Projects in collaboration with Fair Capital offer Lendahand investors a guarantee on their investment, including interest. With this guarantee, Fair Capital reduces the risk of investing in crowdfunding projects focused on sustainable and fair trade agriculture.
For selected projects, Fair Capital provides a guarantee on both the investment amount and the interest, excluding any value changes resulting from exchange rate fluctuations between USD and EUR. This means your investment (in US dollars) and the expected return are protected, even if the project does not succeed.
These guaranteed projects focus on sustainable agriculture in Peru. Fair Capital finances Organic and Fairtrade export companies, and through Lendahand, you can support these businesses.
The first projects are with Juan Santos Atahualpa, a cooperative, and M&V Rivas, a private company. Both are committed to strengthening sustainable farming in Peru, with the support and guarantee of Fair Capital.
How does the Fair Capital guarantee work?
Thanks to the collaboration with Fair Capital, you can invest in sustainable projects through Lendahand with reduced risk. Fair Capital takes on the risk of default: if JSA and/or M&V Rivas do not fully repay their loan, Fair Capital ensures that you, as an investor, still receive your money.
Through this partnership, you, as an investor, can directly contribute to improving the incomes and lives of small-scale farmers in Peru.
Practical Example:
You invest €1,000 in a Fair Capital guaranteed Company. The Company receives the funds to purchase organic and fairtrade coffee from smallholder farmers in Peru. The coffee is processed and sold to international markets such as in the US or in Europe. Once the loan matures, the Company pays back the loan (plus interest) to you.
In case the Company is unable to repay the investors, Lendahand will claim the guarantee with Fair Capital that will be used to compensate you. Note: the guarantee does not cover exchange rate risk between the US dollar and the euro. Any decrease in the value of your investment due to currency fluctuations is your responsibility.
How does the loan term and repayment work?
The maturity of the Juan Santos Atahualpa loan is 9 months. You will receive full repayment of the loan at maturity, in month 9. Interest payments are made in months 3, 6, and 9.
Important to know: interest is only paid over the period during which the loan is outstanding. In the event of (early) repayment, interest accrual stops at that point. Any future interest payments will be cancelled and are not covered by the guarantee.
When does the guarantee take effect?
If an expected repayment from the guaranteed projects is delayed, Lendahand will have the right to request the activation of the guarantee 60 days after the delay. Fair Capital will then have to pay the missing amounts within 14 days of the guarantee execution, and the funds will be transferred to your Lendahand wallet.
As impact investors, we are aware that small delays may happen in the soft commodity export sector, and will be mindful of first understanding the Company’s situation before executing the guarantee. Nevertheless, recovering the investments from our crowd investors remains Lendahand’s utmost priority.
The guarantee is assessed per expected repayment and reimbursed separately.
Lendahand will initiate the guarantee process. This means that, as with any project, an individual investor is not permitted to take action in the event of non-payment by the borrower.
Does the guarantee also cover expected interest?
Yes, the expected interest is also covered.
Does the guarantee cover the EUR to USD exchange rate?
No, the exchange rate risk between EUR and USD is not covered. Read more here about investing in different currencies via Lendahand.
Does the guarantee apply to all my investments?
No, the guarantee only applies to specific projects offered by Fair Capital, namely Juan Santos Atahualpa (JSA) and M&V Rivas.
When does the guarantee not apply?
If Fair Capital is no longer able to meet its payment obligations, the guarantee may not be fulfilled.
How Was the Guarantee Established?
This collaboration was made possible after several years of discussions between Lendahand and Fair Capital. Both organisations realised that they had one objective in common: financing underserved communities in rural areas of low-income and middle-income countries.
Fair Capital has a deep expertise in assessing agriculture project social impact and credit risk. By leveraging Lendahand’s pool of impactful investors, we are able to further finance the purchase of coffee from smallholder farmers, benefitting their livelihoods.
In the future, the collaboration will likely expand to other sub-sectors, but always within the field of sustainable agriculture. Besides coffee, cocoa, grains, or spices-related trade could well be the next type of projects we offer on the platform.
Who is Fair Capital?
Fair Capital SA is a Swiss-based impact investing firm specializing in providing loans and lending solutions to the organic and fairtrade sector. The company focuses on providing tailored financing options to small and medium-sized enterprises (SMEs) across various sectors within the sustainable agriculture space, aiming to support their growth and development, and to ultimately benefit smallholder farmers.
Fairtrade certification ensures ethical production by guaranteeing fair wages, safe working conditions, and sustainable practices for producers in developing countries. It supports communities and promotes environmental responsibility. Consumers choosing Fairtrade products, like coffee or cocoa, help reduce poverty and encourage a more equitable, transparent global trade system. The Fairtrade label is owned by FairTrade International, an NGO based in Germany.