Oliver Moore: Beechlawn organic farm raises €20,000 via auction
While it’s exceedingly difficult to get loans from banks these days, Beechlawn went with the Linked Finance option. Úna Ní Bhroin explains how it worked for them:
“Linked Finance contacted us three times about a loan,” Úna recalls. “We would discuss it, but were worried as we were already in debt, so why take more on? They contacted us three years ago and two years ago, the second time, we looked more seriously at it. We sent them accounts.
“The third time, Conor McAlese got in touch to say that he was passing. He popped in. We had a chat about what we would do were we to get funds in.”
Úna said Conor couldn’t have been nicer and more helpful; it really felt like he had the couple’s interests at heart.
Úna and Pádraig initially worried about repayments, but felt that they’d be okay. They pay €633 per month on the €20,000 they gained from the auction. Conor contacts them in advance of each payment to allow them to ensure the cash is in there.
“We gave him a list of our needs: a roller door for our new wash shed; a new computer for the office; a new van for deliveries; a new refrigeration for the new van also, as well as a motor door and insulation panels for our partly completed coldroom in our wash shed,” said Una.
“We gave him a copy of our bank statements along with other loan statements for the previous six months and we also got a credit clearance certificate.
“In the end, we focused on the van, upgrading our warehouse and storage facilities, including the construction of a concrete bay to provide better access for trucks. We also plan to build an office above the wash house which will offer easy access for staff and customers.
“Our office is located in our home at present, which is becoming a bit cramped. We will also be putting in an additional coldroom in the washhouse to keep veg cool, and a steel roller door has just gone in.
“The final project we have is to make improvements and enhancements to our webshop.”
Linked Finance ran an auction, whereby people could invest in Beechlawn’s upgrade plans. The auction ran for three weeks.
“We were encouraged to keep an eye for, and respond to, queries via email about the auction, and in the Q&A section of our loan, as they were likely to be from interested potential investors.
“Linked Finance gave lots of support, while we also promoted it on Facebook, with family and fields; we contacted customers, suppliers and anyone we could about it really.”
Bids were from €50 up, lots came in at €100, and there were a few people who seemed to do this a lot, based on their profile activities, said Úna. Returns for bidders are higher than they would get from the bank as interest on savings. All lenders who supported the loan for €250 or more at 6.5% were offered a 10% discount on veg boxes purchased in 2014.
The auction was oversubscribed, to the tune of 175%, at an interest rate of 8.73%. About 275 people invested in Beechlawn, lending for 36 months. Úna and Padraig got the €20,000 less a completion fee of €500 — 2.5%. The loan can be settled early with zero penalty interest.
And so there you have it. There are other options beyond the banks for loans. Crowd funding has emerged as a genuine alternative for businesses, including organic food businesses.
