Frequently Asked Questions

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General Questions

What is the Fair Finance Fund?

The Fair Finance Fund (“Fund”) is a non-profit social finance fund dedicated to providing loans and mentorship services to local food and farm enterprises that value strong local food systems, local economies, and a healthy planet. The Fair Finance Fund builds on seed capital to implement an ongoing investment opportunity for community-minded investors, that is, individuals who want to invest their capital to build local food systems in Ontario to support food that is grown, raised and processed in their own backyards.


Who can get a loan?

The target group for the fund is regionally owned food and farm enterprises with social purpose focused on local production and local markets. Local food stores, markets, new farmers, co-ops, community-scale processors and other agri-food based social enterprises consistently identify lack of access to capital as a key barrier to their development and growth. Applicants will be assessed on their business plan, previous track record, and ability to cite social and environmental benefits that result from their operations. Applicants must have a business registration number.


Who can invest?

The community bonds are available to accredited and non-accredited investors. The Fund provides a full business plan and offering statement so that investors can invest according to their beliefs, asset levels and portfolio goals.


What is the interest rate?

The standard interest rate is 6%.


What is the term of the loan?

The average term is 5 years.


Is there flexibility in repayments?

There can be flexibility in terms, if appropriate, and determined on a case by case basis.


Can you repay the loan early?

The loan is open for prepayment in full at any time.  This payment would consist of outstanding principal, unpaid accrued interest and the next 3 months of scheduled interest.


Do you take security?

Typically the only security required is a promissory note, but there is the option of requesting security on a case-by-case basis.


Why is the interest rate listed as variable in the term sheet and offering statement?

The interest rate that the Fair Finance Fund is offering is a base of 2%. If the Fair FInance Fund has a surplus in any given year, the board of directors does have the option to provide a greater return to investors.


What does first loss capital mean?

The Fair Finance Fund has received first-loss capital of $400,000. Catalytic first-loss capital refers to socially and environmentally driven money, in this case grant capital, that bears first losses in an investment in order to catalyze the participation of co-investors. If any loan defaults occur, that loss will be absorbed from this first loss capital, prior to any investors suffering losses. It is a powerful risk aversion mechanism.


What type of clients does the Fair Finance Fund provide loans to?

The Fair Finance Fund provides loans to local food and farm enterprises that have a social mission of local production and local markets. These businesses have to have their headquarters within Ontario and be able to effectively communicate the social and environmental impacts of the proposed project, expansion or start-up initiative that the loan will be financing.


How will I understand the economic, environmental and social returns I am receiving from my investment?

Semi-annually all investors will receive an Impact Investment Report that will provide insightful information about the impact of their investment within Ontario communities. This report is built from the Fair Finance Fund’s integrated impact measurement system and communicates outcomes in two ways. First, there will be quantitative outcomes communicated through impact metrics on job creation (including jobs retained, job quality and more), additional revenue generation, and local procurement. Second, investors will receive detailed case studies highlighting the social and environmental outcomes that their dollar has contributed to from highlighted clients. This provides a rooted understanding of specific loan recipients and their contribution to the growth of their regional food system.


What is the process to purchase a community bond?

Once an individual or institution expresses interest in purchasing a bond, has spoken with a member from the Fair Finance Fund team and has read the Offering Statement thoroughly, they will need to fill out the Schedule B at the end of the Offering Statement. This demonstrates the contractual commitment from the investor. Next, a member from the Fair Finance Fund will be in contact to set the investor up in the secure portal for principal and interest transfers, enabling a seamless process for the investor. Once these papers are processed, a bond certificate will be issued from the Fair Finance Fund.


What happens to my money when I purchase a community bond?

All money raised through community bonds will go directly into the investment fund, providing loans to local food and farm enterprises. No portion of the capital provided will be used for expenditures.


When and how do I receive my interest payments?

All investors will receive their interest payments on January 31st or the next business day thereafter each year. The interest payment will be automatically deposited into your chosen bank account through the Fair Finance Fund’s secure electronic fund transfer system. This system reliability and safely holds the investor’s account information and provides payments seamlessly. This system is also used by the Fair Finance Fund to receive the principal payment at the issuance date and to deposit the principal and any remaining interest at maturity.