Guarantee of loan repayment with the possibility of obtaining a subsidy for interest repayment – this is the latest offer for farmers and processors from the agri-food sector financed from PS funds for the CAP 2023-2027. Specifically, it is a financial instrument called the Agricultural Guarantee Fund Plus – Agromax.
The Ministry of Agriculture and Rural Development, in cooperation with Bank Gospodarstwa Krajowego, introduced the offer a new loan repayment guarantee with the possibility of obtaining a subsidy for interest repayment for the agri-food sector from the Agricultural Guarantee Fund Plus – Agromax. It secures both an investment loan and a working capital loan. Thanks to the Agromax guarantee from FGR Plus, farmers and processors of the agri-food sector will be able to obtain a loan more easily and on more favorable terms, which will enable them to finance planned investments. to improve market competitiveness. The new guarantee is financed from the Strategic Plan for the Common Agricultural Policy for 2023-2027. FGR Plus was established on the basis of an agreement between the Ministry of Agriculture and Rural Development and BGK.
The total value of resources in the Fund is PLN 681.5 million, which – as forecasted – should generate lending in the amount of approximately PLN 3 billion.
From the above amounts – PLN 282 million are to be allocated for investments in agricultural farms increasing competitiveness; PLN 70.5 million for the development of cooperation within the value chain – on the farm for farmers); PLN 94 million – for the development of cooperation within the value chain – off-farm (for enterprises); PLN 235 million – for the development of services for agriculture and forestry.
The first three interventions are already available in the bank’s offer, while the last intervention will be launched in 2025.
– We want to support the resilience of the agri-food sector. The previous edition of the program was a success and enjoyed great interest from farmers and agri-food enterprises. The aim of FGR Plus is to provide farmers and entrepreneurs with easier access to repayable financing in the form of a loan – he emphasized during the event organized on June 12 this year. meeting at the Ministry of Agriculture on proposed new financial instruments, Secretary of State Adam Nowak.
– We are expanding the scope of support to include financial instruments addressed not only to farmers and entrepreneurs from the agri-food sector, but also to enterprises providing services to agriculture and forestry – the deputy minister also noted.
The deputy minister also reminded that for the first time similar repayable support was proposed in the CAP financial perspective 2014-2020. Back then, it was all about loan repayment guarantees. In order to reduce difficulties in access to credit related to the effects of the COVID-19 pandemic, in addition to investment loans, working capital loans were also introduced. He added that support in 2014-2020 was of a pilot nature and was offered under the Agricultural Guarantee Fund. As he said, this help was very popular.
So far, BGK has granted over 15.4 thousand from the Agricultural Guarantee Fund. guarantee for approx. 11 thousand farmers or processors.
Mateusz Olszak, director of the Guarantees and Sureties Department of BGK, said during Wednesday’s meeting that – according to the latest research (May 2024) – 87 percent. farms and agri-food companies claim that thanks to loans secured by the BGK guarantee, their liquidity has improved, and 46 percent entities that obtained a loan from December 2022 to November 2023 indicates that without collateral they would not have obtained it or would have received it, but its amount would be much lower. Approx. 75 percent farms and 72 percent agri-food processing companies have completed or are implementing investments thanks to loans secured by the FGR guarantee, and 93 percent FGR guarantee recipients claim that this support met their expectations, and 95 percent respondents would recommend this type of support to their friends, farmers and agricultural processors.
Who can benefit from the guarantee?
Farmers and processors from the agri-food sector can benefit from the new guarantee. The Agromax warranty covers up to 80%. loan amount and cannot exceed PLN 5 million in the case of farmers and SMEs and PLN 10 million in the case of large enterprises. Borrowers can also benefit from additional support in the form of interest subsidies for a period of 2 years. In the case of a “young farmer” (up to 40 years of age), the subsidy may be up to 100%. interest installment amount.
– Bank Gospodarstwa Krajowego has been supporting farmers and securing their liquidity and investment needs for many years. We have now launched another product from the Agricultural Guarantee Fund Plus to provide even greater support to farmers and processors. Agromax is an incentive to develop and strengthen competitiveness. Investment loans will be subject to interest subsidies, which will additionally encourage farmers and processors to undertake investment activities, said Tomasz Robaczyński, vice president of the management board of BGK, during a meeting at the Ministry of Agriculture and Rural Development.
Two loans – investment and working capital
The bank does not charge any commission or fees for granting a loan repayment guarantee. The free Agromax guarantee from FGR Plus can secure two types of loans:
- investment – granted to finance tangible (e.g. tractor) and intangible (e.g. animal feeding automation system) investments related to business activities in the agricultural sector;
- non-revolving working capital – granted for the purpose of financing current business activities, related to an investment financed by an investment loan secured by an Agromax guarantee.
The maximum guarantee period for an investment loan is 183 months, and for a working capital loan – 51 months.
Interest subsidy
The interest subsidy is a subsidy to the interest rate on a loan covered by the FGR Plus guarantee. It involves BGK covering part or all of the interest charged for a given interest period by the lending bank.
– This is to reduce the costs of loan servicing and to encourage beneficiaries to use this form of support to a greater extent – explained Ryszard Kogut, deputy director of the Technical Assistance Department of the Ministry of Agriculture and Rural Development.
The interest subsidy may amount to 50 or 100 percent. interest installment amount. The higher level of subsidy may be used by a young farmer or other borrower (including those who want to develop services for agriculture and forestry) whose investments contribute to environmental or climate protection or implement the objectives of the “Farm to Fork” Strategy. The catalog of such investments is an annex to the PS guidelines for the CAP 2023-2027 (banks will also verify applications in terms of these guidelines).
What investments can be covered by the guarantee?
Investments in agricultural farms increasing competitiveness:
- purchase of machines, devices, equipment and agricultural equipment
- purchase and installation of installations for the production of energy from renewable sources for farm use
- construction, reconstruction, renovation of buildings or structures
- establishing orchards or plantations of fruit bushes
- purchase of farm animals and plants
- construction of water intakes, including wells and reservoirs
- purchase of computer equipment and software to support agricultural activities
- purchase of modern (including digital) technologies or innovative solutions in agriculture
- purchase of machines and equipment for storing, drying, storing and preparing agricultural products for sale
- purchase of land (up to 10% of the loan value, and in the case of a young farmer, up to 100% of the loan value).
Development of cooperation within the value chain – on the farm:
- construction, expansion, reconstruction of buildings/rooms used for processing, storage and marketing of agricultural products
- purchase of machinery or equipment related to the processing, storage and marketing of agricultural products
- implementation of quality management systems
- costs of marketing products borne by agricultural producer groups and their associations, cooperatives, farmers’ cooperatives, producer organizations and their associations, inter-branch organizations
Development of cooperation within the value chain – beyond the farm:
- construction, expansion, reconstruction of buildings/rooms used for processing and storage activities
- purchase of machinery or equipment related to processing and storage
- implementation of quality management systems
- costs of marketing products borne by agricultural producer groups and their associations, cooperatives, farmers’ cooperatives, producer organizations and their associations, inter-branch organizations
- production of ready-made GMO-free feed based on protein plants
- processing food waste and processing by-products into biocomponents
Development of services for agriculture and forestry:
- purchase of equipment, machinery, devices related to business activities in the field of agricultural and forestry services or for the maintenance of water facilities
- purchase of computer equipment and digital technologies necessary to provide agricultural or forestry services
- purchase of an agricultural and forestry tractor in order to provide services related to agriculture or forestry
From which bank can you apply for a loan with a guarantee?
The loan covered by the new guarantee and interest subsidy is now available at Bank Spółdzielczy in Brodnica. In the following days, the offer will be available in other banks that have signed an agreement with BGK. They include:
- Bank Polskiej Spółdzielczości SA
- BNP Paribas Bank Polska SA
- Credit Agricole Bank Polska S.A.
- mBank SA
- SGB-Bank S.A.
- Wschodni Bank Spółdzielczy in Chełm
– .
