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FAQ Participated Loans - Lenders

Steward Team Updated by Steward Team

At Steward, we strive to offer a simple, accessible, and compliant means for farmers to access capital. We appreciate that Steward's framework may be unfamiliar to many, so below we've outlined answers to some of Steward's most frequently asked questions. We hope these help! 

Who is Steward Lending?

Steward Lending LLC is a non-bank financial institution that acts as a private commercial lender exclusively to support sustainable agriculture. Our parent company, Steward Holdings (US) Inc., is a public benefit corporation and a certified B Corp. This means we consider more than just profit when making decisions, instead, ensuring our decisions align wholly with Steward's mission: to promote economic and environmental stewardship through regenerative agriculture.

Is Steward Lending a bank?

Steward Lending is not a bank. As a private commercial lender, Steward makes business loans to business entities such as yours that are exclusively commercial in nature. We don’t lend money for people to buy homes, nor do we extend credit to individuals who may just need money. We don’t lend money to farms that want to buy agricultural land that has a residence on it. We also do not take deposits.

In what ways is Steward different from a traditional lender, like my local bank?

  • Size: We are willing to support human-scale agriculture businesses with loans as low as $10,000. These types of businesses are generally ignored by traditional financial institutions who instead want to provide large amounts of financing to long-term businesses with significant credit history. 

  • Flexibility: We offer flexible payment terms on the business loans we make, such as providing a period of accrued interest after the loan is disbursed so the funds can be used to generate revenue before starting to make repayments. We are able to customize the loan's term and structure based on the unique circumstances of each borrower. This is fundamentally different from traditional financial institutions where they often only offer set financial products with little to no room for customization. 

  • Growth: We lend to support the acquisition of land, infrastructure, equipment, and operations based upon the future potential of the business, providing a pathway to growth and scale, whereas most traditional finance is only lending based on historical cash flow. 

  • Values: Steward Holdings (US) Inc., a Public Benefit Corporation, is a mission-driven entity that supports regenerative practices and takes into account values and positive externalities when making credit and underwriting decisions, which is also important to our participating lender community. Our primary purpose is to provide access to capital that advances sustainable, regenerative agriculture businesses. 

  • Diversity: We take a much broader perspective on the agricultural businesses and products we support, including niche growers and heirloom varietals, heritage breeds of livestock, and other natural products, whereas most traditional agricultural funding is solely limited to the major global commodities. 

  • Advisory Services and Sector Expertise: Each application for a loan is vetted by a seasoned farmer who works for Steward so that during our diligence process the loan candidate can explain their business, production, and opportunities for growth to someone who actually understands farming. Each farm has ongoing access to the expertise of the "Farm Steward" and other paid, add-on supporting Farm Services, such as bookkeeping, grant writing, and e-commerce support. 

What is a “participated loan”, and how does it work?

A participated loan is a recognized commercial lending structure. Steward Lending makes loans to individual farms, for specific commercial purposes. To support Steward, qualified individuals (those who regulators specify as “sophisticated lenders” or investment institutions) can buy a “piece” of the loan that Steward is making. These supporters are referred to as “participating lenders,” and they are buying a “loan participation”. 

Am I loaning money directly to a farm?

No. Participating lenders are purchasing a piece of Steward Lending’s loan. Participating lenders do not have any direct relationship with the farm. You’re not “investing”, no more than a bank that holds your home mortgage is an “investor” in your home. However, we definitely encourage our participating lenders to support our sustainable farms by purchasing their products! Some of the farms to which Steward lends will actually provide produce-based incentives to participating lenders who participate at certain levels.

Are these loans secured or unsecured?

All of Steward’s loans to farms are secured. A secured loan means the borrower has “put up” collateral to secure repayment of their loan. This means if a farmer were to default on the loan, Steward would have access to specific assets of the farm to use to ensure it has funds to make its payments on the loan participations. This is another way that the participating lenders can be comfortable that there are funds to make payments on the participations they are buying.

Am I buying stocks or bonds?

No. Stocks and bonds are what are referred to as “securities” which are general investment vehicles in a particular company that are regulated by the Securities and Exchange Commission, or the “SEC”. Our loans are secured commercial loans directed to a specific lending community and are not securities.

Is this Crowdfunding?

No. Crowdfunding implies investment in a business through an online offer of securities. This generally means multiple individuals or institutions are buying stock in your business on an approved platform in an offering that has been approved by the SEC. Steward Lending only deals in loans at this time. Because there are many participating lenders in each of our loans, it's often confused that this is a form of “crowdfunding”. The participating lenders in our structure are just that- lenders, not investors. They’re not buying a piece of your business; they’re just participating in our secured loan to you.

Can anyone from the general public purchase loan participations from Steward?

Not just anyone! Our participated loan product is only right for certain purchasers. These purchasers could be institutional buyers (such as a bank) or private buyers (such as a private equity fund). Individuals who are deemed to be sophisticated lenders can also purchase a participation in the loan. Sophisticated lender is a term for individuals who are familiar with financial transactions, are able to understand the risks of entering into a transaction such as this, who have the funds to lend, and can bear the potential loss of their loan principal. No loan repayment or anticipated proceeds are ever 100% guaranteed; lending involves assumed risk. But Steward goes to great lengths to ensure that all risk is minimized as much as possible to protect participating lenders. Individual purchasers certify to us upon checkout that they meet these criteria. Above all, the primary criteria for becoming a participating lender is the desire to support sustainable agriculture through our curated portfolio of farms, ranches, fisheries, and product producers. 

Is this a donation? Is it tax-deductible?

No. A donation is a contribution or a gift, whereas these are loans, and that means money is paid back with interest as the loan is repaid. Steward Lending is not a 501(c)(3) charitable organization, but we do have one! If you’re interested in making tax-deductible donations to support worthy causes in sustainable agriculture, please email Ryan Anderson, Executive Director of the Steward Foundation, at ryan@gosteward.org.

How do I get repaid?

By becoming a participating lender, you’re loaning Steward money to use to support sustainable farms. In exchange for using your money to support our projects, we pay the principal you’ve paid back plus interest. The interest rate you receive is the same as the interest the farmer pays for its loan. All money you provide when becoming a participating lender goes to support the loan.

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