A community bakery in Birmingham is issuing “bread bonds” to help finance its expansion from the owner’s kitchen to a custom built premises.
Loaf has been run from Tom Baker’s Cotteridge home for the past two years, but he now needs to raise around £25,000 to equip a bakery and 12-person cookery school when it moves to new premises on Stirchley high street in April.
Mr Baker is offering an unusual approach to funding where investors give a £1,000 loan, to be repaid in full in three years.
During the three years, bread bond holders will get an six per cent interest rate on their loan, which instead of being paid in cash will be paid in the equivalent value in bread – a large loaf of sourdough every fortnight.
Loaf has signed a contract for a lease on a property bought by Everards the brewer.
Its headquarters will be the first premises established as part of Everards’ Project Artisan – a scheme to purchase and then lease out buildings for expanding artisan food and drink businesses.
Mr Baker, 29, said: “Everards investment in the property means that Loaf can take on a bigger and more suitable premises than we otherwise could have done.
"Everards are investing in the refurbishment of the property, which is an enormous help, and means we only need to buy the equipment we need and fit it into the property when we’re handed the keys.
"We hope a bread bond issue will raise the majority of that cash. We are a social enterprise business and wanted to raise money instead of going to the bank.
“We have had quite a response. About 30 or 40 people are interested.
“We only need 25 to make it work, some people have said they are definitely interested but others have asked to see the business plan before they commit. We try to do business as ethically as possible and try to source organic ingredients.”
Mr Baker, orginally from Reading, went to Aston University to get a degree in psychology and biology in 2004 before doing a masters in nutrition in Oxford and working for the NHS for around five years.
Loaf sells bread through a community supported bakery scheme, as well as selling wholesale to specialist local delis. Bread is made with flour grown and milled in the UK, some from watermills in Warwickshre, and some from Shipton Mill in Gloucestershire.
The idea of a community supported bakery is borrowed from the American community supported agriculture model.
Each month a customer subscribes to a bakery, giving a set amount of money upfront.
Because of the monthly investment and commitment to the bakery, the baker has a guaranteed income and so can invest in equipment, tools, supplies, and labour, to repay the investment with an agreed amount of produce.
The Loaf cookery school runs courses on breadmaking, cupcake baking, handmade pasta and butchery.
From April it hopes to add foraging for cooking, preserves, sausage making, wine tasting, a stocks, sauces, and kitchen skills workshop, charcuterie and dairy and fish skills to its offer.
The new premises will share a retail space with South Birmingham Food Co-operative.