This project was successfully funded by both Direct Participations and Steward Regenerative Capital.
This loan will be used to purchase additional automatic milking machines and to consolidate existing loans, easing cash flow constraints & improving efficiency.
Funded on 09/23/2024
Cottonwood Farms is a multi-generational family dairy farm that has been operating in the southeast corner of Genesee County, New York since 1880. Father and son team, Paul and Jason Tillotson, owe their farm’s longevity to their family’s openness to change and willingness to innovate in a shifting landscape.
In 1955, the Tillotsons were the first family in the valley to build a milking parlor. In 1999, the family moved away from the conventional dairy model and—despite the conventional wisdom of the day—refocused on improving soil and animal health by returning animals to the land in an ambitious grazing program. In 2006, the Tillotsons earned organic certification and broke free from the conventional milk markets. Most recently, they have installed automated milking systems to increase production efficiencies and give their cows more natural milking schedules.
Today, Cottonwood Farms is operated by the family’s 4th and 5th generations. They’re milking approximately 300 cows and are managing roughly 800 acres of owned land and an additional 200 acres of leased land. Every day, they produce around 15,000 pounds of organic milk for a regional milk co-op.
In 2024, the State of New York awarded Cottonwood Farms a conservation easement grant that will ensure that the 800 acres of farmland owned by Cottonwood will stay in agricultural production into the future. The conservation easement payment is expected to take place mid-2025 and will lower the leverage of the Steward loan through a pre-payment. Please see the Use of Funds section for more detail.
Cottonwood Farms is regenerating land, producing healthy organic food, creating high-quality jobs on the land, and proving that stewardship can be a rewarding endeavor.
This loan is designed to help Cottonwood ease cash flow constraints, increase efficiencies of milk production, and help them grow into the future. The majority of this loan will be used to consolidate several of Cottonwood’s business loans, easing cash flow by lowering monthly debt service payments. Additionally, about $300,000 of this loan will be used to purchase new automated milking machines, which will create more efficiencies on the dairy operation.
Important Note: The land that will be secured by the mortgage has been awarded a conservation easement grant by the Genesee Valley Conservancy. The payout for the conservation easement is expected to take place within 18 months of the closing of the loan. Upon receipt of the easement payment, Cottonwood will use the proceeds to pay off a portion of Steward Regenerative Capital’s (SRC’s) participation in the loan, enabling Steward to utilize those funds for other SRC-funded projects at that time. Note that this principal payment will not impact the repayment schedule for other participating lenders, and only SRC's position in the loan will be reduced.
Cottonwood Farms is committed to regenerating the resources of the ecosystem and to generational stewardship. Currently, they achieve these goals through:
Maintaining USDA organic certification
No till & low-till soil management
Management-intensive Grazing (MIG) (Cows are moved to fresh paddocks every 12 hours.)
Creating and maintaining wildlife riparian areas
Cover cropping & crop rotation
Granting their cows free access to pasture during grazing season
Granting their cows 24-7 access to milking machines to enable the animals to choose their own milking schedule
Participating in animal welfare programs through DFA (Dairy Farmers of America) and other organizations.
Utilizing two (of only three in the country) Solar Hybrid Diffuser Augmented Wind Turbines (DAWT) to help power their farm operations and reduce their carbon footprint
This loan will be made to Cottonwood Farms, LLC, a New York State limited liability company, which manages an organic dairy herd and sells organic dairy milk to a large regional dairy co-operative.
This loan will be used to refinance existing debt secured by the company’s land, equipment and livestock, the loan will also fund all closing costs and fees.
The total loan amount is $3,850,000.00 which will allow Cottonwood to consolidate all of its financing with Steward and provide Cottonwood Farms with lower monthly debt service and finance with a mission-aligned partner. The State of New York has awarded Cottonwood Farms a conservation easement grant that is expected to be paid out in the summer of 2025. The impending payment from the State of New York for the awarded conservation easement grant offers further risk mitigation, Steward will require Cottonwood to pay down Steward’s outstanding debt by the greater of 60% of the gross proceeds of the conservation easement award or $1,112,175.00. The principal pay down will go towards paying off part of Steward Regenerative Capital’s (SRC’s) portion of the loan.
This is a secured loan with a mortgage on the 800 acres of owned farmland and a second priority lien on all business assets behind a small EIDL loan.
The borrower’s interest rate for this loan is 8.5%, with a net interest rate of 8% being passed on to participating lenders (accounting for a .5% servicing spread). The loan has a 60-month term. The first 18 months of the loan will be interest only payments, followed by payments of principal and interest on a 20-year amortization schedule thereafter. Note that if the conservation easement grant is disbursed prior to month 18, the loan repayment schedule will convert to principal and interest upon receipt of the grant. Assuming principal payments begin on month 18, the balloon payment at the term of the loan will be $2,548,860.16.
Total Loan Amount: $3,850,000
- Debt Refinance $3,277,531
- Milking Robots $326,200
- Closing Costs $246,269.00
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