Subscription underwriting

This service is offered by our partner Co-operative and Community Finance (CCF) and is fee-free.

If you think affordability is an issue for your community investors, CCF can offer you an interest-free repayable loan to enable people to buy shares through instalments over a maximum of 12 months, with the society receiving the full investment upfront. 

Typically, between £10,000 and £25,000 can be underwritten by this service. You might use this to help less affluent members of your community buy the minimum shareholding amount that you set in your offer documents.  

For example, if you set your minimum shareholding at £100, then individuals could pay for this via instalments throughout the year, paying in £10 per month over 10 months. Without subscription underwriting, you would have to wait until the end of the year to collect all the equity invested, which could be problematic if you need the money upfront to complete the purchase of a building, for instance.  

Funds would be advanced to you on completion of the share offer raise to match any money committed as community shares bought through subscription. This money is then paid back by you to CCF as the monthly instalments from individual investors are paid to you.

Please note this is a short-term loan, provided as debt to be repaid under a standard loan agreement, we will recover the loan through fixed instalments (the same amount each month) by Direct Debit over an agreed term, modelled over 12 months but may be shorter and flexible as required. It is assumed repayments to CCF will track at least a month behind allowing the society to collect funds from individuals. The repayment schedule would be agreed at the loan agreement stage.

Please also note that the society is responsible for recovering the payments by instalment from individuals and responsible for all associated administration and membership. CCF do not have any contact with investors, only with the Society as the borrower.

Kindling Farm used this text in their Share Offer Document:

Purchasing by Instalment - We hope to be able to offer the chance to purchase your shares in X equal monthly instalments and are currently applying for support from Co-operative and Community Finance (CCF) to enable us to do this. This facility is not currently available via the Ethex platform so please contact xxxxxxx directly by emailing xxxxxxx. We will email an application form to you to complete and return to us, which will include a question asking if you would like to pay by instalment. We will then email you to approve your application and you will be asked to set up a standing order with your bank to make your payment over 8 monthly instalments. Should you fail to pay your instalments and fail to reach the minimum shareholding of £200 within the X month period, all monies received in this period shall be refunded and you shall cease to be a member of the society. Ethex will be responsible for managing the shareholder registry once the offer has completed.

Stretford Public Hall used a more sophisticated online application tool and payment process for their subscription share investors using the Stripe payment processing platform.

In the two examples above the societies decided to only honour shareholding once the minimum had been met through the instalments. You may however wish to treat instalments ‘to date’ as share capital investment, as long as the rules allow.

If the society doesn’t raise all the monies in instalments as planned, to match the funds received as a loan, CCF would work with the borrower to help them bridge the finance gap.

If this service is of interest, please select this option on the application form.