Start-Up Commercialization Planning

Objectives: The primary objective of agCredit's pre-commercialization plan is to establish a solid foundation for revenue generation by offering loans to underserved farmers and ranchers via a BaaS partnership with a commercial bank.  The company aims to utilize the $250,000 investment effectively to: 

sustain necessary systems,  

forge a partnership with a BaaS partner,  

implement the agCredit.bank software into the bank’s current systems and procedures, 

conduct testing before fully launching into the market, and 

maintain collaborative relationships with the USDA FSA and state extension offices. 

The ultimate goal is to facilitate the funding of approximately $10 million in loans during the first year of operation. 

Budget Allocation (*Will be supplemented by revenue after 9 months): 

Plaid Identity Verification + AML: $9,000 

Invo Solutions In-App Communication: $5,625 

Microsoft Azure Webhosting: $2,700 

Cyber Security Monitoring: $2,700 

Experian Credit Check: ($1,502 per month): $13,518 

Misc. Software/ADP Expenses: $2,631.88 

Liability/Cyber Insurance: $1,575 

Marketing: $6,000 

Salary/Health Insurance for 2 Employees: ($22,916.67 per month): $206,250.12   

Total Nine Month Budget: $250,000 

Implementation Phases: 

Phase 1 – Month 1-3: Finalize BaaS Partnership 

Finding the right Banking-as-a-Service (BaaS) partner is a crucial step for Agcredit Consulting, LLC to successfully offer its services. 

Continue networking with potential bank partners. 

Review expectations and outcomes of Agcredit Consulting and the potential partner banks. 

Send potential banks our due diligence package to review. 

Sign finalized agreement with the BaaS partner of choice. 

Implement new Identity Verification & AML system via Plaid (due to outpricing by current provider, Jumio). 

Phase 2 - Months 4-5: Setup and Testing 

Create API into BaaS partner’s Core Provider via loan documentation system. 

Receive FSA approval of EasyLoan Scorecard into the partner bank’s FSA PLP Credit Management System. 

Testing: Conduct rigorous testing of all systems to ensure smooth integration, reliability, and security. Address any bugs or issues. 

Employee Training: Provide training to relevant bank employees on using the systems effectively and handling customer inquiries. 

Phase 3 - Month 6: Refinement and Optimization 

Bug Fixes: Continuously monitor system performance and address any bugs or glitches that arise during testing. 

System Optimization: Fine-tune the systems to ensure efficient and quick credit assessments via the EasyLoan scorecard. 

Bank Engagement: Present the successful results of testing to the BaaS partner bank. Highlight the value-added proposition of Agcredit Consulting's solutions in streamlining their loan approval processes. 

Phase 4 - Months 7-8: Pilot Launch and Feedback Collection 

Soft Launch: Begin a limited soft launch with a small target group of ag producers (through collaboration with an FSA office) to gather real-world feedback and assess user experience. 

Feedback Collection: Actively engage with early users to understand pain points and gather suggestions for improvement. 

Performance Monitoring: Continuously monitor system performance and user interactions to identify any performance bottlenecks or user experience issues. 

Bank Collaboration: Collaborate closely with the bank partner to customize the BaaS solution according to their requirements and streamline loan origination processes. 

Phase 5 – Month 9: Full Launch and Revenue Generation 

Refinement: Incorporate feedback received during the soft launch to make final refinements to the systems. 

Marketing and Outreach: Begin a marketing campaign to promote Agcredit Consulting's offerings to a wider audience. 

Full Launch: Officially launch the services to a larger market of underserved farmers and ranchers, showcasing the reliability, efficiency, and convenience of the agCredit.bank solution. 

Bank Funding: Collaborate with the partner bank to ensure a seamless integration of loan funding processes. Aim to achieve the targeted $10 million in funded loans within the first year. Begin planning out the pooling and selling of loans. 

Continuous Improvement: Establish a feedback loop with users and the bank to identify areas for ongoing improvement and innovation. 

Key Performance Indicators (KPIs): 

Number of Users: Monitor the growth in the number of users of the agCredit.bank app. 

System Uptime and Performance: Ensure high system availability and responsiveness. 

User Satisfaction: Gather user feedback and track user satisfaction scores to gauge the quality of our services. 

Loan Funding Volume: Measure the actual loan funding facilitated through the BaaS partnership with the bank against the $10 million target. 

By meticulously following this pre-commercialization plan, Agcredit Consulting, LLC aims to efficiently utilize the $250,000 investment, establish a solid BaaS partnership, and ensure that all systems are thoroughly tested and refined before entering the market. Through effective marketing, collaboration with a commercial bank partner, and continuous improvement, the company aims to achieve its revenue goals while providing valuable services to underserved farmers and ranchers and community banks. 

1.1 Overview.  Agcredit Consulting, LLC is set to commercialize a first-to-market customer-facing digital lending solution (agCredit.bank) that is faster, better, and more profitable for rural lenders to better serve smaller farmers and ranchers in rural areas.  Preferences and behaviors have shifted to mobile technology, transforming traditional face-to-face lending to digital lending channels. A customer-facing agricultural digital lending solution attracts and retains the next generation producer.

1.5 Desired Outcome. The desired outcome is an effective and efficient digital platform and business model for community banks to increase their capacity to serve more agricultural producers, thus improving the economic viability of banks and the rural communities they serve. agCredit’s mission is to keep the business of banking relevant in rural America by expanding access to credit to smaller-sized creditworthy producers.

2.1 Overview of agCredit. Agcredit Consulting, LLC was co-founded by Emily Rischling and Steve Cleveland in 2018 to 1) develop software, 2) facilitate agricultural credit applications, and 3) provide educational resources. Spencer Morris, a software engineer, joined the team as the technical co-founder in 2020. The company was awarded USDA Small Business Innovation Research (SBIR) Phase I and II grants to research and develop its agCredit.bank digital lending solution.

3.1 National Market Overview. Agricultural production has shifted to much larger farming operations over the last three decades, even as the number of very small farms grows: 10% of farms account for 80% of production on 52% of the land (ABA, 2021). Farm lending has shifted from commercial banks (36%) to the Farm Credit Services (44%). The USDA FSA holds a smaller lending presence (3%). Commercial banks assert unfair competition from FCS for borrowers because of tax advantages that can lower the relative cost of funds for FCS. Regardless, farm banks have consolidated over the same time period, resulting in fewer local financing choices for the other 90% producing 20% on 48% of the land. Those are largely underserved, smaller-scale and beginning producers who reside in rural areas.

3.2 Market Potential. The scalability of agCredit.bank is staggering considering a $425 billion plus agricultural finance market. 1,553 farms banks funded $99 billion of agricultural loans. US banks funded $69 billion of small and micro farm loans (our target market). 1.5% of the market is $1 billion. Small farms control 48% of the land but only produce 20% of US ag revenues.

5.2 Commercialization Overview. The timely vetting of Agcredit Consulting’s mission-based approach by the USDA SBIR program, coupled with funding opportunities of the American Recovery Plan Act (ARPA), positions agCredit to commercialize and nationally scale its agricultural digital lending application for smaller-sized farmers and ranchers in rural areas. Community banks, rural lenders, the USDA FSA, CDFIs, and educators will refer underserved producers to the agCredit.bank platform for loan underwriting, and funding. The utilization of digital marketing resources will be key to identify and penetrate targeted audiences and geographies. The BaaS component, coupled with the targeting of a largely underserved market, positions agCredit as a high growth business model.

6.2 Financing. A pre-seed stage capital raise of $1.3 million is anticipated in year 1 (2024) to finance the initial scale of the business model and revenues summarized in Table 1 and detailed in Tables 3 and 4. Table 3.1 estimates revenue generated by the BaaS provider. Table 5 demonstrates the scalability of the business model. A seed-stage capital raise of $10M in year 4 (2027) will ramp up staffing to accelerate loan volume and revenue.

2020 – Achieved Proof of Concept via early demonstrations with rural-smaller-sized farmers and rural-based lenders, and the award of a USDA SBIR Phase I grant

2021– Approach was validated when the USDA FSA National Office approved the agCredit.bank EasyLoan scorecard.

2022 – The agCredit.bank EasyLoan Application and Scorecard tested as functional and user friendly and placed in the app stores.

April 2023 – Raise Pre-Revenue Investment of $500k

July 2023 – Secure BaaS Partner and Hire First Agent

December 2023 – Reach Revenue

April 2024 – Raise Pre-Seed Investment of $1.3M and increase staffing to exceed $2M of annual revenue