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Steward is a lending platform dedicated to regenerative agriculture. It was actually created by one of the co-founders of Fundrise, which is one of the largest and most popular real estate platforms today.
With its focus on smaller farms and making farmland accessible to all, Steward offers its deal to everyone, not just those who are accredited. They also require an incredibly low minimum of $100. There are also no fees paid by lenders.
Unlike other farmland platforms, Steward structures deals as a loans. This debt structure provides lenders a more consistent return and less uncertainty than equity structured deals.
Beyond just farmland, loans also go out to ranches, fisheries and local food producers.
The funding model is called a “Participated Loan,” where qualified individuals can buy a piece of the loans made to farms and ranches, and then are repaid their principal plus interest over the term of that loan.
- Low minimum starting at $100
- Open to All – non-accredited and accredited
- No Fees
- Debt Structured Deals Instead of Equity Which Results in Clearer Returns
- Every loan on the platform is secured and interest bearing
- Debt Structured Deals Typically Result in Smaller Returns than Equity Deals
While we grow more disconnected from the source of our food, it's important to remember that it starts with farmers. Most of the time, these farmers are operating on a small scale. In 2015, 90% of farm production came from family farms.
These farms often have significant difficulty in raising money from traditional lenders like banks. This is because banks like “safe” assets, and despite the fact they may have been in business for generations, a small family farm rarely fits that definition.
As a capital-intensive business, this makes things particularly challenging for farmers who want to expand.
In recent years, a number of platforms have popped up exclusively focused on solving this issue. Many of these solutions have taken off fairly quickly thanks to the returns of farmland typically outperforming the stock market.
One of these platforms is Steward, which has a focus on ensuring sustainable farmers have the cash they need.
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Steward Review: Summary
- Steward is a lending platform that specializes in sustainable farms and regenerative agriculture practices
- The founder was a co-founder of Fundrise, one of the largest real estate platforms to date
- Lenders allow small farmers to expand operations while taking advantage of the benefits of farmland
- Deals are structured as debt, so participants are loaning money for a pre-determined timeframe
- With a minimum of $100, the platform is extremely accessible
- Most deals do not require lenders to be accredited
- There have been 60+ deals successfully funded on the platform since inception
- Most deals are made with interest rates ranging from 5% to 10% and are structured as mortgage loans
- Steward charges lenders no fees
What Is Steward?
Steward is a lending platform designed to empower smaller sustainable farmers to expand their farms, ranches or fisheries. Through the platform, farmers can raise money for new projects and lenders can put as little as a hundred dollars in.
This provides an easier way for farmers to access capital than going through a bank.
Not only that, but farmland as an asset class has a history of delivering returns higher than the stock market, with less volatility.
However, it's only with the recent rise of platforms like Steward, that this asset class has become available to mainstream individuals.
While many other farmland platforms cater to larger operations, Steward focuses on the little guys. These farmers typically go overlooked by other financial institutions that prefer to work with larger clients.
By identifying this underserved market, Steward can create a deeper connection between lenders and the farmers they are supporting.
This has allowed Steward to operate as a purpose-driven organization and register as a certified B Corporation. B Corps are businesses that work to address social and environmental issues while still turning a profit.
For lenders with an interest in connecting with the farmers they are funding, some farms even have a professionally produced short video that allows you to meet the farmers and hear their stories.
The management team has extensive experience in the lending and agricultural industries. For those familiar with real estate trends, they will likely have heard of a platform called Fundrise.
Dan Miller, the founder of Steward, was a co-founder at Fundrise and served as the President of the company for 5 years before leaving to start Steward.
How Does Steward Work?
Farmers are able to submit their projects to Steward who then performs thorough due diligence on the deal. If it's deemed a good fit for the platform, it's listed for lenders to browse.
Most deals on the platform range in size from $10,000 on the low end, all the way up to $970,000 on the high end.
A significant benefit of this for lenders is that minimums are much lower. Instead of $10,000+ minimums, Steward can allow individuals to participate in deals with as little as $100.
All of the deals on the platform are structured as loans rather than equity deals. This means that lenders know from the get-go what the rate of return will be on the project. There is also more certainty on the repayment schedule and time horizon.
Steward Returns & Time Horizon
Most of the loans on the Steward platform have interest rates between 5% and 10%.
Time horizon varies based on the investment. Most have a 3 to 6 year time horizon, however they do offer short-term 9 month loan terms via Steward Regenerative Capital.
After the loan has reached completion, lenders will receive the remainder of their principal. This leads to more predictable cashflow than an equity venture would.
Some of the projects will provide incentives to lenders that meet certain funding amounts. For example, a recent project from The Fleischer Family Farm provided backers of over $1,000 with a collection of Fleischer Family Farm merchandise, and backers of over $10,000 with a CSA share.
As a platform focused on helping the little guy, the incentives can help lenders feel more connected to the farms they are supporting. While many other farmland platforms focus solely on the numbers, Steward also works to emphasize the people and the projects that your dollars are impacting.
The fee structure for lenders on the Steward platform is simple and straightforward. There are none.
However, Steward is not running a charity and they are still making money. Instead of charging a fee to the lenders, there is a 3% loan origination fee that the farmers pay.
This fee covers the cost of operating the Steward platform and allows lenders to see a greater return on their money.
Most equity-based platforms send participants form K-1 each year. This form is specifically for partnerships and most equity-based platforms are structured as limited partnerships.
One advantage that being issued a K-1 offers is that there is the potential for individuals to receive some losses from the partnership that they can deduct on their taxes.
With a debt-based platform like Steward, lenders will receive a 1099-INT form at the end of the year. This form will report the interest received from your portfolio and will not include any losses. Interest income is taxed at your typical income tax rates.
- Everyday people gain access to farmland lending through the platform
- Ability to support small and medium-sized farmers to expand their operations
- No fees to become a lender on the Steward platform
- CEO co-founded Fundrise, one of the largest real estate platforms on the market
- No accredited requirement in place
- Low barrier to entry with minimums starting at $100 per deal
- More consistent and predictable returns can be achieved through debt deals
- History of 45+ successfully funded projects on the platform
- Returns on debt are typically lower than equity.
- The platform is still relatively new and there is not yet significant data on past returns.
Steward Review: Final Verdict
For beginners looking to diversify a portion of their portfolios into agriculture, Steward is one of the best lending platforms we have come across.
The low minimum of only $100 makes it accessible for anyone to participate. In addition, the fact that lenders do not have to be accredited is a big plus. Virtually all other farmland platforms are going to require participants to be accredited.
Additionally, the platform's history of successfully funding 45+ different deals shows that there is staying power here.
One thing that all of us will be able to agree on is the importance of supporting smaller farms. Through lending to small farmers, lenders can help to create a more sustainable future for the food production industry.
It has historically been very difficult for these farmers to acquire funding and so through Steward, it is possible to help them expand.
Whether you decide to use Steward or go through one of the many other farmland platforms, it's crucial that you do your homework first. These platforms are not all created equal and they tend to vary quite a bit.