Steward Review 2023: Best Farmland Lending Platform?

Key Points

• Steward is a lending platform focusing on sustainable farms and regenerative agriculture practices.
• It was created by one of the co-founders of Fundrise, a popular real estate platform.
• Steward offers loans to smaller farms, ranches, fisheries, and local food producers.
• The platform uses a debt structure for deals, providing lenders with consistent returns and less uncertainty.
• Steward has a minimum investment of $100 and is open to accredited and non-accredited investors, with no fees charged to lenders.

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 need help 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.

Several platforms have popped up exclusively focused on solving this issue in recent years.

One of these platforms is Steward, which focuses on ensuring sustainable farmers have the cash they need.

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Steward Review: Summary

• Steward is a lending platform specializing in sustainable farms and regenerative agriculture practices.
• The founder co-founded Fundrise, one of the largest real estate platforms.
• Lenders allow small farmers to expand operations while taking advantage of the benefits of farmland.
• Deals are structured as debt, so participants loan money for a pre-determined timeframe.
• With a minimum of $100, the platform is highly accessible
• Most deals do not require lenders to be accredited
• There have been 60+ deals successfully funded on the platform since the inception
• Most sales 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 that empowers smaller, sustainable farmers to expand their farms, ranches, or fisheries. Farmers can raise money for new projects through the platform, and lenders can put in as little as a hundred dollars.

This provides an easier way for farmers to access capital than through a bank.

While many other farmland platforms cater to more extensive operations, Steward focuses on the little guys. As a result, these farmers typically need to be noticed 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 interested 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.

Management Team

The management team has extensive experience in the lending and agricultural industries. In addition, those familiar with real estate trends 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 company's President for five years before leaving to start Steward.

How Does Steward Work?

Farmers can submit their projects to Steward, who then performs thorough due diligence on the deal. Then, 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 to $970,000 on the high end.

A significant benefit of this for lenders is that minimums are much lower. For example, instead of $10,000+ minimums, Steward can allow individuals to participate in deals with as little as $100.

All the platform deals are structured as loans rather than equity deals. This means 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%.

The time horizon varies based on the investment. Most have a 3 to 6-year time horizon. However, they do offer short-term nine-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 cash flow than an equity venture would.

Steward Incentives

Some of the projects will provide incentives to lenders that meet specific 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 their supporting farms. While many other farmland platforms focus solely on the numbers, Steward also emphasizes the people and the projects your dollars impact.

Steward Fees

The fee structure for lenders on the Steward platform is simple. There are none.

However, Steward is not running a charity, and they are still making money. Therefore, 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.

Steward Taxes

Most equity-based platforms send participants from K-1 each year. This form is specifically for partnerships, and most equity-based media are structured as limited partnerships.

One advantage that a K-1 offers is the potential for individuals to receive some losses from the partnership that they can deduct from 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 your portfolio received and not include any losses. Interest income is taxed at your typical income tax rates.