Skip to content

Alternative financing helping to grow Northern farm, agri-food businesses

Fair Finance Fund assists Manitoulin craft brewer with installation of canning line
Split Rail Brewing Co., based in Gore Bay on Manitoulin Island, received funding last March to install a permanent canning line to help boost output.

Since launching in 2015, Gore Bay’s Split Rail Brewing Co. has grown into an established brand offering a diverse array of craft beers, building a strong and loyal customer base.

Located on the west end of Manitoulin Island, the locally owned brewery has grown its revenue year over year, and its taproom has become a popular year-round attraction.

But as the business blossomed, one complication persisted.

“We just didn’t have enough supply to meet demand, and that’s not a perennial problem that you want to have as a business owner,” said co-owner Susan Snelling, speaking during an online presentation hosted by the Northern Ontario Farm Innovation Alliance (NOFIA) on Nov. 3.

“If there are people who want your product, you want to be able to supply that.”

One way they could address the issue was switching their packaging from bottles – a process Snelling described as labour-intensive, physically demanding and slow – to cans.

So, three years ago, the brewery began experimenting with the idea, periodically enlisting the services of a mobile canning system, which the operator would haul up to Split Rail from southern Ontario, spending a full day canning beer before heading back south.

But it proved to be a temporary solution.

“It’s a great option if you only need a little bit of canning or if you’re looking to enhance your capacity,” Snelling said. “But it’s expensive and you’re subject to their schedule, so you can’t necessarily guarantee when you’re going to have the packaged product.”

As a business that values sourcing local ingredients, creating jobs for local residents, and doing all its production locally, engaging help from outside the region didn’t sit well with Split Rail’s owners.

They also balked at the environmental impact created by hauling equipment back and forth from the southern part of the province.

So, early this year, the brewery decided to purchase its own canning line, and it looked to the Fair Finance Fund to make it happen.

“We knew with the Fair Finance Fund we would have a lender who understood our social purpose, understood our environmental constraints and considerations, and would support us in that,” Snelling said.

“So we didn’t have to make the argument that local was important.”

Want to read more stories about business in the North? Subscribe to our newsletter.

Launched in 2019, the Fair Finance Fund is a non-profit social finance fund providing loans and mentorship services to farms and food-related businesses that prioritize local food systems and economies, along with the environment.

Its lending capital comes from community bonds. Investors purchase a bond, and that money goes into a pool of funds that’s loaned out to food and farm enterprises in Ontario. The interest generated from the investment is then shared between the fund and the investors, who are typically strong believers in local food systems, Fehr said.

“It’s really helping to support not just the physical goods economy within Ontario, but also the monetary goods and having the flow of money and that circular economy throughout Ontario,” said Deirdre Fehr, Fair Finance Fund’s loans officer.

“You’re not just getting a loan from Fair Finance Fund; you’re also supporting other people and enterprises within Ontario.”

To date, the fund has distributed 17 loans with a value just under $1 million, and its investments have helped create 99 jobs.

Twenty per cent of its loans have been distributed to business owners in Northern Ontario, a region Fehr acknowledged is beset by challenges including a shorter growing season and higher costs related to transportation and distribution.

The difference between the Fair Finance Fund and a more traditional lender is something Fehr called a “character-based lending process.”

Instead of solely assessing a client’s credit score, the fund will get to know the person and their passion for their work, determine how dedicated they are to their business’ mission, and appraise their commitment to repaying the loan.

Loan clients also receive mentorship services from a pool of expert advisors who have decades of experience in the farm and food industries, Fehr said, and the fund will help with marketing and promotional assistance as well.

“We like to say that our fund really wants our clients to succeed,” Fehr said.

Split Rail Brewing secured its loan from the fund in the early spring of 2020, just as the COVID pandemic was taking hold in Canada.

The brewery installed its permanent canning line in May, and since then the operation has changed dramatically.

Being able to can beer on their own schedule, using their own staff, has been a “game-changer,” Snelling said. The machine can currently produce 12 cans per minute, but the system can be expanded if needed to boost production further.

“Now we’re up and running with the canning line, and it has absolutely increased our capacity to meet demand,” Snelling said. “We have grown our revenues and our production through the pandemic, which not every business can say.”