Steward is an awesome way to support sustainable agriculture and pays a competitive interest rate for even its diversified evergreen campaign!
Invest in small to mid-sized regenerative farms and sustainable producers through simple, flexible business loans.
Steward is a lending platform that finances the growth of small to mid-size regenerative farms and sustainable producers through simple, flexible business loans. With as little as $100, you can lend to farms, ranches, fisheries, and local food producers and earn up to 10% interest or contribute to a loan pool and earn 6% interest.
Let's take a closer look at Steward and why you might want to consider lending or look elsewhere to make an impact.
What is Steward?
Steward was founded by Dan Miller, former President and Co-Founder of the real estate crowdfunding platform, Fundrise. After meeting with a well-known chef in Washington D.C., Dan heard about independent farmers' difficulties securing loans. So in 2017, he built Steward to empower farmers and let consumers join in the success.
The platform enables farmers to submit projects ranging from $10,000 to $970,000 in size. Then, after due diligence, you can fund the projects through the platform. Most deals are structured as debt with an interest rate of 5% to 10% and a time horizon of nine months to six years. And, farmers may offer additional incentives, such as merchandise.
Each loan is an individual agreement with a unique start date and maturity date. All initial investments, interest payments, and maturity transactions occur on the 15th of the month, so timing matters when making transactions. While you can withdraw a loan early, you must provide three months' notice and withdraw the entire amount.
Any income you generate from these investments is taxed as interest at the ordinary income tax rate and reported on Form 1099-INT.
Why you might sign up
Steward makes it easy to support small sustainable farms with as little as $100 and earn a compelling 5% to 10% interest rate. Unlike equity crowdfunding, these deals are structured as debt that provides a steady source of income. Secured debt is also typically senior to any equity, meaning there's less risk of loss than equity investments.
In addition to loaning to specific projects, the Steward Regenerative Capital pool provides short-term bridge loans to a diverse collection of farmers, translating to significantly less risk. The 4.5% interest rate offers a compelling return, and the nine-month timeframe makes it an excellent option for long-term savings (e.g., a CD alternative).
Of course, Steward is one of the few ways individuals can invest in small, sustainable agriculture. Most crowdfunding platforms (and traditional banks) target large farms and producers, leaving smaller farm-to-table businesses on the sidelines. By supporting these businesses, you can help restore farmland and promote sustainability.
Why you might pass
Steward structures most of its deals as debt, which has less upside potential than equity. For example, debt entitles you to regular repayment with interest, but nothing more. If a farm or sustainable producer experiences significant growth, you will still only receive your principal back with interest over time.
The interest payments on loans are taxed at the ordinary income tax rate, which could significantly impact your after-tax returns if you're in a high tax bracket. Therefore, you should consider setting money aside to cover your tax obligations when investing in these debt agreements. And you may want to compute your after-tax returns beforehand.
Finally, while Steward has been around since 2017, the platform is relatively new and has a limited track record. With repayment periods of up to six years, there won't be a long track record for some time. However, Mr. Miller's experience at Fundrise provides an added level of credibility versus other new crowdfunding platforms.
The bottom line
Steward makes it easy to lend to sustainable farmers and producers with as little as $100. With interest rates of up to 10% and repayment periods as low as nine months, these investments work for everything from long-term savings to long-term fixed-income investments. They're an excellent way to earn a return while supporting sustainable agriculture.
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Mar 23, 2023
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Impact FocusSustainable Agriculture
- Support sustainable farms, ranches, fisheries, and producers by providing access to capital.
- Earn attractive interest rates through secured, interest-bearing loans.