or restrictions in choosing one form over another that may make different options available as time goes on, or restrict the co-operative from choosing other options. Some banks and financers may not be comfortable with the non-share capital structure, which may limit the ability of the co-op to raise money. A co-op developer, lawyer or accountant (preferably one who is knowledgeable about co-operatives) can help advise a co-op on how to proceed with making the choice of structure.

Financing Will Require A Business Plan

The co-op should have a business plan that outlines the co-op’s financial situation or the proposed financials. A business plan contains standard information about the co-op or the project. Business plans can be presented to commercial lenders to help them understand your business and properly assess your needs and their ability to help you. A business plan should identify:

  • Revenue or potential revenue associated with the project or the co-op’s operations – usually through the inclusion of financial statements or pro forma financials
  • Ley personnel involved in the co-op
  • Timelines and status of the project
  • Risks associated with the project and how the co-op has addressed them
  • An assessment of the market that the business is operating in and what the co-op’s ability to succeed in this market will be (their competitive advantage)

The business plan is a tool that can be used to demonstrate that the co-op has the skills and ability to move forward successfully. It can also show a lender or potential investors that the co-op can manage the project and can mitigate any risks that exist or might occur. On Co-op can assist your organization in writing a business plan, or link you to a co-op developer or other consultant who can help you. Resources are also available online, be sure to select a website from a company or organization that you recognize.

Financing Through Other Sources

Securities (Offering Statements)

The sale of shares and other securities (like debentures) is dictated by the Co-operative Corporations Act. If a co-op wishes to raise money through the issuance of securities, and does not meet the very specific exemptions contained in the Act, it must issue an “Offering Statement” which is similar to a prospectus offered by a business corporation that is offering shares.

More information on Offering Statements is on this page: 

Debt Financing

In addition to the ability to raise money from the membership and community investors, co-ops can also take on debt financing from financial institutions like credit unions or banks in order to finance their projects and operations. This can include obtaining a mortgage or loan to purchase property or equipment, opening a line of credit for the co-op to use, or other types of shorter term loans. The ability of a co-op to obtain financing of this type will depend on several factors, including:
· The available equity or collateral that the co-op can bring to the table
· The perceived risk of the investment or the business of the co-op on the part of the financial institution
· The amount of money required


Some co-operatives, usually only those operating with not-for-profit or charitable status, can also access grants from charitable foundations or government agencies like the Ontario Trillium Foundation. There are some granting programs that are open specifically to co-operatives, regardless of their tax-status.

Grants are usually project-based and provide funding for a finite period of time. They usually do not provide ongoing operational funding, but may partially cover staff costs. Grants will generally require an application and approval process and not all applications will be successful.

On Co-op maintains lists of co-operatives and other organizations providing loans, grants and technical assistance funding. Contact the Co-op Development manager for more information.

Government Subsidies or Support

Some co-operatives are eligible to receive government funding that supports their operations. This can be the case with co-ops that are providing a social service that is subsidized by the government, as in the case of some not-for-profit housing co-ops or some child care co-ops.


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Sep 15, 2015 - If your co-op has a print or electronic newsletter, include the co-op logo in a corner. Use it to accompany your own look, logo and image.

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Oct 18, 2018 - 2018 OCA AGM

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