Preferential Loan for Farmers
Winter is a good time for farmers to analyze plans related to the development of their own farm and evaluate their financial possibilities in this respect. If the funds at your disposal prove to be insufficient to meet the assumptions, you should consider taking a loan. A good offer for farmers is preferential loan with additional payment from the Agency for Restructuring and Modernization of Agriculture (ARiMR). Futher reading at http://o3premier.net
What is a preferential loan?
A preferential loan is a type of loan granted on special conditions to specific groups of clients (in this case farmers). A better offer may concern, among others general contract terms, lower interest rates, repayment schedules, collateral, or the possibility to apply a grace period. The difference between the price of ordinary commercial loan and preferential loan is covered by the state budget. Obtaining such a loan, however, involves the need to meet additional formal requirements (apart from those that apply when applying for a regular loan).
What can you spend your loan on?
Preferential loans for farmers are mainly allocated for the purchase of agricultural land, construction and improvement of buildings, purchase of necessary agricultural machinery and equipment and for establishing long-term plantations.
If the applicant wishes to receive a preferential loan for the purchase of agricultural land, he may apply for a loan under two credit lines:
1. For the implementation of investments in agriculture and inland fishery (RR line).
2. For the purchase of agricultural land (line Z).
It is worth knowing that in the case of the RR line, the loan can be used to support the purchase of agricultural land in the part not exceeding 10% of the total amount of investment expenditures planned to be incurred. Under the Z-line, the entire loan granted may be used for the purchase of agricultural land. In this case, aid in the form of interest rate subsidies is treated as de minimis aid in agriculture (financial assistance that a Member State can grant to a holding without the prior consent of the European Commission), therefore the amount of the subsidy may not exceed EUR 15,000 over a 3-year period (current year and the preceding 2 tax years), taking into account all payments of de minimis aid from all titles.
Preferential credit terms
Both in the RR line and in the Z line, the loan amount can not be higher than 80% of the value of capital expenditures, nor can it exceed PLN 5 million. What’s more, the loan period can not be longer than 15 years (however, it is possible to apply a 2-year grace period for loan repayment). The interest rate on a preferential loan for farmers is not less than 3% per annum.
What do you need to do to get a preferential loan?
A farmer who wants to get a loan with an ARMA payment should:
1. Prepare the investment plan including:
- the purpose of the investment,
- location and description of the project (including the date of its commencement and completion),
- investment financing structure, with an indication of the purpose and amount of credit and own contribution and taking into account the planned costs of investments covered by other public aid,
- production direction during the loan period,
- information on outlets, especially if the investment is to increase production,
- loan period and grace period in loan repayment.
2. Submit a loan application with the required attachments at the bank:
- investment plan,
- statements supplemented by the formulas indicated,
- a form necessary when applying for de minimis aid in agriculture or fisheries, supplemented by the formula,
- a set of documents required by the bank.
Having the above data, the bank will decide whether the farmer can be granted a preferential loan with ARiMR subsidies for interest.