About TerraFund Loans & Equity Investments

The terms of debt and equity investments for TerraFund enterprises are negotiated before the contract is signed to fit the context of each project. Entrepreneurs should refer to the contract for specific details regarding their loan and/or equity investment.

About TerraFund Loans:

  • The investment committee reviews companies’ documents, application and how funding could be used to restore land.
  • The entrepreneur is vetted by business experts and signs contract with Realize Impact, its subsidiary Africa Trees, or Barka Fund.
  • The length of the loan term is between 1 and 5 years.
  • Loans are provided at an 8% interest rate in USD, 12% in KSH, and 14% in RWF, with the last payment forgiven upon submission of reports and on-time payments throughout the life of the loan.
    • If the final loan payment is forgiven, the effective interest rate of the loan decreases to 4%.
    • For loans in USD, foreign exchange rate fluctuations are capped at 10% depreciation, based on the official exchange rate at the date that the loan was issued. TerraFund covers all additional currency depreciation.
  • Loans may be distributed in tranches, which means that a portion of the principal will be disbursed upon the execution of the loan agreement, with subsequent portions disbursed at later dates provided reports and payments are made on time.
    • Tranche-based disbursements amounts are specific to each enterprise and outlined in the contracts.
  • A week before each payment is due, entrepreneurs will receive a reminder email with the amount due, as well as instructions for making a payment in the payment in each the loan was issued.
    • Entrepreneurs should wait to receive this email before making a payment to make sure the correct amount is sent, especially if their loan is denominated in USD.
  • If an enterprise repays its loans on time and submits its impact reports on TerraMatch, it can be eligible for an additional loan or equity investment, as need arises.
  • To understand how loan repayments work, entrepreneurs can download this example loan repayment schedule here, which provides examples of interest and principal payments over the life of a 24, 36, 48, or 60 month loan. 

About TerraFund Equity Investments:  

  • Equity is a type of investment whereby Africa Trees purchases a minority stake in a company. There is no repayment with this type of investment. Companies may receive both equity and debt investments, or solely one or the other.
  • Africa Trees will have the right to appoint one board member and will serve as a close advisor. Africa Trees does not intend to sell its shares in the company.

Regardless of the type of investment received, all funded enterprises must submit reports on TerraMatch, create geospatial data for their restoration areas, and update know-your-customer (KYC) documentation at the intervals specified in their contract.

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