Social Accounts - Appendix 4

Types of lending

PRODUCER LENDING PRODUCTS

We offer a range of credit and loan finance products for fair trade producers, farmers and artisans
across the world. We also lend to fair trade organisations involved in the production of commodities
and handcrafts.

We offer:

Pre-financing: This facility provides sufficient working capital to producer groups to enable them to
complete and deliver new orders. Customers can borrow a maximum of 80% of the value of any
order received (60% for some commodity orders). Repayment happens once delivery is made and
when the buyer pays for the order via Shared Interest Society. We deduct the amount borrowed and
any interest due.

Term loans: We offer producer groups term loans primarily for the purchase of assets such as a
coffee washing station, cableway for transporting bananas or trucks to transport the produce.
Borrowing is usually for between one and five years and repayments are set depending upon the
circumstances of the producer group. Loan sizes are determined by the financial situation of the
producer group and its ability to repay the loan. We have extended the maximum duration of our
term loans from five to seven years in order to assist producer organisations with both pests/disease
and climate change, particularly coffee producers who need to renew crops that have suffered with
leaf rust in recent years.

Stock facility: We offer producer groups a short term revolving loan for the purchase of stock.
Borrowing is for up to a 12-month period and repayments are arranged according to the cash flow of
the producer group.

Pre-harvest loan: Similar to a stock facility, this product is available to help producer groups
maintain and improve their crops by purchasing fertilisers ahead of the harvest and the setting of
contracts.

BUYER LENDING PRODUCTS

We offer a range of credit and loan finance products for fair trade buyers across the world. We also
lend to fair trade organisations involved in the procurement of commodities and handcrafts.

We offer:

Buyer Pre-financing credit facility: Fair trade buyers are required to provide a pre-payment to
producer groups of at least 50% of the order value if it is requested. However, buyers can find
themselves struggling to provide sufficient pre-finance from their own cash reserves. We assist by
offering fair trade buyers a facility that can be used to pre-finance orders with their producers. In
addition a buyer can also benefit from a further credit period of up to six months after the order is
received, enabling them to sell their product and receive an income prior to repayment of the amount
borrowed.

Shop loans: These loans are specifically designed for buyers opening new retail stores and they
enable a business to purchase the initial fair trade stock. We agree the loan amount in consultation
with each applicant and repayment is made over an agreed period.

Term loans: Our first term lending for buyers was approved in 2008. We provide the loans generally
for the purchase of assets and for website development or working capital. Borrowing is for between
one and five years and repayments are set depending upon the circumstances of the buyer. Loan
sizes are determined by the financial situation of the buyer and its ability to repay the loan.