Green loan

Can capital help solve climate change?

Thanks to Green Loans, a new Heavy Finance investment product, the answer is yes!

Green Loans allow you to provide financing for environmental solutions making a real positive change to our climate while making a great return on your investment. At HeavyFinance, we open the door for retail and institutional investors to the growing market of carbon certificates, offering an opportunity for a significant return with a significant impact. We encourage you to learn more about the potential of the carbon certificate market on our blog.

What are carbon certificates?

A carbon certificate is a unit of exchange that companies and organisations can use to offset their greenhouse gas emissions. One carbon certificate is equivalent to one metric ton of greenhouse gases removed from the atmosphere, and farmers engaged in no-till practice on average remove 2.3 tonnes of carbon dioxide per hectare from the atmosphere every year.

As the current market price of a single carbon certificate is within the range of 25 - 35 EUR, only one hectare of agricultural land with adopted no-till practice can generate 58 - 81 EUR per year.

As more and more companies are targeting zero net emissions goals, the demand and therefore the price of carbon certificates is expected to increase over time. Moreover, as all HeavyFinance sustainability projects are verifiable and accurately track their actual carbon dioxide sequestration, the quality of our carbon certificates can be sold at a market premium, further increasing the return on investment. Read more on carbon certificate pricing in our blog and learn why HeavyFinance provides you with the best exposure to the carbon market.

About the farm

HeavyFinance provides you with an opportunity to invest in a loan for a business focusing on sustainable crop production. Mr Tomasz received the 13ha farm from his parents in 2014 and is currently farming 90ha. A colleague helps with the work on the farm, and the entrepreneur employs one worker during the season.

The farm is focused on crop production with the current crop structure: cereals - 20 ha, maize - 30 ha, rapeseed - 40 ha. The crops are sold mainly in his region. As crop production is the main livelihood of the farm, the farmer runs the farm in a sustainable way, through no-till, leaving crop residues in the field and using bio-fertiliser.

Machinery used on the farm:

• CASE FARMALL tractor with front loader 
• FENDT Favorit 824 tractor
• ROSTELMASCH Vector 425 combine harvester  
• MATBRO loader 

For soil cultivation, he uses:

• AGROMASZ seeder
• AGRISTAL 5m disc machine 
• BAIMFOL 1000L sprayer
• WIPROL sprayer 1200L
• WIPROLseed drill 800L 
• VERUM 5 skid DX plough
• AGROFACTORY subsoiler 3m
• PROMAR 12t trailer
• SCHMIDTtrailer 18t 
• METALFACH 8T manure spreader

The farmer plans to buy a bigger tractor, chisel plough and multipurpose seed drill as well as increase farming area.

Seeing an opportunity to accelerate the business by getting a Green Loan from HeavyFinance investor community,  the financing will be used to purchase fertiliser, fuel, seed and machinery parts needed to increase agricultural production.

Main Terms

The principal will be repaid by the farmer in regular instalments over the span of 4 years in accordance with the repayment schedule.

All 82 hectares of arable land are included in the Green Loan program. It is estimated that a total of 756 carbon certificates will be generated in 5 years (based on a conservative estimation). Consequently, investors will receive a portion of sales proceeds from every carbon certificate generated throughout the span of 5 years as the following terms;

• 60% of income share during the loan period
• 40% of income share for the following year after the loan period

It is expected that the first carbon certificates will be generated and sold in the fourth quarter of 2024. The exact return will depend on the amount of sequestered CO2 levels and the sale price of the carbon certificates.

If the farm withdraws from the Green Loan without a period of at least 5 years has elapsed, it undertakes to reimburse 13,4% annual interest.

CO2 emissions to be removed from the atmosphere because of this loan are equal to 3,11 million kilometres driven by an average gasoline-powered passenger vehicle.

Annualized return forecast

• Conservative scenario (€20 per carbon certificate): 13.4% IRR*
• Today's scenario (€35 per carbon certificate): 23.1% IRR*
• Optimistic scenario (€100 per carbon certificate): 64.6% IRR*

Read more about the return scenarios in the document section

*The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. Learn more about it

Keep in mind that the return forecast is an estimation and does not guarantee you the returns mentioned above.