Horse Shoe Ranch, a regenerative poultry and livestock farm, recently relocated from Lebanon County to a sustainable farming community in Chester County and expanded its pastured-egg production with the purchase of a mobile coop business.
The $165,000 loan for that expansion didn’t come from a bank but from a group of 128 individual lenders - some family, friends and customers, and others total strangers from 32 different states.
All of them put up money for the project through Steward, a lending platform that brings together sustainable farms in need of funding with individuals who want to promote environmental and economic stewardship by supporting regenerative agriculture.
Steward is the brainchild of Dan Miller, who in his 20s started Fundrise, a crowdfunding platform for investing in commercial real estate. Working with restaurants, he learned of their challenges sourcing local ingredients and the struggles human-scale farms like Horse Shoe Ranch face to access capital.
“Building out a chicken operation that’s not conventional doesn’t make a lot of sense to banks and other lending institutions,” says Bryan Donovan, who owns Horse Shoe Ranch with his wife, Brittany.
Steward is different, Donovan says.
Pasture raised eggs and chicken from Horse Shoe Ranch's sustainable farm.
“They really work with us and know our needs and kind of understand how the seasons work and cash flow and all that,” he says. “Their whole platform is great.”
Although Steward launched as an investment fund six years ago, it pivoted a year and a half ago to its current model as a non-banking private financial institution offering loan participation, says Ryan Gallagher, Steward’s vice president of marketing.
While the concept is similar to crowdfunding in that the financial goal requires the collective participation of many individuals, Steward lenders are not making investments or donations. They are helping to fund secured loans, and their contributions are repaid with interest.
To date, Steward has issued loans for 70 regenerative agricultural projects for a total of $12.8 million. It currently has a community of about 2,500 lenders throughout the United States.
“A common theme across all our lenders is that they’re in this to make an impact,” Gallagher says.
Here’s how a Steward loan works for sustainable farms
Steward’s agricultural borrowers fill out an application much like they would for a bank, detailing their financial information, revenue and the purpose of the loan, which could be anything from purchasing equipment or land to improving infrastructure, Gallagher says. A four- to eight-week vetting process includes an examination of their agricultural practices and financial records.
Potential borrowers must meet other requirements as well, he says. Steward does not loan to startups. Borrowers must be registered businesses farming in the U.S. with at least three years of revenue. They must also practice regenerative agriculture. “If they want to transition, we will come up with a plan,” he says.
Finally, borrowers must have securable assets.
“We're quite flexible in what we call loan security, but they are all secured loans,” Gallagher says.
Once Steward approves an applicant, it creates a loan package and a funding campaign on its website, where potential lenders can learn the farm’s story and decide if they want to participate in a loan for the project.
By design, Steward makes it easy to join its mission of environmental and economic stewardship. Individuals interested in supporting regenerative agriculture can become a Steward lender for as little as $100, Gallagher says. They simply self-qualify for participation by confirming they are of sound mind and have the financial capacity to make good decisions on their own behalf, he says.
Lenders set up an account with Steward that includes an online dashboard with a “wallet” linked to their bank account. They can then pull funds into their wallet, where they will be available to loan to the funding campaigns of their choosing.
Loan participants can also lend to Steward Regenerative Capital, an aggregate fund that provides short-term bridge loans to farms that need quicker access to capital. That fund has raised $9 million since August 2021, Gallagher says.
Loan participants are essentially purchasing part of a loan from Steward; they are not lending directly to the borrower. Steward combines all of the loan participations for a particular project and issues a single loan to the borrowing agricultural business.
Steward places a lending cap on each project to allow for broader participation. Even with those limits, projects are funded quickly once the initial application process is complete, Gallagher says.
“It used to take four to six weeks for a $150,000 project to get funded. Now they’re getting funded in 15-30 minutes,” he says. “It’s kind of like making dinner. You have to buy ingredients, prep and cook it, and it takes five minutes for everyone to eat it.”
Inside one of Horse Shoe Ranch's mobile coops.
Paying a Steward loan back - and forward
Most Steward loans have a deferment period of three to six months before repayment begins, Gallagher says. Fixed interest rates vary from around 5% to 8%, with loan terms averaging three to seven years. Each month, individual lenders receive a small repayment with interest in their Steward wallet.
Steward does not take a cut of the interest, Gallagher says. The company charges the borrower a 3% origination fee to cover legal, bookkeeping, marketing and other professional services.
“(Lenders) get to feel good that they’re supporting small business and making an impact in supporting the regenerative agriculture movement, and they’re getting their money back with interest,” he says. “Once you’ve accrued at least $100 back in your wallet, you could choose to redeploy those funds toward another project or put that money back in your checking account.”
Every funding campaign launches privately to encourage local buy-in by offering first right of refusal to the borrower’s family, customers and community. By the time most campaigns launch publicly, they are usually at about 20% of goal, Gallagher says.
Horse Shoe Ranch received loan participations ranging from $100 to $20,000, with an average of $1,100. The lending cap during the public phase was $5,000, Gallagher says.
Donovan estimates it took about three weeks for Horse Shoe Ranch to reach its percentage goal in the private phase. Once it went public, the loan was funded within hours.
“It’s a great way for people to feel like they're helping the farming community by contributing. Even if it’s $100, I feel like I’m helping this farm out,” he says. “It's been huge for us to know that people care about what we’re doing. … It feels like you have all these people who believe in you, and you want to do the best you can for them.” -Bryan Donovan, owner Horse Shoe Ranch
“We were moving farms at the time, and I was driving from the farm in Lebanon to Pottstown, and while I was driving it got fully funded,” he says. “It was kind of crazy.”
While small, diversified family farms like Horse Shoe Ranch are typical of the businesses that seek Steward loans, Gallagher says they are increasingly funding infrastructure that is critical to the food system, such as meat processing, shared cold storage and food hubs. Recent projects included a meat processing facility for a ranching co-op in Montana and a warehouse providing cold storage, a commercial kitchen, distribution and packing facilities for 40-50 producers in an Oregon food hub.
Several, like Horse Shoe Ranch, have had multiple loans through Steward.
“We want to be a lending partner in perpetuity,” Gallagher says. “We don’t see it as a once-and-done infusion of cash. We see it as being able to finance the growth of a business.”
For Donovan, however, Steward is more than simply an alternative means of acquiring capital. Being able to purchase another egg business has made an obvious impact on the family business but doing it through Steward has made it more meaningful and personal, for both the borrower and the lenders, he says.
“It’s a great way for people to feel like they're helping the farming community by contributing. Even if it’s $100, I feel like I’m helping this farm out,” he says. “It's been huge for us to know that people care about what we’re doing. … It feels like you have all these people who believe in you, and you want to do the best you can for them.”
To learn more about Steward, visit gosteward.com.
