Radical Routes Loans
From 1991 to 2012:
- Radical Routes made over sixty loans to member co-operatives worth slightly over £1 million.
- Around two thirds of these loans were for property purchase, usually as a "top up" to bank loans. In this way, Radical Routes loans have been used as leverage for a further £3 million of finance from other sources to help finance £3.8 million worth of property purchases.
- Other loans have financed equipment and property improvements.
- In the only two instances when a co-op has been wound up while owing Radical Routes money the full amount has always been repaid in full, leaving no bad debts for Radical Routes to absorb.
As a lending record, we feel this is quite impressive. Most banks show a much higher failure rate than this.
How has this come about? Here are some possibilities:
The method of making loans. The best people to assess whether a co-operative project will work are people from other, similar co-operative projects, rather than bank managers with virtually no experience of co-ops. Radical Routes only makes loans to member co-ops, and then only when other member co-ops agree to the loan. This 'peer-group lending' means that when an loan is applied for the details of the loan are scrutinised by over 150 individuals, many of whom are involved in similar projects and will have asked for similar loans in the past. Banks involved in "microcredit" use peer-group lending to reduce the loan failure rate and reduce the costs of assessing loans.
The support network provided by Radical Routes. Setting up and running co-ops can be hard work, but through networking events, people draw support from what others are doing. Radical Routes gatherings ensure that co-ops have plenty of chances to meet other co-ops and share their experiences and knowledge. As Radical Routes grows, these gatherings are starting to take place on regional as well as national levels. There are also international meetings with networks in Germany and the Netherlands which are similar to Radical Routes.
In addition to this informal support and motivation, Radical Routes and its member coops can provide technical advice, support and training on many of the practical, legal and financial aspects of setting up and running a co-operative enterprise.