Root Capital

Root Capital is a nonprofit social investment fund that grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training, and strengthening market connections for small and growing agricultural businesses (SGBs).

We accept both senior and subordinated debt investments from institutional and accredited individual investors. We on-lend these investments to rural SGBs that, in addition to providing stable incomes to their small-holder producers, also generate positive social and environmental benefits for their communities.

Providing capital to SGBs, especially those not reached by commercial lenders, we address market failures through an innovative lending model, applying value chain finance tools in new areas of the supply chain. Leveraging global market demand for sustainable products, we provide credit to SGBs that is secured against assignment of payment for their future sales to buyers in North America and Europe.

Over the past 10 years, we have been uniquely positioned to meet the needs of rural SGBs through:

• An effective lending model & systematized risk management system

• Regional office structure & streamlined loan evaluation system, enabling us to respond to clients efficiently

• Local field staff with experience working as managers of rural SGBs and who understand the markets in which we operate

Financial description

Root Capital provides loans ranging from $50,000 to $3,000,000 to cooperatives, associations, and private enterprises comprised of small-scale producers. Annual interest rates, which typically range from 9% to 14%, are designed to be competitive with local bank rates. That is, we aim to extend finance to businesses not currently reached by commercial lenders without distorting the market. In turn, we pay our debt investors rates of 0 - 2.5%.
To our clients we offer:
• Short-term trade credit loans that are oriented around a harvest or production cycle.
• Long-term fixed-asset loans of up to five years for investment in processing equipment, infrastructure, and general operations.
The majority of our loans employ a form of value chain finance, whereby the main security is future sales contracts from Western buyers. The purchase agreement decreases or replaces the need for traditional collateral as it represents a discrete, future revenue stream pledged to repay our loan.
Over the past 10 years, we have maintained a 98% repayment rate from our borrowers and a 100% repayment rate to our investors.