Investment FAQs

Interested in learning more about the investment option we have for Co-op members? Below are some of the frequently asked questions about investing in The Mustard Seed.

What kind of investment does The Mustard Seed Co-op offer?

The Mustard Seed Co-operative Grocery Inc. is an incorporated business in Ontario (#1851894) providing benefits to members through its sourcing strategies and business practices.  An additional benefit is the option for members to capitalize the business through direct loans.  Promissory notes are issued by the Co-op, binding the corporation to repayment terms outlined in each agreement.

Why would I invest in The Mustard Seed Co-op?

You value locally sourced and wholesome food, and you believe The Mustard Seed Co-op will strengthen your community.  You have financial resources available and want to invest in line with your values.  You want a direct vehicle for impacting positive change in our local economy and food system. You know that you can directly affect that success by patronizing the Co-op, creating mutual benefits for yourself and your community.

Are these Promissory Notes risky?

These notes are direct unsecured loans made by Co-op members.  There are inherent risks to establishing any business, but co-op enterprises have much higher success rates than conventional businesses.  The Co-op has a thorough business plan that projects various scenarios and potential challenges, while outlining strategies to ensure risks are mitigated and long-term financial sustainability is achieved.  Members may request a copy of the business plan by email before making a decision to invest.  Notes retain their full face value, unlike stocks or mutual funds which may drop in value after their purchase.

Is this RRSP/TFSA eligible?

These loans are not registered investments, and are not eligible for inclusion in RRSP or TFSA portfolios.

Is there a minimum or maximum loan value?

We accept any amount between $1,000 and $200,000 in increments of $1,000.  The total capitalization through loans is projected at $400,000. This is an opportunity for many members to directly enable The Mustard Seed’s success.

What is the loan term?

The promissory notes have 4-year terms.  Any notes issued before the Co-op opens will begin their term on June 1, 2013, maturing May 31, 2017.  Any notes arranged after June 1, 2013 will commence immediately.

Can I make a monthly investment if I don’t have a lump-sum amount up-front?

Alternate scenarios may be possible, but would require approval by the Board of Directors.

What is the interest rate on the loan?

The interest rate is 2% for the first year (commencing June 1, 2013 or the date of the date of the note if after June 1, 2013), and 4% for years 2-4.  Interest is compounded annually and will be paid out upon maturity.

How do these loan rates compare to GICs or other investment options?

We know that many commercial investment options are available to members.  However, member loans offer the unique opportunity to directly strengthen our community, align with member values, and return a reasonable rate of interest.

Comparison of current commercial GIC interest rates compared with The Mustard Seed promissory note.

What tax implications are there?

A T5 Statement of Investment Income will be issued annually for members’ income tax filings.

What if I need my money back sooner?

The standard note term is 4 years.  Any request for an earlier repayment date would be at the discretion of the Board of Directors.

Might you pay off loans before the end of their term?

From time to time, the Board may review the capitalization needs of the Co-op, and may decide to repay member loans.  Any repayments would be randomly selected by the Board at their sole discretion.

What if I withdraw my membership in The Mustard Seed Co-op?

You may request a refund of your membership share under certain conditions.  However, your promissory note remains valid through the end of its term.

Are member loans transferable?

No member loan may be transferred without the consent of the Directors in the form of a resolution passed by the Board.

Can I invest my money interest-free or at a lower rate?

You may request that your loan be interest-free or at a lower interest rate upon settling the initial terms.  You may also donate any interest accrued at the end of the term.  Either option would reduce the financing costs carried by the Co-op.

How will the Co-op have enough money to pay me back, and when?

The business plan projects financial profitability based on sound financial management and strong member participation in the retail business of the Co-op.  Capitalization needs are most acute during years 1&2 as the business gets established.  Years 3&4 are expected to provide sufficient profitability to repay all outstanding notes and accumulated interest, while ensuring the Co-op remains in a strong financial position.

Does the Co-op take donations?

Yes, we welcome any donations towards the Co-op’s costs of operation.  Donations can be monetary or gifts-in-kind, but the Co-op cannot issue charitable tax receipts for any donations.  Please contact the Co-op if you have a particular donation idea.

Can I get free groceries instead of interest?

Great idea! Yes, interest can be redeemed in grocery gift cards at maturity!

What are the major start-up expenses for The Mustard Seed?


Your investment will provide capital for launching the Co-op. Member loans will provide roughly 75% of target expenses. This graph highlights the major start-up expense categories.