Page Comparison

1) Cash transfer: This could be conditional or unconditional. Give money to farmer orgs and they spend on whatever assets they want

• Simple

• Demonstrating trust to FOs builds their agency

• No repayment issues for FOO

• Not possible in India due to FCRA, could try in Ethiopia or Kenya

• Money could be mis-spent

• GiveDirectly

2) Paygo: DG buys the asset and makes it available to FPO on a rental basis with a path to eventually transferring over

• Simple for FPO

• DG (or whatever entity is providing the service) can provide favorable rental + transfer terms to FPOs to increase access

• DG could aggregate purchasing volume and drive volume discounts with suppliers

• DG will have a bunch of assets on its balance sheet

• Operationally complicated

• Lots of examples with solar systems but these are usually for individuals, not collectives

3) Risk capital for FOs. Debt that sits between equity (member contribution) and normal bank debt (working capital and term loans). Venture or Mezzanine. No fixed repayment rate, investor return varies based on FO earnings.

Can create a structure where a bunch of such loans are pooled and more senior / risk averse lenders get repaid first and more impact oriented investors (philanthropies, impact investors) are paid last. This could be a fund or issue a green bond organized around this theme

• Seems like a missing piece in the capital stack

• Flexible repayment terms

• Totally new instrument with uncertain risk / return profile; will investors sign up for this

• Complicated to monitor and collect cash

• Revenue share convertible note (3x return paid through cooperative earnings from Start.coop)

• rePlant Capital Soil Fund

4) P2P Loan: Retail investors directly support FOs by offering capital at preferential terms in exchange for impact outcomes 

• There is now an established regulatory structure for this and some proven demand

• Limits on borrowing amounts / number of funders which could be an issue

RangDe

Can test by signing up as an impact partner and listing FO as a borrower on RD

5) Become a banking correspondent for an existing bank or NBFC

• There are lots of banks with huge balance sheets which need help meeting their PSL targets

• Eventually, FOs will need to engage with formal credit systems

• Agri-Infra fund provides 3% interest subvention and credit guarantees which could motivate lenders; wonder why others have not yet been able to unlock this

• Need to partner with an RBI regulated partner (NBFC or bank); they have their own challenges (high cost of capital for NBFC, high transaction costs and slow moving for traditional banks)

• Usually a fixed repayment schedule which is not FO friendly

• Conservative underwriting criteria; maybe DG can address through loan guarantees but they will move slow

Dvara

Bharosa

A related model is Aceli who provides first loss guarantees and bonus payments to banks who lend to small famers / agri MSMEs / coops. NABARD and Dept of Agri play this role in India already; our value add could be coupling FLDG with capacity building / TA?