海角大神

In November of 2012, a month after Hurricane Sandy hit Far Rockaway, a neighborhood in Queens, N.Y., 10,000 residents were still living without power. The neighborhood, located on a peninsula less than a mile wide, with Jamaica Bay on one side and the Atlantic Ocean on the other, was devastated by the storm, and more than half of its local businesses remained closed long after Sandy struck.

鈥淚t looked like a nuclear bomb had hit. I鈥檇 never seen that kind of destruction before,鈥� said Henry Lezama, a construction worker and Far Rockaway resident of 14 years. He took his family to a local church where others had gathered for aid and shelter. That鈥檚 where he met organizers from Occupy Sandy and The Working World, an organization that provides low-interest loans and technical support to cooperatives.

鈥淭hey were talking about ways to restore the community,鈥� said Lezama. 鈥淭hey said they could help us start a co-op.鈥�

Lezama was hesitant about the idea at first. He had already attempted to start his own construction business once, but found the paperwork and bureaucratic process difficult and expensive to navigate, leaving him unlicensed and with a limited pool of customers.

A co-op, however, held the promise of job stability and better wages; he would get a say in how many hours the co-op took on and his co-owners would be people from his own community. The Working World gave him and four others the start-up money. They used it to start a construction cooperative called Roca Mia.

Traditional banks won鈥檛 loan to small businesses if there鈥檚 too much risk involved, said Working World co-founder and director Brendan Martin. If they do issue a loan, it comes with high interest rates鈥攆ar greater than the business鈥檚 rate of return.

The result is that 50 percent of small businesses don鈥檛 make it past the first five years, and owners lose everything trying to pay off the loans. That鈥檚 why Working World-funded co-ops like Roca Mia don鈥檛 start repayment until they鈥檝e become profitable, giving businesses a chance to stabilize before they begin repayment.

Martin refers to traditional lending as 鈥渆xtractive finance鈥� 鈥� a system where lenders benefit from projects they are financing without any responsibility to the borrowers. It鈥檚 a way for banks to protect themselves from risk; but for new businesses on shaky legs, it means putting everything on the line.

That鈥檚 what Martin saw in the early 2000s, when Argentina鈥檚 economy had taken a nosedive. A recession had driven out investment and closed the doors of many small businesses and factories. At the worst point, unemployment rose to 20.8 percent. Left without jobs, workers across the country decided to take matters into their own hands and reopen businesses as cooperatives.

While these workers had resurrected their businesses, some were still in need of cash for raw materials and growth.

鈥淢ost banks weren鈥檛 even willing to talk to them,鈥� 聽Martin said. 鈥淚f they had been, they would have said, 鈥楾his is a lot of risk鈥攖he only way we do this is if you put the factory on the line and use that as collateral.鈥� Then, if the cooperative isn鈥檛 able to pay the loans, they lose control of the factory.鈥�

That鈥檚 when Martin, along with filmmaker Avi Lewis (who collaborated with wife Naomi Klein on The Take, a documentary about the factories), created the investment firm, The Working World.

Over the years, they started practicing a different form of finance: investing solely in worker-owned co-ops and providing loans that didn鈥檛 require collateral or go into repayment until the co-op made a profit. They used funds from investors who wanted to support cooperatives.

Despite giving what traditional banks might consider 鈥渞isky鈥� loans, today The Working World has a 98 percent rate of repayment and has expanded from Argentina to invest in cooperatives in Nicaragua and the United States.

鈥淲e know some small businesses [in Brooklyn] that have taken out loans with 30-35 percent of interest鈥� businesses with very low rates of return,鈥� said Steve Wong, a project officer for the New York branch of The Working World.

Comparatively, Roca Mia has an interest rate of just 4 percent (though most co-ops The Working World finances average around 7 percent).

Ten months after meeting at the church, Lezama and his co-owners are still learning how to work in the cooperative model. Group decision-making can be a challenge, he said, but there are also benefits: 鈥淭his is the first time in my life I鈥檝e had a salary.鈥� With their $20,000 loan, they have used their construction business to help rebuild the damage from Sandy and are training two new apprentices to join their ranks.

While The Working World is funded by investors from around the world, the goal is to put locals in charge of businesses and eventually finance.聽The catch is that the businesses have to be co-ops, or willing to convert to a co-op structure, ensuring that more people hold power over the business鈥攐r 鈥渙wn the means of production,鈥� as Martin says.

Alex Payne is one of The Working World鈥檚 鈥渁ngel investors.鈥� He says that his investment in cooperative businesses produces a 鈥渟ustainable return鈥�:聽鈥淚t keeps going by creating businesses that put more people in power.鈥� 聽

Payne was an early employee at Twitter and has since worked with nonprofits, contractors, and startups. He says he doesn鈥檛 consider the investment risky. In fact, he says he has more faith in the cooperative business structure鈥攚hich is why he keeps reinvesting in The Working World after he is paid back.

鈥淚 think there are a lot of problems with those kinds of models鈥� said Payne. 鈥淣onprofits end up on a donor dependency treadmill, and at the other end of the spectrum companies run the risk of selling out their customers.鈥�

When Roca Mia repays聽its loans, the interest will go into a fund that will be reinvested in three more co-ops already in development in the Rockaways.聽The co-op will put its聽debt to work for the local community.

The hope is that the fund can be locally controlled by the people of the Rockaways, giving residents the ability to stay within their community if they need a loan to start a business.

While The Working World model is small, operating with a fund of only a few million dollars a year, Martin believes it鈥檚 a potential solution for the up-and-coming small businesses whose only other option would be to take on crippling debt. A large enough fund owned by communities could聽start to聽contend with big banks 鈥� at least, that鈥檚 what Martin hopes.

鈥淔inance is one of the cornerstone issues in the way our economy doesn鈥檛 work for people,鈥� he said. 鈥淚t鈥檚 one of those threads that, if you tug at it, things start to come apart.鈥�

鈥� Araz Hachadourian is a reporting intern at YES! Follow her at @ahachad2.聽

鈥� This article (see original article here) originally appeared at YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. 听听