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title, section, order, summary

title	section	order	summary
When an Owner Wants to Sell to the Workers	Growing the Sector	60	Owners who choose to sell their company to its workers can get a loan from the bank to do it, on a separate track with its own money and its own test, so the sale can't overcharge the workers or muddy the main experiment.

When an Owner Wants to Sell to the Workers

This model buys nobody's company. But some owners want to sell to their workers. Most often, they're retiring, have no family member who wants the business, and would rather it stay in the town with the people who built it than go to a competitor or a private equity fund.

American banks already lend for some of these sales, as the evidence below shows. But those are mostly sales to employee stock ownership plans (ESOPs), trusts that come with large federal tax breaks and don't give workers one member, one vote. Sales to a real worker co-op, especially of smaller firms, are harder to finance. Lenders usually want personal guarantees, which a whole workforce can't give (Why a new bank).

So should the bank lend for these sales? This page's answer is yes, but on a separate track, with its own money, its own rules and its own test, and alongside private lenders wherever they'll join in. The evidence for buyouts of healthy firms is among the strongest in the co-op literature. The ways they go wrong are also well known, and every rule below answers one of them.

The case for it

Healthy firms sold to their workers survive. In France, five years after a healthy business is handed over to its workers as a co-op, 90% are still running. For French co-ops as a whole the figure is 79%, and for French businesses generally it's 61%. Even struggling firms taken over by their workers reach 76% (France's co-op federation, cited in a 2025 report to the French National Assembly). That isn't a like-for-like comparison. The general figure includes brand-new businesses, and firms chosen for a handover were already doing well. Still, it's hard to read as a warning.

Loans for these sales get repaid. A study of 1,232 bank loans for ESOP buyouts at three large banks, from 2009 to 2013, found only 0.2% a year defaulted in a way that cost the lender money. By comparison, loans to mid-sized companies generally defaulted at 2% to nearly 4% a year over similar periods, though the two figures don't count defaults in quite the same way (NCEO, 2014). So the comparison only suggests something. It doesn't prove it.

It can grow the sector fast. Britain created a simple way for owners to sell to a trust for their employees in 2014, with a tax break. By January 2025 there were about 2,000 of these employee ownership trusts, and one estimate puts them at 6% of all business sales in 2024. Most are doing well. Very few have failed, mostly in construction, where profit margins are thin (Pendleton and Robinson, 2025).

It reaches workers the startups don't. A startup co-op begins with a handful of people. A buyout brings in a whole existing workforce at once, often in trades where new co-ops rarely start.

A caution about all of this evidence. None of it comes from exactly this design. ESOPs and British trusts come with big tax breaks, and neither gives workers one member, one vote. Italy's buyouts under the Marcora Law also show high survival, 87% still operating, but most were rescues of firms in crisis, and many were only a few years old when counted (Has This Been Tried?). The evidence shows that selling a healthy firm to its workers can work. It doesn't show that this particular track will.

What goes wrong

Workers overpay. The seller usually knows the business best and wants the highest price. In one American case, the trustee who was supposed to protect the workers approved a price after a half-hour meeting about the valuation, and the workers' plan overpaid for Constellis, a private security contractor, by almost $30 million. A federal appeals court upheld the judgment (Brundle v. Wilmington Trust, 4th Cir. 2019). In a British case, a founder gave his adviser rosy forecasts, the adviser raised them further, and the managers who had to run the company were given no time to read the terms. The company nearly failed under its payments to the founder and was saved only by renegotiating (Pendleton and Robinson).

The seller keeps control. Under Britain's original rules the seller could appoint the trustees who were meant to act for the workers. Britain changed that in 2024. Now the seller and their associates can't make up half or more of the trustees, and the trustees must make sure the price is no more than market value (Pendleton and Robinson).

The debt comes out of the workers' future. Almost nine in ten British trust sales are paid for by the company itself, out of future profits, over about six years (Pendleton and Robinson). That's the workers' money, paying the seller. Most firms manage it, but it can squeeze out investment and pay.

Tax breaks get expensive and attract the wrong sellers. Britain let owners who sold to a trust pay no capital gains tax at all. By 2021–22 the tax break cost £600 million a year, and it was forecast to reach £2 billion by 2028–29. One accounting firm puts that at about 20 times what was originally expected (Scholes Chartered Accountants, 2025). In November 2025 the government cut it back, so that only half of the gain is tax-free (Charles Russell Speechlys, 2025). The researchers noted that a big tax break "could attract owners who have little or no interest in employee ownership."

A trust isn't a co-op, and it isn't forever. In a British trust, the workers usually don't vote one member, one vote. The company is typically run with an ordinary management hierarchy, and a trust can later sell the company. Nothing like the lock stops it.

Rescues of failing firms lose money. Uruguay's public fund lost almost 90% of its loans, mostly on firms that had already failed (The Pilot, in Numbers).

The rules

Healthy firms, willing sellers, no new tax break

• Only healthy businesses. At least three years of profits, with the latest year audited by an outside accountant and every year matching the tax returns. Sales to the seller's own other businesses or relatives don't count toward those profits. The seller must have owned the business for at least three years, and it can't be in bankruptcy or behind on taxes. Rescues stay out, as they do for the rest of the pilot.
• The owner starts it, in writing. The bank never approaches an owner, and neither do the advisers or groups the pilot pays. The owner can back out at any time before closing.
• No new tax break. American law already lets some owners put off capital gains tax when they sell to an ESOP or a worker co-op. It applies to one kind of corporation (a "C corporation"), requires the workers to end up owning at least 30%, and requires the seller to reinvest the money in other American companies (26 U.S.C. § 1042). This model leaves that rule alone and adds nothing to it. The bank's only offer is that it will lend. That keeps out most owners who are only after a tax deal, and it keeps the cost to the public from growing the way Britain's did.
• Private lenders go first. The bank lends alongside a private or community lender that takes at least a quarter of the main loan, on the same terms. If no lender will join, the bank can lend alone only after two lenders have turned the deal down in writing. Those deals are marked and reported separately. If private lenders join almost every deal, that's a sign the bank isn't needed for buyouts, and the results will show it.

A fair price

• Appraisers come from a panel, in rotation. An independent appraiser, drawn in turn from a panel the bank keeps and paid by the bank, values the business under standard professional rules. The value is what the business is worth on its own, to a buyer who'll run it as it is. It doesn't include the premium a competitor might pay to combine it with their own business, since the workers can't get that value out of it.
• Profits are checked, not taken on trust. Before the appraisal, an outside accountant restates the profits as they'd look under new owners. The owner's own job is counted at a normal salary for that work. Upkeep and equipment the owner put off are counted as costs. One-off gains are taken out.
• The seller can challenge it. The seller can order a second appraisal from the panel. If the two are more than 10% apart, a third panel appraiser settles it, and that figure is final. The price can't be higher than the final figure.
• Appraisers are checked too. One deal in ten, picked at random, is re-appraised after closing by a different appraiser. Appraisers whose values run consistently high are dropped from the panel.
• Everything the seller gets counts as the price. For five years after the sale, every payment to the seller, their family or their other companies counts toward the price: salary, consulting fees, rent, royalties, payments for not competing. The only exception is a payment set at a going rate by an independent appraiser. If the seller keeps the building, the co-op gets a lease of at least ten years at appraised rent and the right to buy it at appraised value. Patents, brands, customer lists and a normal level of working cash all come with the business.
• The seller tells the truth, in writing. The seller discloses in writing any big customer or contract that's at risk, any lawsuit, and anything else a buyer would need to know. If the disclosure turns out to be false, the co-op can cut what it still owes the seller by the damage, and sue for more.
• The workers get their own adviser, chosen by the workers (or their union, if they have one) from a list the bank approves, and paid from the buyout track's own budget. The adviser explains the price, the debt and the risks in plain terms. The workers get at least 30 days with the full terms before they vote.

The seller shares the risk

• At least 20% of the price is paid to the seller over time, and only after the bank's loan payments are made. If the price was too high and the business struggles, the seller's payments stop before the workers' jobs do.
• Nothing is paid on it for the first two years. Interest builds up, but the seller's payments start only in year three. The workers here put almost nothing in up front, so the seller's waiting share, a loan paid last, is what stands between the lenders and a loss. It isn't the same as workers' own money, and two years is weaker than what the SBA asks: it counts a seller's loan toward the buyer's stake only if nothing is paid on it for the whole life of the SBA loan (SBA SOP 50 10 8). Two years covers the stretch when a new owner is most likely to stumble, without asking a seller to wait ten. The coverage test below is what makes up the difference. Anything else paid to the seller in those two years, such as adviser's fees, waits with it and is paid last too.
• The seller's loan has limits of its own. Its interest rate can't be higher than the bank's own rate on the deal plus 4 points. That's a higher rate than the bank gets, because the seller is paid last and waits, but it's capped: any interest above the cap counts as part of the price, so it can't be used to slip past the appraisal cap. The deal file states what the seller's loan is really worth at a going rate for loans paid last, so everyone can see how much of the price is money now and how much is a promise. The loan is due within ten years of the sale, extended by any time its payments had to wait (below), with interest still building at the capped rate. A cut for a wrong forecast (next point) applies to the interest that has built up too, not just the original amount.
• That share shrinks if the forecast was wrong. If checked profits over the first three years average more than 20% below what the appraisal assumed, the price is treated as too high by the shortfall beyond 20%, and that amount comes off what's still owed to the seller, up to all of it. On a $2.5 million sale with $500,000 still owed, profits 30% below the forecast cut $250,000 (10% of the price); profits 40% or more below cut the whole $500,000. The cut is measured against the whole price, not just the seller's remaining share, because a seller who knew a drop was coming was paid most of the inflated price in cash at closing. There's no cliff, so a few dollars of profit either side of the line don't swing the seller's payout, and nobody on either side has much reason to nudge the books.
• Neither side can tilt the test. Profits for the test are counted under the same accounting rules as the pre-sale restatement, with all pay, members' and managers' alike, held at pre-sale rates per unit of work (after inflation), and upkeep at its normal level. So the co-op can't shrink the seller's share by raising pay, hiring ahead, skipping repairs or moving costs into the test years. If profits jump back in year four, costs shifted into the test years are added back. The seller gets the audited accounts and the calculation, and either side can send a dispute to an accountant from the bank's panel, whose answer is final. The seller's payments due in year three wait in a separate account until the test is settled.
• Only half of an industry-wide fall is forgiven. A fall that hits the whole industry is measured by a public index, chosen for each industry in the lending standards filed before the first loan, not picked deal by deal. Which industry a firm is in is fixed at signing, from the industry code on its last tax return before the sale. Half of that fall is taken out before the test, and half stays with the seller. A seller shouldn't carry all of a recession they couldn't have known about, but the workers shouldn't carry all of it either. The adjustment works both ways: if the industry grew, the forecast is raised by half the growth before the test.
• The seller is protected like a lender, and only like a lender. The seller's share carries a legal claim on the business's assets, behind the bank's, and the right to be paid. It carries no say in how the co-op is run. The seller signs a written agreement with the bank and the private lender to be paid behind them, and can't demand early repayment or seize assets while the bank's loan is unpaid. If the seller sells the loan to someone else, every rule here, the wait, the cut and the pay protection, binds the new holder.
• Pay isn't cut to pay the seller. In any year the co-op cuts its members' pay rates below where they were before the sale (after inflation), the seller's payments wait. They're owed later, not cancelled, and the due date moves back by the same time, so the waiting payments don't pile up into one lump at year ten.
• The debt has to fit the business. The bank lends only if the business's checked cash flow, what's left after normal upkeep spending and taxes, covers all the loan payments, the bank's, the private lender's and the seller's, plus the cash members need to pay tax on their profit shares and the capital-account payouts that will come due (Member Capital Accounts), with a real margin to spare: checked cash flow in each of the last two years, and on average over the last three, at least 1.25 times the payments in the heaviest year of the schedule. That's usually year three, when the seller's payments start on top of everything else, with the interest that built up during the wait. The SBA's own minimum, under the rules in force since June 2025, is 1.15 times, and for a change of ownership it can rest on a forecast of reaching that within two years (SBA SOP 50 10 8). Many lenders ask for more than the SBA minimum, so 1.25 times is a normal lender's margin, not an unusual one. What's different is that it has to be met on past results, not a forecast, and after the seller's wait ends. The SBA has published a revision of these rules, reported to take effect in October 2026. This comparison is to be updated from the new rules once they take effect, and if the SBA's floor ends up as strict, the page will say so. The margin is part of the lending standards filed before the first loan (Making It Last).

The workers decide

• Who votes. Every worker on the payroll 12 months before the owner applied, and still there, can vote, including part-time workers and agency temps who work there regularly. The seller and their family can't. Nobody can be laid off, reclassified or offered money tied to how they vote in that time.
• How they vote. By secret ballot, run by an independent election body, with a neutral ballot and after the 30 days with the full terms. The sale needs a majority of everyone eligible, not just of those who turn out.
• Unions keep their place. A union contract carries over to the co-op. Becoming a member doesn't take away anyone's right to organize.

Then they govern

• Everyone becomes a member unless they say no. At closing, every worker is enrolled as a member unless they opt out in writing. The buy-in is kept small and can be paid by payroll deduction, so no one's shut out for lack of savings. Workers who opt out can't be fired for it, and can join whenever they like.
• The membership rule, with a fair start. New hires follow the lock's usual rule: membership after at most 12 months. For the first three years, workers who were there before the sale and chose not to join don't count against the rule that members must do three-quarters of the work hours. After that, the normal rule applies, as it does for every co-op the bank funds.
• One member, one vote, from day one. A converted firm meets the full co-op definition, unlike a British trust. It can keep managers, but they answer to a board elected by the members. The first board election happens within 90 days of closing.
• The seller's control ends at the sale. The seller can stay on as a paid adviser for up to two years, and the members can end that by vote at any time. If the seller works there, they can join as a member, with one vote like anyone else. Neither they nor their family or associates can sit on the board, hold a special share or choose who governs.
• Paying off the debt builds the members' accounts. Loan payments come out of profit, but they aren't a cost in the co-op's books. So the profit that pays down the loan is still credited to members' capital accounts under the usual split, and paid out on the usual schedule. The workers who pay for the business build up a claim on it.
• Help with the change. Moving from one owner to a members' democracy is hard. The French parliament's report calls support and training for newly elected leaders essential. Converted firms get governance training and the hands-on help that the support lottery tests, paid from the buyout track's own budget.
• Who benefits is published. Who became a member, who sits on the board and how profit shares are split, by race, gender and job, the same as for the startups.

Locked, like every co-op the bank funds

A converted firm accepts the lock and stays a co-op forever. This is the biggest difference from Britain's trusts. The seller gets a fair price once. After that, nobody can cash in the business again. Every seller signs knowing that.

The lock costs the seller something too, and they should know it. If the co-op fails while the seller is still owed money, the business can't be sold whole to an ordinary buyer. It can only go to another co-op, or be sold off in pieces. So the seller will likely get back less than from a failed conventional firm. That's one more reason to set the price where the business can carry it.

Why a separate track

Buyouts would make the pilot's main result look better than it deserves. A business that has already survived for years is far more likely to keep surviving than a new one. If buyouts were mixed into the main test, the co-ops' survival would look better whether or not worker ownership had anything to do with it. That's why the pilot already scores existing firms separately.

So buyouts get:

• Their own money. $100 million, set aside in the same one-time charter, separate from the $350 million for new co-ops. That raises taxpayers' worst case from $350 million to $450 million, and the model says so. Up to $5 million of it pays for the workers' advisers and governance help. Buyout loans can never draw on the startup money or the startup help budget, so they can't shrink the main test.

• Their own limits. The same $3 million lifetime limit, which covers every business owned by the same seller or group, so one owner can't split a company into pieces to get around it. The same caps on industries and places apply. With a private lender's share and the seller's share on top, that means companies priced up to about $5 million: small and mid-sized firms. Bigger sales can use the ESOP market that already exists.

• Their own test, judged at year 12 with the rest. It has two parts, and both must pass:

  1. The money. The buyout money has to earn at least the Treasury rate after all losses and costs, including the advisers' budget, the appraisals and the track's share of running the bank. Its losses can't be clearly higher than the loss rate the bank publishes before its first buyout loan (below). Deals the bank made alone count, and so do loans restructured to keep them alive, under the same rules as the startup test (Keeping zombies alive).
  2. The pay. The test follows everyone who was on the payroll at the sale, members or not, whether their firm is still open or not. Their median pay per hour, after inflation, can't have fallen below what it was over the last two audited years before the sale. Workers whose firm closed count at what linked government wage records show they earn now, and as below the line where no record can be found. A track that gets repaid by cutting pay, or by letting the lowest-paid go, hasn't passed.

  The two tracks pass or fail on their own. A good buyout record can't rescue a failing startup test, and a bad one can't sink a passing one.

Why not just use the SBA?

The SBA can already back a loan for a co-op to buy a controlling share (51% or more) of a business. But its rules, as they stand since June 2025, treat a co-op worse than an ESOP in two ways that matter for a buyout (SBA SOP 50 10 8):

• Cash up front. Buyers in a change of ownership have to put in at least 10% of the cost themselves. An ESOP buying control is exempt. A co-op isn't. A seller's loan can cover up to half of that, but only if nothing at all is paid on it until the SBA loan is repaid. So the workers would still have to find at least 5% of the project's total cost in cash, including fees and any working capital, and more if the seller won't wait that long. For a $3 million business, that's $150,000 or more, from people most of whom don't have it.
• Someone has to guarantee it. Every SBA loan needs at least one person or company to guarantee it. For an ESOP, the rules say plainly that the workers don't have to. For a co-op there's no such exception: if nobody owns 20% or more, which is normal in a co-op with more than a handful of members, "at least one of the owners must provide a full unconditional guaranty." That means asking one worker to promise their house and savings for everyone's loan. Lenders have long asked the same of co-ops in practice, and it's a main reason co-ops have rarely used the SBA since Congress opened it to them in 2018 (The Pilot).

The bank's track replaces both. The seller's waiting share, paid last, takes the place of the workers' cash. The bank lends without personal guarantees, relying instead on the seller's share, the coverage test and a private lender taking part, and pricing what's left of the risk into its rate. That's a real risk the SBA's rules are there to guard against, and the track's loss rate is how it's judged (below).

To make sure the bank isn't just taking deals the SBA would have done anyway:

• Its rates are published next to the SBA's. Each year, the bank publishes its average rate on buyout loans alongside the typical rate on matched SBA change-of-ownership loans, taken from the SBA's own loan data. The bank will usually charge more. The gap is roughly what doing without the workers' cash and a worker's house costs, along with the bank's own costs.
• Ordinary lenders have to say no first. Before the bank lends, the co-op must have asked two lenders with no ties to the deal and a real record of lending for business purchases, one of them a conventional lender and not only the SBA route, and been turned down on a standard form that says why. The forms are published with the deal file.
• It counts its own overlap. The bank publishes each year how many of its deals could have met the SBA's terms, by a definition fixed in the lending standards before the first loan.
• It asks for the SBA fix too. The model asks Congress to give co-ops buying control of a business the same two exemptions ESOPs already have. If that happens, the buyout track lends only where the SBA route still can't serve the deal, and says each year how many that is.

How many deals

After the $5 million for advisers and governance help, $95 million at about $1.5 million a deal, half the limit, funds roughly 60 to 65 buyouts. With a private lender and the seller's share on top, that typical deal is a business priced around $2.5 million. That's too few for the tight survival comparison the startup test uses. So survival is published and compared, but as evidence, not as a pass-or-fail line. The terms of every deal are published: the price, the appraisals, the loans and the seller's share. So is what happened to them: every cut to a seller's share, every year payments had to wait, and the losses on deals the bank made alone, reported apart from the rest from the start.

Who buyouts are compared against

Three groups of businesses can be followed. None of them makes a clean experiment, so the comparisons describe; they don't prove that worker ownership caused a difference. The reviewer publishes the matching rules, the code and every classification before the first buyout loan, so nobody can pick the comparison after seeing the results.

1. Businesses bought with government-backed small-business loans. The SBA publishes every loan in its main program, including the borrower's industry, the loan size and term, the approval year, and whether the loan was paid off or written off. It also marks loans made for a "change of ownership" (SBA loan data and its field list). By this site's count of the SBA file as of June 2026, leaving out cancelled loans, there were about 4,600 to 6,900 a year from 2020 to 2025, and about 13,800 of $1 million or more since 2020.

• How they're matched. On industry, approval year, the whole deal's debt (not just the bank's slice) and loan term. A long term usually means the loan bought a building too, and in these buyouts the seller often keeps it. Loans that look like partner buyouts or employee-ownership deals are dropped where they can be spotted.
• What's compared. The share of money written off, at the same loan age on both sides. The SBA reports write-offs before anything is recovered afterward, so the bank's losses are counted the same way.
• The loss rate the test uses. For change-of-ownership loans of $1 million to $5 million approved in 2015 to 2019, about 1.9% of the money lent, and 3.1% of the loans, had been written off by mid-2026. That's a floor, not a final figure. About 39% of those loans were still being repaid, and the SBA publishes nothing about them beyond that, not even whether they're behind. And in 2020 and 2021 the government made 6 to 14 months of payments on these loans for their borrowers (15 U.S.C. 9011), which kept some from failing. So the bank's rate comes from a formula the reviewer fixes in advance: the SBA write-off rate in dollars for the same industries, sizes and terms, at the same loan age, adjusted for the pandemic years in a way that's also published. The reviewer's job is to make sure it wasn't set high, since a high rate is the easy one to beat.
• Chance. About 65 loans at a loss rate like that means two or three failures. One more or one fewer moves the rate a lot. So the published rate comes with a margin worked out in advance for how much it could miss by chance alone, and the test fails only if losses land above that margin. That means the test can catch a track that does much worse than SBA lending, but it can't show that buyouts do better. The report says so.
• The deals aren't built alike. The bank's loans come after three audited years of profits, with a checked margin over the payments and a seller who waits to be paid behind the bank. SBA loans often have neither. Lower losses may just show that the screen and the seller's share work, not that worker ownership does, and the report says that too.

2. Businesses sold to an employee stock ownership plan (ESOP). An ESOP is a retirement plan that owns company stock for the workers. Each such plan files a yearly return with the Labor Department that marks it as an ESOP, and separately as one that borrowed to buy the stock, gives the company's tax number and industry, and counts the plan's members (Form 5500 instructions). A plan that ends files a final return.

• How they're matched. By industry, state and size, starting from the first year a plan is marked as having borrowed to buy the stock, which is the closest the filings come to the date of the sale. ESOPs are expensive to set up and rare in companies this small, so the reviewer first reports how many matches exist. If there are too few, this comparison is dropped rather than stretched.
• What's compared. Whether the firm is still open after 5 and 10 years, and whether it's still owned by its workers. A plan's member count includes some people who've left, so it's only a rough measure of jobs.
• Sales. A final return doesn't say why the plan ended. The company may have closed, been sold, or merged the plan into another. Coders who don't know which firm is which sort each case using state business records, and every call is published. For survival, a sale counts as neither success nor failure, and then both ways, as in the startup test. For worker ownership, a sale counts as losing it, since that's the usual way ESOP ownership ends and exactly what the lock prevents.

3. Deals that almost happened. Owners who applied but whose deals fell through: on the profit test, the payment margin, the appraisal or the workers' vote. They're the closest thing to the same businesses without a buyout. The reviewer follows them through the same records. Where a deal missed a line narrowly, like a vote decided by a few workers, it's close to a coin flip, and the reviewer reports those cases separately.

Pay and jobs. Neither public record has pay. The track's pay test uses the co-ops' own payroll and linked government wage records (The Pilot). The bank applies for access to those records before the first buyout loan. If access is refused, the report says so instead of leaving the comparison out quietly. Pay growth is also compared with pay in the same industry and county from public wage statistics.

Where the money went. For each deal, and for the track as a whole, the report adds up 12 years of payments: to the seller, including everything counted as part of the price, interest to the private lender and to the bank, and what members got above their pay before the sale, in wages, profit shares and account balances. Passing the pay test only shows that workers weren't made worse off while they paid for the business. The ledger shows how much they gained, and how much went to the seller and the lenders.

What none of this covers. Most small businesses change hands with no SBA loan and no ESOP, through cash, private loans and seller financing, and those sales leave no public trail. So the comparisons show how buyouts do against two kinds of financed sale and against deals that fell through, not against every sale.

Expect opposition. Business brokers and private equity funds, who make money when owners sell, may see a public lender as a competitor. Italy's main employers' association got part of its worker-buyout program suspended by the EU (Has This Been Tried?). Keeping the bank at market rates with no tax break is the best defense, because it leaves little to call unfair. The rest is in Making It Last.

What this doesn't solve

• The workers pay for what they helped build. A fair price is a price for the owner's years of ownership, and the workers pay it out of profits their own work will produce. This model accepts that, because the alternative is taking the business, and it doesn't take anyone's business. The rules keep the price fair. They can't make it free.
• These loans have less behind them than ordinary ones. Almost no cash from the buyers, no personal guarantees and a seller who waits two years, not ten. The coverage test and the seller's paid-last share carry the weight that cash and guarantees carry in an SBA loan. If that isn't enough, it will show up as losses above the published rate, and the track fails its test.
• The seller always knows more. Written disclosures, checked profits and a shrinking seller's share make hiding problems costly. They can't make it impossible.
• A fair price is a matter of judgment. Appraisals are estimates. The rules make overpaying harder and put the seller's own money behind the price, but they can't make valuation exact.
• The vote can be pressured. A secret ballot, a neutral ballot and a majority of everyone eligible help. They can't stop a well-liked owner or manager from leaning on people in the break room.
• One failure can become a story. A single buyout that goes wrong will make a better headline than sixty that don't. Publishing the expected loss rate in advance, and every deal's terms, lets anyone check whether a failure was bad luck or bad lending. It doesn't stop the headline.
• "Forever" is a lot to ask of a business that wasn't founded that way. Some owners won't sell under the lock, and some critics will say it's wrong to lock a firm its members never chose to lock at founding. Whether the lock should protect the co-op form or only its value is an open question for every co-op, not just these (Open Problems).
• It may pull good founders away from co-ops. A founder who expects to sell to their workers one day can start a conventional company, keep full control for 20 years, and then sell at a fair price. That may be a better deal than founding a co-op (The Founder Problem). For the model's goal, more workplaces owned by the people who work there, it's still a win. But it could leave fewer strong founders for the startup test.
• Sixty buyouts is a small sample. The track shows whether the loans can be repaid safely without cutting pay. It can't show much more than that about whether the workers who were bought in end up better off.