Our Approach
“As an investor in and beneficiary of its ‘green’ lending activities, our company remains grateful for Root Capital’s work, as we believe its lending model addresses an important need that comes from the coffee producers themselves.”
Michael Dupee
Director of Social Responsibility
Green Mountain Coffee Roasters
"Root Capital goes well beyond the delivery of credit to promote financial capacity in the countryside in a way that comprehensively builds rural enterprises into “bankable” businesses."
Maria Teresa Villanueva
Project Team Leader
Inter-American Development Bank
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Lending to Rural Grassroots Businesses
Our lending model provides access to both the finance and supply chains that allow rural people to build
sustainable livelihoods and lift themselves out of poverty. The main security for our loans is future
sales contracts from companies like Green Mountain Coffee Roasters, Marks & Spencer, Starbucks, and Whole Foods.
When natural products are shipped, the buyer pays Root Capital directly for interest and
principal payments. Short of weather issues or other unforeseen circumstances, we can be highly confident
that our loan will be repaid. By moving beyond traditional approaches to collateral, we are proving the
business case for lending to the rural ‘unbankable’ through intelligent use of supply chains that redefines
risk across rural finance in developing countries. In addition to short-term working capital loans, Root
Capital also provides longer-term credit for capital investments, such as processing equipment, drip
irrigation, agricultural applications of renewable energy technologies, and farm refurbishments to
increase organic production yields.
Factoring Model

1. Order goods
2. Make loan with purchase order as collateral
3. Ship goods
4. Pay for goods
5. Remit payment, net of loan principal and interest
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Financial Education & Training
Our financial education program trains managers and elected leaders of rural cooperatives in
financial management and basic business skills. The goal is to equip leaders of farmer and
artisan associations with basic skills to build their businesses and work effectively with
their members, buyers, and financial institutions. The training targets both new clients and
existing borrowers in order to accelerate their organizational development, prepare them for
initial and larger capital infusions from Root Capital, and make them attractive clients to
local financial institutions. Our approach includes building bridges to local banks and
actively drawing them into rural financial markets.
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