Lending

FarmWorks and Food Production in Nova Scotia

To apply please go to FarmWorks Application Form

The Directors of FarmWorks Investment Co-operative Limited are committed to promoting and providing strategic and responsible capital for food production and distribution in order to increase access to a sustainable local food supply. Food production creates jobs on farms and throughout the food system, increases food sufficiency, keeps money in Nova Scotia and provides economic stimulus to help reinvigorate rural communities.

Shareholders’ investments in FarmWorks Community Economic Development Investment Fund provide capital that is loaned to a qualifying farms and food-related businesses.

FARMWORKS VISION

Healthy farms and healthy food

OBJECTIVES

— Support farms and food-related businesses that have the capacity to contribute to food sufficiency

— Forge long-term relationships with businesses and provide appropriate support and resources

— Co-operate with all stakeholders and draw on collective experiences and knowledge

— Measure financial performance

CAPITAL FOR FOOD-RELATED ENTERPRISES

Loans are provided to qualifying enterprises to help them increase production and profitability through sustainable economic activity. Businesses seeking funding will send a preliminary application to FarmWorks. If the business fits with FarmWorks principles and objectives the applicant will be asked to submit more information to FarmWorks. Board Members and Advisors will evaluate a comprehensive business plan that includes current financial information and projections, will visit the business and meet with the applicants and will complete a Comprehensive Review. The Board will make a decision and a loan agreement will be signed with successful applicants.

Guidelines for measuring and reporting outcomes are in place for enterprises receiving loans. Borrowers will repay loans within 2 to 5 year terms at an interest rate that reflects both the unsecured nature of the loan and the patience of investors willing to accept moderate returns on investment. FarmWorks will endeavour to provide Community Economic Development Investment Fund Shareholders with a return on their investment. As repayments to FarmWorks are made, money is loaned to other qualifying enterprises.

LENDING CRITERIA – 2016

FarmWorks provides loans to food-related for-profit businesses in order to help increase economic, health, social, environmental and other benefits that result from producing and eating Nova Scotian food.  Loan recipients are chosen by the Board to balance risk and achieve strategic goals.

Capital

The Board and Advisors works with potential recipients to determine the amount that FarmWorks will lend based on the criteria below. All loans undergo a due diligence process that evaluates business planning, financial returns and level of risk. Businesses must be excellent candidates for repayment of loans.

FarmWorks has a flexible loan policy based on the merits of each individual application. The current interest rate is 6% with a term of two to five years. The Board determines the rate that will be charged for loans.

Characteristics of loans:

— There are no application fees or legal fees and there are no charges for any assistance provided by Directors or Advisors
— Interest rates for existing loans may decrease but will not increase
— Loans are unsecured and no chattel security is taken
— No payments are required for the first three months following the granting of the loan
— There are no interest charges for prepayment of all or part of the loan balance
— Businesses submit brief semi-annual reports and annual Financial Statements 90 days after year end
— Individuals who are owners of businesses that borrow from FarmWorks can invest in FarmWorks and receive the 35% Provincial tax credit (5 year hold) and credits of 20% and 10% for subsequent 5 year holds

General Lending Criteria

Potential for Growth and Business Sustainability

The business will have strong, experienced and ethical management with a clear and compelling vision; the skills and will to execute the business plan and grow the enterprise; the potential to achieve a minimum of a 10% increase in annual production and profitability within three years. The business will provide financial information to FarmWorks on a semi-annual basis, and FarmWorks, when appropriate, will facilitate mentoring by appropriate Directors, Advisors or other specialists to help insure the success of the enterprise.

Potential for Social Impact

The business will meet food-related needs, stimulate economic growth, provide social and environmental benefits and collaborate with others to achieve benefits for other producers and consumers. FarmWorks will provide ongoing support in the form of promotion of the benefits of eating healthy local food and investing in local enterprises.

Specific Lending Criteria

Please review these criteria to determine if your business is a strong fit prior to applying:

— Registered food-producing entity owned and operated by a Nova Scotian entrepreneur
— Comprehensive  business plan with current financial statements and projections and record of success over a minimum of two years
or is a start-up with well-researched and well-developed business plan, funded by other lenders and seeking funding from FarmWorks to leverage money from other lenders
— Full disclosure of any issues that could impact eligibility
— All permits are in place and all requirements for health and safety are being met
— Has insurance appropriate to their business
— Able to pay back loan monthly within the maximum term
— Will achieve 10% increase in production and profitability within 3 years

Farm Criteria:

— Is actively farming and has a current registration under the Farm Registration Act;
— Is generating a minimum annual gross farming income of $10,000 based on the Statement of Farming Activities (T2042, T1273) or Schedule 125 (for Corporations) that was filed with Canada Revenue Agency for the most recently filed tax year;
or is registering a farm for the first time in 2016 and the applicant is 19 years of age or older and has a minimum of 50 percent controlling interest in the farm business (for new entrants the requirement of generating $10,000 in farm income will be waived) http://www.gov.ns.ca/agri/prm/programs/development_programs.shtml#1

Food-related business Criteria:

— Has been in business for at least two years
— Has a minimum annual gross business income of $10,000
or is a start-up with well-researched and well-developed business plan, seeking funding from FarmWorks in order to leverage money from other lenders
— Must buy at least 50% of inputs from NS farmers for value-added processing of agricultural products

Application Process

— Review the lending criteria and information for applicants
— Return the preliminary application by email, mail, fax or in person
— Applications are reviewed in sequence based on the date the application is deemed complete
— Preliminary applications are evaluated and applicants are contacted within two weeks
— Applicants being considered for loans submit their business plans and financial statements and PERSONAL STATEMENT OF FINANCIAL AFFAIRS and a site visit is arranged
— FarmWorks completes the Comprehensive Review and applicants are notified of the Board decision
— Loan Agreement is signed and money is disbursed

Evaluation

— Annual financial reports.
— Semi-annual updates.
— FarmWorks Board and Advisors consult with the business to understand successes and challenges.
— FarmWorks provides mentors where appropriate.